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Market Share

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What is Market Share?

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Definition of Market Share

Market Share is, very simply, the percentage of a certain sector that your product, service or software is responsible for, calculated by sales. 

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.

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What is Market Share

General FAQ

How is market share calculated?
Market share may be calculated by dividing a business’s total revenue or sales by the industry’s total sales across the relevant fiscal period. This reveals the company’s share of the industry’s overall sales.
What is the relative market share?
This marketing metric allows companies to compare their market share with that of their biggest competitor. The market leader’s share serves as the benchmark for comparisons of smaller competitors, too.
What is an example of market share?
If a business selling $20 million’s worth of a product in one year, and the total market is worth $40 million, the brand’s market share would be 50%.

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