To increase market share, a company has to do three things: identify its current position in the market, develop a strategy for gaining a larger piece of the pie, and implement that strategy. Surprisingly, many businesses never take the time to assess their market share or understand what capturing a larger piece of it would take. If you want to grow your business, read for tips on increasing your market share.
What is Market Share?
Market share is the percentage of a market controlled by a particular company. It is calculated by taking the company’s sales within a specific market and dividing it by the total sales of all companies in that market. Increasing one’s market share can indicate a company’s success, as it shows they are gaining more control over its industry. However, this can also lead to monopolies and decreased competition. Overall, achieving a higher market share can be a primary goal for businesses.
How is Market Share Calculated?
To calculate a company’s market share, you first need to determine the total market size of a particular industry. Then, take that company’s sales within that industry and divide it by the total market size. This will give you the percentage of the market that the company holds. For example, if Company A has $50 million in sales within the toothpaste industry, which has a total market size of $500 million, its market share would be 10%.
It is important to note that market share can also be calculated for a specific product or brand within a company rather than just overall company sales within an industry. Additionally, market share can change over time as a company’s sales and the overall market size shift.
Benefits of Market Share
Increasing market share can lead to greater profitability for a company. This is because a more significant portion of the market means more customers and potentially higher sales. Additionally, having a larger market share can increase suppliers’ bargaining power and attract potential investors. Focusing on increasing market share can be a beneficial strategy for a business.
Impact of Market Share
The market share of a company can have a significant impact on its overall success. A higher market share often means that a company has more control over pricing and profitability. It can also lead to increased brand recognition and customer loyalty. However, there are potential downsides to having a high market share, such as attracting government scrutiny for possible monopolistic practices. Ultimately, companies should strive for sustainable growth in their market share rather than rapid increases.
How to Increase the Market Share of a Company?
1. Improve the product or service. This could mean adding new features, enhancing quality, or using new technology.
2. Expand into new markets or target untapped demographics.
3. Creating a strong brand image and positive customer experience can help attract more customers and increase market share.
It’s essential to continually assess the competition and stay ahead regarding offerings and marketing strategies. Overall, staying proactive and adaptive in the marketplace can lead to an increase in market share.
Market Share Example
One example of a company with a significant market share is Apple. As of 2019, they hold approximately 17% of the global smartphone market. Another example is Netflix, which holds around 35% of the streaming market in the United States. These companies have solidified their positions as industry leaders through strategic decision-making and innovative products.
Why Is Market Share Important?
Having a high market share can give a competitive advantage and indicate a strong customer base. This, in turn, can lead to loyal customers who consistently choose your company’s products or services over others. Overall, having a larger market share can result in higher profits and success for the business.
Strategies to Gain Market Share?
1. Conduct market research and identify new customer segments. This can help a company target and tailor its products or services to attract these potential customers. Additionally, market analysis can reveal untapped markets or unexplored growth opportunities.
2. Differentiate your offerings from competitors by highlighting unique features or benefits. This can help attract customers looking for something specific that sets a brand apart from others in the market.
3. Improving overall customer experience can also lead to gaining market share. This could involve investing in better technology, offering more personalized interactions, or providing exceptional service at every customer journey touchpoint.
4. Potentially acquiring other companies or forming strategic partnerships can expand a company’s market share and reach. These moves can bring new resources, customers, and market presence to help a business grow.
Overall, gaining market share involves staying aware of the market and being proactive in adapting strategies to meet customer needs and stand out among competitors.
How Do You Measure Market Share?
One method to measure market share is by examining sales data. This involves looking at the total sales within a specific market and comparing it to the company’s individual sales within that same market. Another way to measure market share is through surveys and customer research, where individuals are asked about their purchasing habits and brand preferences.
Market share can also be measured by analyzing the number of customers or subscribers a company has compared to its competitors. Additionally, companies may look at their presence in the industry – such as the number of retail locations or advertising efforts – to gauge their market share. Overall, there is no definitive way to measure market share, but these are some common methods businesses use.
How Can I Prevent Loss of Market Share?
An effective way to prevent loss of market share is to focus on retaining existing customers. This can be done by consistently providing excellent service and offering new products or services that meet their changing needs. Additionally, developing a strategy for acquiring new customers and increasing market share can also help prevent the loss of market share. This could involve launching marketing campaigns targeting specific demographics, expanding into new markets, or even acquiring a competitor. By constantly being proactive in acquiring and retaining customers, you can effectively prevent loss of market share.
What Does Increasing Market Share Mean?
Increasing market share means gaining a more significant percentage of a market compared to your competitors. This can be achieved by attracting new customers or increasing purchases from existing customers. A higher market share can lead to greater profits and dominance in the industry. However, it is essential to consider the cost-benefit analysis and potential backlash from aggressive marketing tactics. Ultimately, it is crucial for businesses to continually assess and adapt their strategies to maintain and grow their market share.
What is a Good Market Share?
Generally, a good market share is considered to be above 10%. However, this can vary depending on the industry and competition. For example, a company may have a market share of only 5% in a highly competitive industry but that could still be considered successful. On the other hand, a company with a market share of 20% in a less competitive industry may not be performing as well. It’s important to consider these factors when evaluating the success of a company’s market share.