As measured by sales, a market share (MS) refers to the percentage of a particular industry that your product or service owns. The market share is estimated by dividing the sales of a specific business in a given period by the sales of the whole market in the said period. The market share percentage provides insight into the heart of a company or a product in the market they compete in. The business or brand with the highest market share is called a “market leader.”
The Importance of Knowing Your Market Share
Understanding your company’s market share can help determine how large, successful, or influential your company is within a specific industry.
Knowing how much of the market you own, you can grow the slice by releasing new products, promoting existing ones, or other methods of increasing sales.
The advantages of using the Market Share metric
As a manager, one of the main aspects of your decision-making process relates to resource distribution. One of the critical parts of the process will be understanding your product’s place and penetration in the current market.
For example, there is no point in investing and spending if your product only serves a small portion of the market. In that case, you will probably dedicate your efforts to maintaining customers and finding ways to increase sales with the existing product. On the other hand, if you hold a significant market share, you may want to introduce your product to new audiences (which means investing more in marketing).
How to Grow Your Market Share
Your market share growth will always come at the expense of your competition in that specific market. So to increase your market share, you must attract the users of competing products or recruit new users that have yet to pledge their loyalty to any particular product or brand. Popular ways of increasing your market share are disruptive innovation, creative marketing, and competitive pricing. It is, however, essential to remember that a larger market share at the expense of revenues may not always be a marker of business success.