Put simply, a company\u2019s market share is a sign of how well it\u2019s doing in relation to its opponents. Once you know this, you can develop new strategies to grow your market share and reach more potential customers, thus increasing your profits. Growth leads to more strategies to gain more market share, and your competitors lose ground. Sounds great, right?<\/p>\n
In fact, research shows that enterprises that have achieved a high share of the markets they serve are considerably more profitable than their smaller-share rivals.<\/p>\n
So, in order to help your business not only survive, but thrive, it is critical to understand the significance of market share and how it impacts your marketing tactics. Let\u2019s start by taking a look at exactly what it is and why it\u2019s so important.<\/p>\n
![\"a](\"https:\/\/www.sogolytics.com\/blog\/wp-content\/uploads\/2020\/05\/GettyImages-1198478018-1024x683.jpg\")
<\/p>\n
What is Market Share? Understanding Its Definition and Significance<\/h2>\n
In a nutshell, market share is the percentage of an industry\u2019s sales that a particular business owns. In other words, it is a comparison of a company\u2019s total sales in relation to the overall sales of the industry they are in.<\/p>\n
For example, if the imaginary TV company \u2018Vision\u2019 sold $30 million worth of TVs in America in 2019, and all the TV companies in the US together sold $100 million worth of TVs, Vision would hold a 30% market share for that year.<\/p>\n
How to Calculate Market Share: Formula and Example<\/h2>\n
Typically, market share is calculated over a period of time, separated by national or regional levels and divided into yearly or quarterly sales. It gives a company an idea of its revenue compared to the overall domestic industry and compared to its competitor.<\/p>\n
The direct calculations look like this:<\/p>\n
- \n
- Market Share = (Total Sales of a Company\/Total Sales of the Market)* 100, or<\/li>\n
- Market Share = Company’s Revenue (Sales)\/Entire Market Revenue (Sales)<\/li>\n<\/ul>\n
Domestic market share is very important for US companies, but many businesses also find it useful to look at market share in emerging markets such as China for key indicators.<\/p>\n
<\/div>\nFor a specific example, looking at the global market share of 5G by vendor, it\u2019s clear that Apple leads the way as they captured 1\/3 of the global market share<\/a> in sales in 2022. This tells us a lot about the future of the telecommunications industry as things stand on a global level.<\/p>\n
<\/div>\nImportance of Market Share: Why It Matters for Business Growth<\/h2>\n
It is widely recognized that one of the main factors of business profitability is market share.<\/p>\n
<\/div>\nCompanies with market shares in excess of 40% have twice the profitability of those with only a 10% market share and it is estimated that for every 10% increase in market share, the return on investment rises by 5%.<\/p>\n
<\/div>\nWhy Measuring Market Share is Crucial for Business Success<\/h2>\n
As market share is a measure of consumers\u2019 or businesses\u2019 preference for one product over other similar products, a higher market share usually means greater sales, less effort needed to sell more and a strong barrier of entry for other competitors.<\/p>\n
<\/div>\nAnd because market share provides a vital indication of market competitiveness, it also enables business executives to identify key trends in consumer behavior, to review total market growth or decline and realize both their market opportunity and market potential.<\/p>\n
<\/div>\nBy understanding market share, companies can furthermore measure consumer perception of new products or services, promotions, pricing strategies, and other key business initiatives which puts them in good stead for a growth in profits.<\/p>\n
<\/div>\nWhile this likely all makes sense, the natural next question is \u201cnow what?\u201d And what level of market share should you be after?<\/p>\n
<\/div>\nHow Much Market Share is Ideal for our Business?<\/h2>\n
Typically, gaining a 100% market share is not a good idea due to the risks involved with market actions such as product, use or fashion changes. If consumer behavior<\/a> shifts in an industry where you have 100% market share, your company will be impacted heavily and it could be detrimental to the future of your business.<\/p>\n
<\/div>\nNot to mention that the cost and effort to maintain 100% market share against smaller, more aggressive competitors can be very high and very tiring.<\/p>\n
<\/div>\nThe best route seems to be for companies to decide on a target market share, where the cost of obtaining market dominance is less than the profit gained. Below we have listed some strategies for how to best work on improving and expanding your market share to reach your desired target.<\/p>\n
<\/div>\n\n![\"market](\"https:\/\/www.sogolytics.com\/blog\/wp-content\/uploads\/2020\/05\/GettyImages-513368437-1024x683.jpg\")
<\/p>\n<\/div>\nBest Strategies to Improve and Increase Market Share<\/h2>\n
So, you want to know how to increase market share for a brand?<\/p>\n
<\/div>\nOnce you calculate your market share and are aware of your business\u2019s position, you can begin strategizing how to increase your company\u2019s overall revenue. As explored in the\u00a0Younium<\/a>\u00a0guide, often includes identifying your performance obligations and establishing the best ways to generate revenue by increasing your market share.<\/p>\n
<\/p>\n
The following four activities are important in building your market share:<\/p>\n
<\/div>\nInnovating Products and Features to Boost Market Share\u00a0<\/span><\/h3>\n
The continuous and frequent launch of new products brings new sales, and new sales increase market share. Companies that are constantly innovating and bringing new and improved technologies to the table tend to have higher market share than those that don\u2019t. Once new customers are gained, a company can then work on customer loyalty<\/a> and build strong relationships with their buyers.<\/p>\n
<\/div>\nHow to Appeal to Larger Demographics for Market Share Growth<\/span><\/h3>\n
It\u2019s important to figure out how to reach a larger portion of the market. A company\u2019s marketing team might run promotions, discounts, or sales to attract new customers from their desired demographic <\/a>and increase their relevance within this sector.<\/p>\n
<\/div>\nContinuous Product Improvement to Capture Market Share<\/span><\/h3>\n
Companies that consistently build their market share in industries such as automotive and telecommunications tend to be those that demonstrate that their products are of the highest quality. Consider the reputations for excellence that the likes of Apple, Audi, and BMW have built for themselves as examples of this approach.<\/p>\n
<\/div>\nBuild Brand Awareness to Increase Market Share<\/span><\/h3>\n
It\u2019s very important to \u2018get your name out there\u2019 so consumers know who and what your company is. If you are looking at how to increase the market share of a brand, national marketing and building your company\u2019s brand awareness<\/a> plays a major role in increasing your market share. Generally speaking, larger companies have the highest market share because they can provide products and services both effectively and efficiently.<\/p>\n
<\/div>\nBecoming a household name brand in an industry will help to increase your market share, so invest in marketing campaigns you believe in so you can achieve this.<\/p>\n<\/div>\n
<\/p>\n