Market Research Edge

Using Concentration Measures

1. Concentration measures in our Market Research series include operational concentrations, reported sales concentrations and employment concentrations.

Concentration measures are often used as a gauge of industry vitality trends. All concentration measures reflect local industry statistics as a proportion of the economy as a whole in the same area. Multi-year concentration comparisons can indicate increasing or decreasing levels of importance or vitality within a given area, while comparison of industry concentrations across multiple locations provide indicators of relative vitality, entrepreneurial and marketing opportunities.

2. Operational concentration

This measure compares the number of operating establishments in a given industry to those in the area economy overall. When benchmarked against comparable percentages in multiple areas, the operational concentration is used as a relative indicator of industry strength and market opportunity. In a single location time series, operational concentrations can create a perspective on increasing or decreasing activity levels and importance relative to the local economy.

3. Reported Sales concentration

This measure compares the reported sales of firms in a given industry to those based in the area economy overall. When benchmarked against comparable percentages in multiple areas or national data, the reported sales concentration is used as a relative indicator of area industry. Since this measure attributes all company sales to the location of headquarters operations, it is also indicative of trends in decision-making capacity in the local industry group.

4.Total Employment concentration

Also called the “location quotient” when the results of two area concentrations are indexed, the employment concentration measure compares the number of total employees in an industry to those in the area economy overall. Employment concentrations are often applied as a surrogate for concentration of locally generated sales. When benchmarked against comparable percentages in multiple local areas or national data, the employment concentration is used as a relative indicator of industry strength, market or entrepreneurial opportunity.

Industry Concentration Rates are included in every one of BizMiner's 900,000 online Market Research Profiles, available for over 16,000 business segments. Market Research Reports are available in both national and local versions covering over 300 US states and metropolitan areas.

Available online at www.bizminer.com/market-research-report.asp .