Market share

Market share is an important sales and business metric which states the share of total industry or product sales which are made by a business or organization of a product or group of similar products and services. The market is usually defined as the quantity of sales of a certain product or group of similar products will have in a specific year in a certain geographic area. The share will be the amount of sales that a given business or organization achieves in that year divided by the total market size.

In corporate strategy the market share of the different players within the industry can provide insights into the players themselves, competitive advantage of players and into the industry itself. Market shares of the different players in the industry can point to a fragmented or consolidated industry with few players or an oligopoly for example.

Market shares can tell different things at the different life cycle stages of an industry. Large market shares could indicate a number of things such as an early pioneer firm in a new industry; their large market share will most likely be eroded with the entrant of new competitors, or a stable large firm in a mature industry with a well cemented brand name. Many of the competitive forces in an industry as well as brand, product quality and pricing have big impacts on a firm’s market share. Apart form structural characteristics of an industry, the business strategy of the firm, use of industry structure and forces and the decisions management make will ultimately influence market share.