Market Share

What is Market Share?

Market share is used to give you an idea of how large, powerful or important your business is within its particular sector. You can calculate your share by taking your total sales and dividing the figure by the total sales of the entire sector or market you are selling in.

A company that maintains its share over time is growing its revenues in line with its competitors. But an increase shows a speedier, market-leading, boost in revenue.

Why is market share important?

Market share is a useful metric, delivering insights far beyond illustrating an organization’s relative size within the market it is operating in. 

Knowing your responsibilities in the market also indicates how successful your business is in relation to competitors, and how effective your marketing, advertising, and new product development have been.

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Understanding and analyzing market share is vital for an organization looking to scale up or improve profitability.

Fluctuations are usually indicators of a company’s competitive advantage, which can be extremely important information for investors and for stock performance.

How to gain market share

Companies looking to increase their share have a few options.

They can look to marketing and advertising to attract new customers, develop new products for the market, lower prices to undercut the competition, or attempt to expand the size of their target market by appealing to new demographics.

Innovation and disruption are also great ways of increasing market penetration.

After all, offering a new technology — one that competitors do not have access to — is a highly effective way of convincing users to migrate to your product or service.

How to increase market share

Increasing market share means increasing the effort put into sales as a company and using additional or new strategies to facilitate your journey to get there.

Companies looking to increase their market share can take several approaches, including:

Finding your niche and making products that fit into it

Tap into your company’s unique characteristics that set you apart from your competition. Are you known for brilliant design? Do you build powerful user interfaces that are easy to navigate? Identify the things that help customers remember your products and keep them coming back for more. If you incorporate these things into your products, you can create a clear brand identity, which helps you increase your market share.

Understanding your direct competitors

To increase your market share, you first need to understand the market.

Get to know what other leaders in your market are doing and how your offerings compare with theirs. If there are gaps in your offerings, look for unique and innovative ways to fill those gaps better than your competition does. 

Innovate and change your products as society changes

There's a reason the Commodore 64 isn't the world's best-selling computer anymore, even though it once was. Other companies changed their products along with society's changes and found new, innovative ways to build computers that addressed customers' needs better than Commodore could. 

That's why it's important to keep innovating and iterating on your products. If you don’t, you'll be left behind.

Engage with your customers 

Since you’re trying to increase your market share, and your market is represented by customers, it makes sense to engage with them. Customers know what they want and what their needs are, so asking them through a survey or social media is a great way to find out what else your company could do for them. Plus, when customers notice you’re interested in their feedback, they’ll be more likely to buy and recommend your products.

Keep delivering great products and making customers happy   

This is as obvious as it is important — you can’t increase your market share with unhappy customers. If you focus on delivering great products and features, excellent customer service and engagement, and keep innovating, you're much more likely to increase your market share.

3 examples of companies that improved market share (and 3 that failed)

Here are a few examples of companies that managed to improve their market share — and a few that weren’t so successful.

3 companies that grew their market share

Coca-Cola

Not only does Coca-Cola control a large share of the soft drink market, it has grown its market share success by expanding into more diverse areas. Its non-soda products like Smart Water, Vitamin Water, and Powerade have helped the company capture a more health-conscious customer base. 

Google

Google has used cutting-edge technology to consistently innovate, allowing it to increase and maintain its vast market share success. 

Apple

Apple introduced a brand-new product (the iPhone) in June 2007, which enabled it to gain a crucial foothold in the cell phone market. Since then, Apple has continually innovated on the iPhone hardware and software to grow its market share further. 

And 3 companies that lost their market share

Kodak

Kodak was once a giant of the photography market and even developed the first digital camera. However, the company was so focused on its print and film photography products that it ultimately ignored the digital photography market. As a result, Kodak lost its valuable market share to more innovative companies, though it still exists today.

Yahoo

Yahoo was a leading name in the early days of the internet. However, it failed to notice changing user trends and didn’t improve its user experience. As a result, Yahoo was overtaken by other companies with a tighter focus on users and experienced market share failure.

IBM

IBM struggled to adjust to the personal computer revolution of the early 1990s. This led to its market share failure, as it couldn’t compete with companies taking a more innovative approach. Eventually, IBM switched its focus to hardware only, which helped it recapture some of its previous market share. 

How to add market share goals to your OKRs

Increasing market share is a major challenge, but breaking it down into OKRs can help businesses take the right steps to achieve growth. Here are three examples to keep in mind.

Objective: Increase market share to 20% this year

Increasing market share to 20% involves attracting new users and keeping them satisfied and loyal. That means finding a way to boost both conversion and retention rates by a realistic degree. 

In that case, your key results may be:

• Increase user retention by 10%

• Increase conversion rates by 12%

Objective: Target a new user base

Targeting a new user base can be complicated — it requires extensive research to identify new users, their interests, and how to find them. You can focus on both social media and organic search to reach a new user base. 

Achievable key results could be:

• Increase social media followers by 10%

• Rank on the first page of Google

Objective: Build brand authority

Increasing brand authority can help you gain more credibility and trust as a leading force in your field. 

Potential key results might be:

• Rank on Google’s first page for topical keywords

• Boost brand searches by 10%

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