What is the market share?
Market share represents the percentage of an industry, or the total sales of a market, This is by a specific company, Is acquired within a specified period. For example, Coca-Cola has had a market share of about 40-50% of soft drink sales in the United States for many years. The total of the company in a given period And divides by the total sales volume of the sales industry over the same period, Market shares are calculated.
Market share formula
Market share can be divided by industry, product class or specific product. Apple, for example, has a huge market share in the smartphone industry, But it has a small market share in the computer industry. This metric is a company’s market And used to give a general idea about its competitors. The market leader of an industry is the one with the largest or most market share.
Why is market share important?
Simply put, market share is a key indicator of a company’s competitiveness. When a company increases its market share, This can increase its profitability. This is because as companies grow in size, They can also scale, So sell products at lower prices And limits the growth of their competitors.
In some cases, companies push competitors Or to force them to go bankrupt, Can work and sell products at a loss. After a while, the company increased its market share, And bankrupts competitors, It can increase the price of things to make more profit. In the stock market, market share can greatly affect the share price, Especially in the circular industry when margins are narrow and competition is intense. Any significant difference in market share could trigger the weakness or strength of investor sentiment.
Advantages of market share:
- To increase the market share of a company to make the company work harder, May allow you to take risks and increase profits. This gives the company an advantage over its competitors, That means reducing the price of things.
- Increasing market share helps increase a company’s total sales. When buyers notice a brand’s trust in most of their peers, Then the rest of the buyer easily agrees to buy that product.
- Increasing market share helps a company grow its customer base. When the majority of buyers are loyal to a brand or product, Then the rest followed.
- Increasing market share helps to enhance a company’s reputation. A good reputation, in turn, helps drive sales and build a customer base.
- As market share increases, A company increases its dominance over the industry in which it operates.
- With increasing dominance over the industry, A company may bargain more with raw material suppliers. The company may bargain with suppliers and distribution channel members for its convenience.