As marketers, it is critical to evaluate market share so that you may analyze your business compared with competitors and design new marketing strategies to attract more potential customers. Here let's understand the meaning of market share and how it helps businesses.
What is Market Share?
A company's market share is the percentage of total revenues in an industry that it generates. Market share is estimated by dividing the sales volume over the period by the industry's total sales during the same period. This statistic is used to get a sense of the company's size in comparison to its competitors and market. The firm with the biggest market share in an industry is the leading player.
Regularly data agencies evaluate and publish the market share of various sectors' regulatory agencies or industry groups. The government gathers this information every four years, whereas other industry associations or regulatory agencies might acquire it yearly or quarterly. As comprehensive sales numbers are challenging to obtain in certain industries, like electricity generating, determining total market share is difficult. Many businesses keep records of and are aware of the number of sales they make. Due to these factors, they may have an inaccurate estimate of the total market worth. They can still make educated guesses based on reliable facts.
The Formula of Market Share:
Market Share= Total Company Sales/Total Industry Sales
How do Businesses Use Market Share?
Organizations use their market share in a variety of ways. Businesses can utilize their market share data to impress analysts and investors who will invest funds and resources into the company. A larger market share reflects the relative competitiveness of a company's goods or services. Many investors and analysts keep an eye on the market shares of businesses and items which interest them.
Investors keep an eye on organizations that are steadily increasing their market share. This indicates that the business is outgrowing its competition in that market or region. Companies utilize a variety of strategies to increase their market share. They may accomplish this through better advertising tactics, cheaper prices, upgraded services or products, and attracting new client segments.
What is the Impact of Market Share?
- Increased Sales
A rise in market share also contributes to an increase in overall sales for a business. When customers observe the brand loyalty of most of their friends, they also try to buy the same products.
- Dominates the Industry
A company's influence over the industry it engages with grows as its market share rises.
- Economies of Scale
Increased market share allows a corporation to function on a larger scale and boost profitability. It also assists the organization in establishing a cost advantage over its rivals.
How Businesses are Increasing Market Share?
- Reduced Price
Reducing expenses might assist a business in increasing its market share. Decreasing product prices draws in more consumers, boosts revenue, and broadens the customer base. This results in a rise in the business's market share.
Advertising is among the most efficient, although costly, ways for a firm to expand its market share. When challenged with fierce competitors, advertising allows a business to present its values, products, and services to a wider client base. This is an efficient strategy for quickly gaining supremacy over the competition.
- Enhancing Employee Motivation
Organizations must maintain high employee satisfaction in order to offer high-quality goods, services, and customer assistance. Employees who are encouraged care more about their job and may make a genuine effort to offer better products and services. A few approaches to boost morale are to implement flexible work environments and employee satisfaction programs.
Improving Existing Customer Connections
Consumer feedback is extremely crucial. Organizations can secure their marketplace by enhancing customer engagement and guaranteeing that their current customer base is not lost to competitors. It also results in higher levels of consumer satisfaction. This aids in the expansion of the current consumer base through word-of-mouth.
An organization's market share is the percentage of an industry's or a particular market's total sales income that it generates during a given period of time. To estimate market share, first, choose a time period, then divide the company's sales during that time period by the total sales of the related industry during the same time frame.
This measure can be used to get a rough sense of an organization's size with respect to its industry and rivals.
Market share seems to be a critical driver inside a business, with a compounding effect. The larger the organization, the more easily it can supply products to clients and expand its market share. As that business increases its market share, the cycle repeats itself.
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