Understanding Market Share

What Is Market Share & How Do You Calculate It?

​Many businesses want to know their share of the market to gain an understanding of how successful they are, and how much potential there is for further growth. Market share is an important metric for any business that wants to remain competitive and stay ahead of the competition.
Calculating market share can be done in a few different ways, depending on what type of business you have. The most common way to calculate market share is by looking at total sales within a particular industry. This means looking at all the competitors in your industry and totaling up their sales figures. Once you have that number, you can then divide it by your own total sales to calculate your market share.
For example, if there are ten competitors in your industry with each having annual sales of $100 million, then the total industry sales would be $1 billion. If your own company had annual sales of $200 million, then you would have a 20% market share—or two times greater than the average competitor.
It's important to note that calculating market share isn't just about measuring actual money earned through sales or profits—it's also about gaining insight into customers' behavior and preferences. For example, if a company has many customers but only a small percentage actually buy products or services from that company, then that indicates that those customers prefer other companies' products or services over theirs and this could spell trouble for future growth prospects. Similarly, if one company has a larger customer base but is selling fewer products than its competitors, this could indicate problems with its product line-up or customer service offerings.
Online businesses can use different methods for calculating their market share because most online services are free or require a subscription fee instead of an outright purchase price. In this case, companies will typically look at usage data such as page views or user engagement metrics like time spent on site as indicators of success and try to compare these figures against their peers within the same space. This can give them an indication as to whether they're gaining enough traction among users relative to other players in the field who may be providing similar services and products.
Overall, understanding market share is essential for businesses who wish to remain competitive — both online and offline — and make informed decisions about which strategies are working best for driving growth and long-term success. By considering both traditional measures such as total sales along with more modern metrics like usage data or social media engagement numbers, companies can get a better idea of where they stand in relation to their competitors and make adjustments accordingly, so they stay ahead of the competition every step of the way! For a comprehensive review of your company online, contact us.