Share of Requirements

Share of requirements (SOR) is the percentage of a category buyer's total purchases in a category that go to a particular brand — measured among that brand's buyers. If a brand's buyers spend, on average, 40% of their total category purchases on that brand (and 60% on others), its share of requirements is 40%. It's a measure of loyalty: of all the times a brand's buyers buy in the category, what share do they give to this brand? A high share of requirements means the brand's buyers are loyal (they give it a large share of their category purchases); a low share means its buyers also buy a lot from competitors (they're less loyal, more switching).

Share of requirements is distinct from market share and penetration, capturing the loyalty dimension specifically. Penetration measures how many people buy the brand at all (breadth of buyers); market share measures the brand's share of total category sales (overall); share of requirements measures, among the brand's buyers, how much of their category purchasing the brand captures (depth of loyalty). A brand can have many buyers (high penetration) who each give it only a small share of their purchases (low SOR — broad but shallow), or fewer buyers who are highly loyal (high SOR — narrow but deep). SOR isolates the loyalty/depth aspect that the other measures don't.

The relationship between penetration, share of requirements, and market share is illuminating, because market share is driven by both how many buyers a brand has (penetration) and how loyal they are (share of requirements). Roughly, market share grows by either gaining more buyers (penetration) or getting existing buyers to give the brand a larger share of their purchases (share of requirements). Decomposing market share into these components reveals what's driving it and where growth might come from: a brand with high penetration but low SOR has many buyers it isn't fully capturing (loyalty opportunity), while one with high SOR but low penetration has loyal buyers but too few of them (acquisition opportunity).

This decomposition matters because the growth levers differ. Marketing science (notably the work associated with the Ehrenberg-Bass tradition) has emphasized that, for most brands, growth comes more from penetration (gaining buyers) than from increasing loyalty (share of requirements), and that large brands tend to have both more buyers and somewhat higher loyalty (a pattern called double jeopardy — small brands have fewer buyers who are also slightly less loyal). So while share of requirements is a real and useful loyalty measure, the evidence suggests penetration is usually the bigger growth lever — making SOR best understood as one component of market share, valuable for diagnosis, rather than the primary growth target loyalty-focused thinking once assumed.

Using share of requirements well means treating it as the loyalty/depth component of market share — measuring how much of its buyers' category purchasing a brand captures, decomposing market share into penetration and SOR to understand what drives it, and interpreting it in light of the evidence on how brands grow. It means recognizing high SOR as genuine loyalty and a real asset, but not over-prioritizing loyalty-building over buyer acquisition, since for most brands penetration is the larger growth lever. SOR is valuable for diagnosis (is the brand broad-and-shallow or narrow-and-deep?) and for understanding the loyalty of a brand's franchise, used alongside penetration and market share for a full picture.

The failures are confusing share of requirements with market share or penetration (different things), over-focusing on loyalty/SOR as the growth lever when penetration usually matters more, and ignoring SOR entirely (missing the loyalty dimension of the brand's franchise). The discipline is to use share of requirements as the loyalty-depth measure within a decomposition of market share — understanding the depth of buyer loyalty alongside the breadth of penetration — while heeding the evidence that growth typically comes more from gaining buyers than from deepening loyalty, so SOR informs strategy without being mistaken for the primary path to growth.

Share of requirements — the share of their category purchases a brand's buyers give it — measures loyalty depth distinct from penetration, a diagnostic component of market share rather than the primary growth lever.

Etymology: source.

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