Market analysis based on an entropy measure for the degree of competition

In view of the growing importance of marketing, there is a need to measure the degree of market competition for analysing strategic advantage. The need for such a measure can also be felt for categorizing the market structure for the usage of market theories in a real life situation. To meet these above-mentioned needs, the present note proposes three desiderata for a good measure for the degree of market competition. Further, one measure, based on the concept of entropy, has been proposed which makes use of market share vector. It also examines the suitability of the proposed measure in meeting the desiderata. A case study has also been carried out, covering two white good items, to demonstrate the applicability of the suggested procedure for market categorization.