Market share
Also known as: market share
Market share is the share of the market that a product, service, brand or company owns. Market share is an important KPI usually expressed as a percentage of the entire market. The main goal of marketingand other activities of commercial companies is to maximize market share.
If one player owns virtually the entire market then we speak of a monopoly. If a few parties together dominate the market then we have an oligopoly. The market share is usually calculated on the basis of sales in a given period.
Among other things, market share is interesting because it says something about a product or brand's position relative to its competitors, both in absolute size and the development of its grip on the market. Market share tells how dominant a brand is and what its main opponents are. The development of a market share can say something about tomorrow's market: which new developments are going to make it and which products are on their way out?
In some industries, players below a certain market share are not considered viable. Exceptions are companies and brands with special target groups or unique selling points. By the way, for several reasons, it is easier to increase your market share with new demand (market growth) than by snatching existing customers away from competitors.
Determining market share
There are two different types of market share:
- Revenue market share that assumes revenue generated
- Unit market share that assumes the number of products sold
The market share as a percentage is calculated for both by dividing the total market size by the own share in it. On the contrary, when the market share is already known, the total size of the market can also be calculated from the own results.
Insight into market shares can be obtained through market research, either in-house or independently. This can use figures published by producers and distributors themselves, as well as field research such as surveys. Useful and reliable research to map the market focuses not only on calculating market shares, but also on their broad context, including the overall size of the market.
In addition to the above two types of market shares(sales and numbers sold), the concept of market share can be further subdivided:
- Penetration share is the number of customers or users within the total potential market
- Share of customer is the share within the market of actual customers and users
- Usage index which partly qualifies market share by the degree of usage
Some industries use other more specific variables to express market position. In software, for example, the installed base, or the number of active installations of a program, is more often considered.