What is Market share? Definition, importance, and FAQs.

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What is Market Share?

Market share refers to the percentage of total sales made by your company of any product or service against that of the whole industry.

This metric is used to give a rough estimate of the size of the company and its brand value in comparison to its competitors within any particular market. The company with the highest market share is called the Market leader.

Market share can be calculated by dividing your sales by the total sales of the entire market that you are a part of.

Any company whose market share remains constant over a period of time is said to be growing in revenues parallel to its competitors. An increasing market share corresponds to a speedier and a market-leading boost in the revenue generated by the company.

What is the importance of Market share?

Investors and analysts always keep a track of any changes in the market share of a company since this metric can be an accurate measure of the relative performance of the company’s products against its competitors and how effective your marketing and advertising campaign has been. Thus, if you are looking for any kind of funding, it is imperative that your market share does not decrease over time.

Market share increase allows a company to expand its operations and increase profit. There are many ways by which companies can plan to expand their market such as lowering prices, advertising on a greater scale, introducing new products, and so on. Apart from this, a company can also plan an expansion to newer territories with a new audience to increase its overall market share.

Another great way to increase your market share is through innovation and disruption. Offering a new technology that your rival companies do not have access to is a foolproof method of convincing the consumers to shift to your product.

For any organization looking to scale up and increase profits, a thorough analysis of its market share is extremely vital. Changes in the market share are generally indications of the company’s competitive advantage, which is important for other important areas such as stock performance as well.

FAQs

Q: How to increase Market share?

A: There are many ways by which companies can plan to expand their market such as lowering prices, advertising on a greater scale, introducing new products, expanding to newer territories and demographics, and so on. Apart from this, offering the latest technological additions to your product has also proven to be a great way to catch the attention of the consumers.

Q: How is market share calculated?

A: Market share is calculated by dividing your company’s sales by the overall sales of the market that you are part of.

Q: What are market size and market share?

A: Market size is the number or value of the products sold by a company. It is calculated by adding all the company’s different sales or volumes together.
Market share is the percentage of total sales made by your company of any product or service against that of the whole industry.

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