Market Share is a valuable indicator for a company to assess its level of competitiveness in a market. It is essential for organizations of all kinds and can help a business's growth strategy.
In practice, Market Share is a simple indicator to understand.
Despite this, it remains one of the most relevant KPIs for a company's strategy, as it helps it understand its real size in relation to the market and the competitors it faces.
This is a definitive guide that simplifies the subject and explains what Market Share is, why it is important, how to calculate it and, above all, how to increase it. How about learning all this? Keep reading !
What is Market Share ?
Market share is a performance indicator used by senegal whatsapp data companies, which represents their percentage of market share in relation to the market in which they are inserted, considering a specific period of time.
Typically, this indicator is related to the percentage of a company's sales compared to the total sales volume of its industry.
That is, for example: if a specific market recorded revenues of US$ 1 million in a given year, only the company that totaled US$ 500 thousand in sales has 50% of the share.
In practice, however, market share can be calculated based on sales volume or total sales value.
Thus, this indicator is especially useful for measuring the size or relevance of a company within its sector and in relation to its competitors.
It's a more objective, tactile, and measurable way to convey the results behind your company's efforts, investments (or cost reductions), and launches.
What is the importance of this indicator?
To the uninitiated, a few percentage points indicating a company's market share may not seem like much. After all, what is the real significance of market share?
The point is that understanding your level of market share is not just a way to understand the “size” of your company relative to competitors.
In fact, it is a strategic indicator that can help your company guide its decision-making .
In other words, we are talking about a KPI that not only represents the monetary value behind a brand, but its value to customers, i.e. its reputation.
Of course, companies with high engagement rates tend to remain strong players in the market.
For small producers, however, the goal of increasing their market share is a way to maximize their reputation, renew their image and, of course, increase their income.
That way, by understanding your market share, you can:
better manage their investments;
simplify scaling your operation;
develop new products;
Increase your profitability.
By analyzing your operation through the lens of market share, your company can understand its position in the industry in which it operates: prominent, stable, or threatened , if market share is low.
In addition, companies with a high market share can take advantage of some competitive advantages, such as ease of entry into other markets, as well as greater bargaining power with suppliers.
Knowing the types of Market Share
There are two types of Market Share, that is, two ways of calculating this indicator: value-based and volume-based .
The difference between the two is very easy to understand, check it out:
The value indicator is related to the company's revenue and its market.
Thus, the goal is to understand the level of revenue share of the company compared to the overall revenue of its market.
In addition, we have the volume share, which analyses the total number of sales in relation to sales made by the entire market.
An example that simplifies the understanding of their difference is the following:
Stop and think about the comparison of the participation of these three vehicle brands: Volkswagen, Fiat and Ferrari.