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Market Share in a Business Plan

… so our market share should be …

To illustrate suppose the served available market (SAM) is 4.5 million and we expect to obtain 1% of this market. In this case the serviceable obtainable market (SOM) is calculated as follows.

The SOM is not normally calculated using a bottom up approach. However, it is a useful exercise to perform the calculation to see whether the business is able to operate at a level indicated by the estimated market share.

To illustrate suppose we have market size estimates for SAM of 4.5 million in year one rising to 7.59 million in year five. Additionally based on available resources (staff, equipment, funding etc.), the business estimates that it can deal with 300 customers in year one and 1600 customers in year five. Assuming an average value per customer of 150, we can calculate a bottom up market share as follows.

Using its available resources the business can support the market share calculated above. Consequently if the top down estimate of SOM is much larger than this the business need to rethink its plan to ensure compatibility with resources available.

Market Share Presentation

The investor will view the SOM as the short term target for the business. They will be looking for this to be achieved without too many problems to show that the business idea has potential. If the business can achieve the SOM then with further investment, it should be able to penetrate the SAM even further.

This is part of the financial projections and Contents of a Business Plan Guide . The guide is a series of posts on what each section of a simple business plan should include. The next post in this series sets out details of the marketing strategy which the business intends to use to win its share of the market.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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What Is Market Share & How Do You Calculate It?

Published: December 07, 2022

In the marketing industry, you've likely heard the term "market share" from time to time, but what does it mean? Why is it necessary, and how is it calculated?

As marketers, it's important to understand market share so you know how your company ranks against competitors and can develop new marketing strategies to reach more potential customers. In this post, we’ll outline what market share is, how to calculate it, give real-life examples, and explain how you can increase yours.

What is market share?

Market share formula.

Relative Market Share  

Relative Market Share Formula

Market share examples.

How to Expand Your Market Share

Understand Your Market Share to Increase Business Success

Market share is the percentage of an industry's sales that a particular company owns. Essentially, it is the share of your business's total industry revenue from selling your products and services. Businesses with larger market shares are industry leaders and competition for smaller companies.

Suppose consumers buy 100 T-shirts, and 70 are from Company A, 25 from Company B, and 5 from Company C. In that case, Company A owns a market share of 70% and is the leading industry competitor .

Market share is typically calculated for a specific period, like yearly or quarterly sales, and is sometimes separated by region.

How to Calculate Market Share

Find your business’s total sales revenue for your preferred period and divide that number by your industry’s total revenue during the same period. Once you have this result, multiply the number by 100 to generate your market share percentage.

Calculating your market share will give you an overall understanding of your position in the industry, but it’s also helpful to understand how you measure up to your direct competitors. By understanding the basics of the stock market , you can easily understand how each company and their share make up the entire industry.

Relative Market Share

Relative market share compares your performance to industry leaders.

Rather than using total industry revenue, you’re dividing your market share by your top competitor's market share, multiplying the result by 100. The result will show you the portion of the market you own in relation to your most significant competitor. The image below shows the relative market share formula.

It may be easier to understand market share with real-life examples, so we’ll go over some below for businesses you may already be familiar with.

Nike Market Share

Nike is part of the athletic footwear and apparel industry, selling various sports equipment, casual shoes, and accessories.

Nike’s global market share in sportswear is estimated to be 43.7% . The brand is an industry competitor for Adidas and Under Armour.

Tesla Market Share

Tesla is part of the automotive industry and produces electric vehicles (EVs). Within the U.S. EV industry, Tesla holds an over 70% market share.

It's essential to recognize that the market for EVs worldwide is significantly smaller than standard vehicles. EV’s market share in the automobile industry is 2.8%, and Tesla’s is .8% . These differences are significant, so it is vital to analyze relative market share to compare your business to your direct competitors rather than just the market as a whole.

Spotify is a music-streaming platform and has the highest music-streaming market share with 31% of the market.

The second-highest market share belongs to Apple Music (15%), followed by Amazon Music (13), Tencent (13%), and YouTube (8%).

E-commerce company Amazon has a U.S. e-commerce market share of 37.8% and is the leading online retailer in the country. Second place belongs to Walmart with 6.3%, and third place goes to Apple with 3.9%.

Most recent statistics show Target is the largest department store retailer in the U.S. with a 38% market share. Walmart and Macy's both rank second with 13%.

Chew is an online pet product and food retailer with a market share of 40% in the U.S. The company plans to expand into the global market in 2024 and is expected to gain a 20% market share outside of the U.S. by 2030.

Google Market Share

Google has a market share of 92.37% , making it the most popular search engine in the world. It dominates the competition, as the second-largest industry leader is Bing with a market share of just 3.57%.

Once you’ve calculated your market share and understand how you relate to your industry competitors, you can begin strategizing how to increase your overall revenue.

How To Expand Your Market Share

Below are a few strategies your company can use to expand your market share .

1. Lower prices.

A great way to compete in your industry is to offer low prices. This is the low-hanging fruit of expanding your market share because consumers typically look for lower-cost products.

However, it's also important to note that the cheap option isn't right for every brand. You want to ensure that you’re pricing products appropriately to provide value to customers but not lose out on revenue opportunities to beat the competition.

2. Innovate new products and features.

Companies innovating and bringing new technology to the table often see their market share increase.

New products and features attract new customers, also known as acquisition , which is a driving factor for generating revenue. New customers make new purchases and, in turn, contribute to higher profit margins and larger contributions to overall industry revenue. More significant contributions directly translate to increased market share.

3. Delight your customers.

One of the best ways to grow your market share is to work on existing customer relationships.

You can inspire customer loyalty by delighting current customers by providing exceptional experiences and customer loyalty. Loyal customers are more likely to make repeat purchases, which increases your business revenue and contribution to total industry revenue. As mentioned above, higher revenue contributions equal a higher market share percentage.

4. Increase brand awareness.

Branding awareness and national marketing play a significant role in capturing market share. Getting your name out there is important, so customers know who you are. Becoming a household name and the preferred brand in an industry will help increase your market share.

Generally, larger companies have the highest market share because they can provide products and services more efficiently and effectively.

But why is this so important? Below, let's figure out what impact market share can have on your company.

Why is market share important?

Calculating market share lets companies know how competitive they are in their industry. Additionally, the more market share a company has, the more innovative, appealing, and marketable they are.

Market share is more important in industries that are based on discretionary income. Market share doesn't always have a significant impact in constantly growing industries. However, it's important to remember that a company can have too much market share — also known as a monopoly.

For example, with growing industries with a growing market share, companies can still increase their sales even if they lose market share.

On the other hand, with discretionary income industries, such as travel or non-essential goods like entertainment and leisure, the economy can significantly impact market share. Sales and margins can vary depending on the time of year, meaning that competition is always at an all-time high.

Higher competition often leads to risky strategies. For instance, companies might be willing to lose money temporarily to force competitors out of the industry and gain more market share. Once they have more market share, they can raise prices.

Lower market shares can let you know that you need to focus on customer acquisition, marketing to raise brand awareness, and overall strategies to increase revenue. Higher percentages indicate that your current plan is adequate and that you should focus on customer retention and product innovation.

Whether your company is well-established or just starting, it’s important to understand your industry standing as it will help you meet business objectives and achieve desired success.

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How to Write a Market Analysis for a Business Plan

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A lot of preparation goes into starting a business before you can open your doors to the public or launch your online store. One of your first steps should be to write a business plan . A business plan will serve as your roadmap when building your business.

Within your business plan, there’s an important section you should pay careful attention to: your market analysis. Your market analysis helps you understand your target market and how you can thrive within it.

Simply put, your market analysis shows that you’ve done your research. It also contributes to your marketing strategy by defining your target customer and researching their buying habits. Overall, a market analysis will yield invaluable data if you have limited knowledge about your market, the market has fierce competition, and if you require a business loan. In this guide, we'll explore how to conduct your own market analysis.

How to conduct a market analysis: A step-by-step guide

In your market analysis, you can expect to cover the following:

Industry outlook

Target market

Market value

Competition

Barriers to entry

Let’s dive into an in-depth look into each section:

Step 1: Define your objective

Before you begin your market analysis, it’s important to define your objective for writing a market analysis. Are you writing it for internal purposes or for external purposes?

If you were doing a market analysis for internal purposes, you might be brainstorming new products to launch or adjusting your marketing tactics. An example of an external purpose might be that you need a market analysis to get approved for a business loan .

The comprehensiveness of your market analysis will depend on your objective. If you’re preparing for a new product launch, you might focus more heavily on researching the competition. A market analysis for a loan approval would require heavy data and research into market size and growth, share potential, and pricing.

Step 2: Provide an industry outlook

An industry outlook is a general direction of where your industry is heading. Lenders want to know whether you’re targeting a growing industry or declining industry. For example, if you’re looking to sell VCRs in 2020, it’s unlikely that your business will succeed.

Starting your market analysis with an industry outlook offers a preliminary view of the market and what to expect in your market analysis. When writing this section, you'll want to include:

Market size

Are you chasing big markets or are you targeting very niche markets? If you’re targeting a niche market, are there enough customers to support your business and buy your product?

Product life cycle

If you develop a product, what will its life cycle look like? Lenders want an overview of how your product will come into fruition after it’s developed and launched. In this section, you can discuss your product’s:

Research and development

Projected growth

How do you see your company performing over time? Calculating your year-over-year growth will help you and lenders see how your business has grown thus far. Calculating your projected growth shows how your business will fare in future projected market conditions.

Step 3: Determine your target market

This section of your market analysis is dedicated to your potential customer. Who is your ideal target customer? How can you cater your product to serve them specifically?

Don’t make the mistake of wanting to sell your product to everybody. Your target customer should be specific. For example, if you’re selling mittens, you wouldn’t want to market to warmer climates like Hawaii. You should target customers who live in colder regions. The more nuanced your target market is, the more information you’ll have to inform your business and marketing strategy.

With that in mind, your target market section should include the following points:

Demographics

This is where you leave nothing to mystery about your ideal customer. You want to know every aspect of your customer so you can best serve them. Dedicate time to researching the following demographics:

Income level

Create a customer persona

Creating a customer persona can help you better understand your customer. It can be easier to market to a person than data on paper. You can give this persona a name, background, and job. Mold this persona into your target customer.

What are your customer’s pain points? How do these pain points influence how they buy products? What matters most to them? Why do they choose one brand over another?

Research and supporting material

Information without data are just claims. To add credibility to your market analysis, you need to include data. Some methods for collecting data include:

Target group surveys

Focus groups

Reading reviews

Feedback surveys

You can also consult resources online. For example, the U.S. Census Bureau can help you find demographics in calculating your market share. The U.S. Department of Commerce and the U.S. Small Business Administration also offer general data that can help you research your target industry.

Step 4: Calculate market value

You can use either top-down analysis or bottom-up analysis to calculate an estimate of your market value.

A top-down analysis tends to be the easier option of the two. It requires for you to calculate the entire market and then estimate how much of a share you expect your business to get. For example, let’s assume your target market consists of 100,000 people. If you’re optimistic and manage to get 1% of that market, you can expect to make 1,000 sales.

A bottom-up analysis is more data-driven and requires more research. You calculate the individual factors of your business and then estimate how high you can scale them to arrive at a projected market share. Some factors to consider when doing a bottom-up analysis include:

Where products are sold

Who your competition is

The price per unit

How many consumers you expect to reach

The average amount a customer would buy over time

While a bottom-up analysis requires more data than a top-down analysis, you can usually arrive at a more accurate calculation.

Step 5: Get to know your competition

Before you start a business, you need to research the level of competition within your market. Are there certain companies getting the lion’s share of the market? How can you position yourself to stand out from the competition?

There are two types of competitors that you should be aware of: direct competitors and indirect competitors.

Direct competitors are other businesses who sell the same product as you. If you and the company across town both sell apples, you are direct competitors.

An indirect competitor sells a different but similar product to yours. If that company across town sells oranges instead, they are an indirect competitor. Apples and oranges are different but they still target a similar market: people who eat fruits.

Also, here are some questions you want to answer when writing this section of your market analysis:

What are your competitor’s strengths?

What are your competitor’s weaknesses?

How can you cover your competitor’s weaknesses in your own business?

How can you solve the same problems better or differently than your competitors?

How can you leverage technology to better serve your customers?

How big of a threat are your competitors if you open your business?

Step 6: Identify your barriers

Writing a market analysis can help you identify some glaring barriers to starting your business. Researching these barriers will help you avoid any costly legal or business mistakes down the line. Some entry barriers to address in your marketing analysis include:

Technology: How rapid is technology advancing and can it render your product obsolete within the next five years?

Branding: You need to establish your brand identity to stand out in a saturated market.

Cost of entry: Startup costs, like renting a space and hiring employees, are expensive. Also, specialty equipment often comes with hefty price tags. (Consider researching equipment financing to help finance these purchases.)

Location: You need to secure a prime location if you’re opening a physical store.

Competition: A market with fierce competition can be a steep uphill battle (like attempting to go toe-to-toe with Apple or Amazon).

Step 7: Know the regulations

When starting a business, it’s your responsibility to research governmental and state business regulations within your market. Some regulations to keep in mind include (but aren’t limited to):

Employment and labor laws

Advertising

Environmental regulations

If you’re a newer entrepreneur and this is your first business, this part can be daunting so you might want to consult with a business attorney. A legal professional will help you identify the legal requirements specific to your business. You can also check online legal help sites like LegalZoom or Rocket Lawyer.

Tips when writing your market analysis

We wouldn’t be surprised if you feel overwhelmed by the sheer volume of information needed in a market analysis. Keep in mind, though, this research is key to launching a successful business. You don’t want to cut corners, but here are a few tips to help you out when writing your market analysis:

Use visual aids

Nobody likes 30 pages of nothing but text. Using visual aids can break up those text blocks, making your market analysis more visually appealing. When discussing statistics and metrics, charts and graphs will help you better communicate your data.

Include a summary

If you’ve ever read an article from an academic journal, you’ll notice that writers include an abstract that offers the reader a preview.

Use this same tactic when writing your market analysis. It will prime the reader of your market highlights before they dive into the hard data.

Get to the point

It’s better to keep your market analysis concise than to stuff it with fluff and repetition. You’ll want to present your data, analyze it, and then tie it back into how your business can thrive within your target market.

Revisit your market analysis regularly

Markets are always changing and it's important that your business changes with your target market. Revisiting your market analysis ensures that your business operations align with changing market conditions. The best businesses are the ones that can adapt.

Why should you write a market analysis?

Your market analysis helps you look at factors within your market to determine if it’s a good fit for your business model. A market analysis will help you:

1. Learn how to analyze the market need

Markets are always shifting and it’s a good idea to identify current and projected market conditions. These trends will help you understand the size of your market and whether there are paying customers waiting for you. Doing a market analysis helps you confirm that your target market is a lucrative market.

2. Learn about your customers

The best way to serve your customer is to understand them. A market analysis will examine your customer’s buying habits, pain points, and desires. This information will aid you in developing a business that addresses those points.

3. Get approved for a business loan

Starting a business, especially if it’s your first one, requires startup funding. A good first step is to apply for a business loan with your bank or other financial institution.

A thorough market analysis shows that you’re professional, prepared, and worth the investment from lenders. This preparation inspires confidence within the lender that you can build a business and repay the loan.

4. Beat the competition

Your research will offer valuable insight and certain advantages that the competition might not have. For example, thoroughly understanding your customer’s pain points and desires will help you develop a superior product or service than your competitors. If your business is already up and running, an updated market analysis can upgrade your marketing strategy or help you launch a new product.

Final thoughts

There is a saying that the first step to cutting down a tree is to sharpen an axe. In other words, preparation is the key to success. In business, preparation increases the chances that your business will succeed, even in a competitive market.

The market analysis section of your business plan separates the entrepreneurs who have done their homework from those who haven’t. Now that you’ve learned how to write a market analysis, it’s time for you to sharpen your axe and grow a successful business. And keep in mind, if you need help crafting your business plan, you can always turn to business plan software or a free template to help you stay organized.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

On a similar note...

What is Market Share? Definition, Formula, Examples

Appinio Research · 15.04.2024 · 35min read

Ever wondered how businesses gauge their success in competitive markets? Market share holds the answer. In the dynamic world of commerce, understanding market share is like having a compass guiding you through the tumultuous seas of competition. But what exactly is market share? Simply put, it's the slice of the pie a company claims within its industry or market segment . It's the percentage of total sales or revenue a company captures compared to its competitors. But why does it matter? Well, imagine you're at a buffet. The dishes with the longest lines? They likely have the largest market share. Market share isn't just about bragging rights; it's about understanding where you stand in the grand scheme of things. It shapes how businesses strategize, invest, and innovate. It's a measure of competitiveness, a tool for growth, and a window into consumer preferences. From mom-and-pop shops to multinational corporations, market share is the compass guiding businesses towards success in the ever-evolving marketplace.

What is Market Share?

Importance of Market Share in Business

Market share plays a pivotal role in guiding strategic decision-making and shaping business performance across various dimensions. Its importance stems from its ability to provide valuable insights into a company's competitive standing, market dynamics, and growth opportunities.

Some key reasons why market share is crucial for businesses include:

• Competitive Positioning : Market share serves as a barometer of a company's competitive strength within its industry. A higher market share indicates a larger share of the market pie and a stronger competitive position relative to rivals.
• Strategic Planning : Market share data informs strategic planning initiatives by highlighting areas of strength and weakness. It helps businesses identify growth opportunities, competitive threats, and areas for improvement, guiding resource allocation and strategic priorities.
• Performance Evaluation : Monitoring changes in market share over time allows businesses to evaluate the effectiveness of their strategies and initiatives. It provides a yardstick for measuring performance, identifying trends, and assessing the impact of competitive actions or market dynamics.
• Customer Insights : Market share analysis provides insights into customer preferences, behavior , and market trends. By understanding which products or services resonate with customers and capture market share, businesses can tailor their offerings and marketing efforts to better meet customer needs and drive growth.
• Investor Perception : Market share is often viewed as a key performance indicator by investors, analysts, and stakeholders. A company with a growing market share is seen as more competitive, resilient, and attractive to investors, which can positively impact stock prices, valuations, and investor confidence.

How to Calculate Market Share?

Market share can be calculated based on various factors, such as units sold, revenue generated, or other relevant metrics, depending on the industry and market dynamics.

The formula for calculating market share is typically:

Market Share = (Company's Sales or Revenue/Total Market Sales or Revenue) × 100 Market Share = (Total Market Sales or Revenue/Company's Sales or Revenue)​ × 100

Suppose Company A and Company B are two leading players in the smartphone industry, competing for market dominance. To calculate their respective market shares, we'll use the following data:

• Company A's total smartphone sales revenue: $500 million
• Company B's total smartphone sales revenue: $700 million
• Total smartphone industry sales revenue: $3 billion

Calculating Company A's Market Share:

Company A's Market Share = (Company A's Sales Revenue / Total Industry Sales Revenue) * 100 Company A's Market Share = (500 million / 3 billion) * 100 = 16.67%

Calculating Company B's Market Share:

Company B's Market Share = (Company B's Sales Revenue / Total Industry Sales Revenue) * 100 Company B's Market Share = (700 million / 3 billion) * 100 = 23.33%

Interpretation:

• Company A holds a market share of 16.67%, indicating that it captures approximately 16.67% of the total smartphone industry's sales revenue.
• Company B boasts a higher market share of 23.33%, signifying its larger share of the smartphone market compared to Company A.

Market Share Analysis

Types of Market Share

When discussing market share, it's essential to recognize that there are different types that provide distinct insights into a company's position within its industry.

• Overall Market Share : This type of market share reflects the percentage of total sales or revenue that a company captures within its industry or market. It provides a broad perspective on the company's performance compared to its competitors.
• Segment Market Share : Segment market share focuses on a company's performance within specific segments or niches within the broader market . For example, a company may have a high segment market share in a particular geographic region or product category, even if its overall market share is lower.
• Relative Market Share : Relative market share compares a company's market share to that of its largest competitor. It helps gauge a company's competitive strength within its industry and its ability to command a significant portion of the market compared to its rivals.

Understanding the nuances of these different types of market share allows businesses to gain deeper insights into their competitive positioning and identify opportunities for growth within specific market segments.

Market Share vs. Market Size

While market share and market size are related concepts, they serve different purposes and provide distinct insights into a company's performance and the dynamics of its industry.

• Market Share : Market share represents the portion of total market sales or revenue that a company captures. It indicates the company's relative strength within its industry and its ability to compete effectively against other players in the market.
• Market Size : Market size refers to the total sales or revenue generated within a specific market or industry. It provides an understanding of the overall opportunity available within the market and helps businesses assess the potential for growth and expansion.

Understanding the relationship between market share and market size is essential for strategic planning and resource allocation. While market share indicates a company's competitive standing within its industry, market size provides context for assessing the scale of the opportunity and the potential for capturing additional market share.

Market Share Trends and Patterns

Analyzing market share trends and patterns provides valuable insights into the dynamics of an industry, shifts in consumer behavior, and emerging market opportunities. By tracking changes in market share over time, businesses can identify patterns, anticipate trends, and adjust their strategies accordingly.

• Seasonal Trends : Many industries experience seasonal fluctuations in demand, which can impact market share. Understanding seasonal trends allows businesses to adjust their strategies and resources accordingly to capitalize on peak periods of demand.
• Competitive Dynamics : Monitoring changes in competitors' market share can reveal valuable insights into shifts in competitive dynamics, emerging threats, and opportunities for differentiation.
• Consumer Preferences : Changes in consumer preferences and buying behavior can influence market share trends. By staying attuned to consumer preferences and adapting their offerings accordingly, businesses can maintain or increase their market share.
• Technological Advancements : Technological innovations and disruptions can significantly impact market share within certain industries. Companies that embrace new technologies and adapt their strategies accordingly can gain a competitive edge and capture market share from less agile competitors.

By analyzing market share trends and patterns, businesses can identify growth opportunities, anticipate challenges, and make informed decisions to enhance their competitive position within their industry.

Incorporating Appinio into market share analysis can revolutionize how businesses interpret and act upon market trends. By leveraging real-time consumer insights, companies can uncover hidden opportunities and stay ahead of industry shifts with agility and precision. With Appinio's intuitive platform and comprehensive global reach, conducting market share analysis becomes a seamless and efficient process.   Book a demo today and discover the power of Appinio in unlocking actionable insights for your business!

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Examples of Market Share Analysis

To better understand how market share analysis works in practice, let's explore some real-world examples across various industries:

Technology Sector

Consider the smartphone market, where major players like Apple, Samsung, and Huawei compete for market share. By analyzing sales data, customer preferences, and competitive strategies, companies can gain insights into their market share position and identify opportunities for growth .

For instance, Apple's market share dominance in premium smartphone segments highlights its brand strength and customer loyalty, while Huawei's focus on mid-range and budget-friendly devices has allowed it to capture market share in emerging markets.

Automotive Industry

In the automotive industry, market share analysis is crucial for understanding competitive dynamics and consumer trends. For example, Tesla's disruptive entry into the electric vehicle market has challenged traditional automakers like Ford and General Motors.

By monitoring Tesla's market share growth and innovative product offerings, competitors can adjust their strategies and investments to remain competitive in the evolving market landscape .

Fast-Moving Consumer Goods (FMCG)

In the FMCG sector , brands like Coca-Cola and PepsiCo fiercely compete for market share in the beverage industry. Through market share analysis, these companies track sales performance, consumer preferences, and market trends to inform product development and marketing strategies.

For instance, Coca-Cola's dominance in the carbonated soft drink market has prompted PepsiCo to diversify its product portfolio and invest in healthier beverage options to capture market share in the growing health-conscious consumer segment.

In the retail sector , e-commerce giants like Amazon and traditional brick-and-mortar retailers like Walmart engage in intense competition for market share. By leveraging data analytics and customer insights, these companies optimize pricing strategies, product assortments, and customer experiences to attract and retain customers.

For example, Amazon's market share dominance in online retail has prompted Walmart to invest heavily in e-commerce capabilities and omnichannel initiatives to compete effectively in the digital marketplace.

Pharmaceutical Industry

In the pharmaceutical industry, companies like Pfizer and Novartis analyze market share data to assess the performance of their drug portfolios and therapeutic areas. By tracking prescription volumes, market penetration, and competitor activities, pharmaceutical companies can identify opportunities for portfolio optimization and strategic partnerships.

For instance, Pfizer's market share leadership in certain therapeutic categories has led to strategic acquisitions and collaborations to expand its market presence and address unmet medical needs.

Benefits of Monitoring Market Share

Understanding the benefits of monitoring market share is crucial for businesses seeking to gain a competitive edge and drive growth. By tracking and analyzing market share data, companies can unlock valuable insights that inform strategic decision-making across various aspects of their operations.

Competitive Positioning

One of the primary benefits of monitoring market share is gaining insights into your competitive positioning within the industry. By comparing your company's market share to that of competitors, you can assess your relative strength and identify areas where you may be lagging behind or excelling.

• Benchmarking : Market share data serves as a benchmark against which you can measure your performance compared to competitors. It provides valuable context for evaluating your market presence and identifying opportunities for improvement.
• Competitor Analysis : Monitoring changes in competitors' market share allows you to gauge their strategies, strengths, and weaknesses. This insight enables you to adjust your own strategies accordingly, whether it involves fortifying your competitive advantages or capitalizing on competitors' vulnerabilities.
• Market Dynamics : Understanding your competitive positioning within the market helps you anticipate shifts in market dynamics and respond proactively. By staying ahead of the competition, you can maintain or enhance your market share and strengthen your position in the industry.

Identifying Growth Opportunities

Monitoring market share provides businesses with valuable insights into potential growth opportunities within their industry or market segments. By analyzing market share data, you can identify underserved market segments, emerging trends, and areas where you have the potential to expand your presence.

• Market Segmentation : Segment-level analysis of market share data allows you to identify specific market segments or niches where you have the opportunity to gain traction. This insight enables you to tailor your strategies to address the unique needs and preferences of different customer segments .
• Untapped Markets : Market share analysis helps uncover untapped or underexploited markets where you have the potential to increase your presence and capture additional market share. By identifying these opportunities, you can allocate resources strategically to pursue growth in new markets.
• Innovation Opportunities : Understanding market share dynamics can inspire innovation by revealing gaps in the market or unmet customer needs. By leveraging market share insights, you can develop innovative products or services that resonate with customers and differentiate your brand in the marketplace.

Evaluating Marketing Strategies

Market share analysis plays a crucial role in evaluating the effectiveness of your marketing strategies and campaigns. By tracking changes in market share following marketing initiatives, you can assess their impact on your brand's visibility, customer engagement, and market penetration.

• Campaign Performance : Analyzing market share data allows you to measure the effectiveness of your marketing campaigns in driving brand awareness, customer acquisition, and sales. By correlating changes in market share with specific marketing activities, you can identify which strategies are yielding the highest return on investment.
• Competitive Advantage : Market share analysis helps you identify opportunities to gain a competitive advantage through strategic marketing initiatives. By understanding your strengths and weaknesses relative to competitors, you can develop targeted marketing campaigns that capitalize on your unique selling propositions and resonate with your target audience.
• Optimization Opportunities : Market share data provides insights into areas where your marketing efforts may be falling short or underperforming. By identifying areas for improvement, you can refine your marketing strategies, allocate resources more effectively, and optimize your marketing mix to drive better results.

Assessing Product Performance

Monitoring market share is essential for assessing the performance of your products or services within the marketplace. By analyzing changes in market share for specific products or product categories, you can gauge their competitiveness, customer appeal, and overall contribution to your company's success.

• Product Differentiation : Market share analysis helps you assess the degree of differentiation and competitive advantage offered by your products compared to alternatives in the market. By understanding how your products stack up against competitors, you can refine your product offerings to better meet customer needs and preferences.
• Customer Satisfaction : Changes in market share can be indicative of shifts in customer satisfaction and loyalty. By correlating changes in market share with customer feedback and satisfaction metrics, you can identify areas where improvements are needed to enhance the customer experience and drive loyalty.
• Portfolio Management : Market share analysis enables you to evaluate the performance of your product portfolio and make informed decisions about product development, expansion, or discontinuation. By identifying products with declining market share or low profitability, you can reallocate resources to more promising opportunities and streamline your product portfolio for greater efficiency and effectiveness.

In summary, monitoring market share offers numerous benefits for businesses, including insights into competitive positioning, growth opportunities, marketing effectiveness, and product performance. By leveraging market share data, companies can make informed strategic decisions that drive sustainable growth and competitive advantage in their respective industries.

Factors Influencing Market Share

Understanding the various factors that influence market share is essential for businesses seeking to maintain or increase their competitive position within their industry. From product quality and pricing strategies to distribution channels and customer experience, numerous elements can impact a company's ability to capture and retain market share.

Product Quality and Innovation

Product quality and innovation are fundamental drivers of market share. A company that consistently delivers high-quality products that meet or exceed customer expectations is likely to gain market share over competitors offering inferior products.

Innovation plays a crucial role in maintaining relevance and competitiveness in rapidly evolving markets. By continuously innovating and introducing new features or technologies, companies can differentiate themselves from competitors and attract customers seeking innovative solutions.

Pricing Strategy

Pricing strategy directly influences market share by affecting customer purchasing decisions and competitive positioning. A company that adopts a competitive pricing strategy, offering products at prices that are perceived as fair and reasonable relative to their value, is likely to capture a larger share of the market.

However, pricing too low may erode profitability, while pricing too high may deter price-sensitive customers and result in a loss of market share. Strategic pricing decisions should consider factors such as production costs, competitor pricing, and perceived value to customers.

Distribution Channels

Effective distribution channels play a critical role in reaching target customers and increasing market share. Companies with efficient distribution networks can ensure that their products are readily available to customers when and where they need them.

Whether through direct sales, retailers, e-commerce platforms, or partnerships with distributors, choosing the right distribution channels is essential for maximizing market penetration and expanding reach. Additionally, seamless logistics and supply chain management are essential for ensuring timely delivery and maintaining customer satisfaction.

Branding and Marketing Efforts

Strong branding and effective marketing efforts are essential for building awareness, credibility, and preference for a company's products or services. Branding goes beyond logos and visual identity ; it encompasses the overall perception and reputation of a brand in the minds of consumers.

By investing in branding initiatives that communicate value, differentiate the brand from competitors, and resonate with the target audience, companies can increase market share and foster customer loyalty. Similarly, strategic marketing efforts that target the right audience , convey compelling messages, and utilize the appropriate channels can drive customer acquisition and retention, ultimately leading to increased market share.

Customer Experience and Satisfaction

Customer experience and satisfaction are critical drivers of market share. In today's competitive marketplace, delivering exceptional customer experiences at every touchpoint is essential for retaining existing customers and attracting new ones. Positive experiences lead to higher levels of customer satisfaction, loyalty, and advocacy, which, in turn, translate into increased market share through repeat purchases and positive word-of-mouth referrals.

Conversely, poor customer experiences can result in customer churn, negative reviews, and damage to brand reputation, ultimately leading to loss of market share. Therefore, companies must prioritize customer-centricity, listen to customer feedback , and continuously strive to improve the overall customer experience across all interactions.

How to Increase Market Share?

Expanding your market share requires a strategic approach that encompasses various tactics and initiatives aimed at attracting new customers, retaining existing ones, and outperforming competitors. From product development and pricing strategies to market penetration tactics and strategic partnerships, there are numerous methods businesses can employ to increase their market share.

Product Development and Innovation

• Continuous Improvement : Regularly assess customer needs and preferences to identify areas for product enhancement or innovation.
• Research and Development : Invest in research and development efforts to stay ahead of the competition and introduce new products or features that address emerging market trends or customer demands.
• Differentiation : Differentiate your products from competitors by offering unique features, superior quality, or innovative solutions that provide tangible value to customers.
• Customer Feedback : Gather feedback from customers through surveys , focus groups , or social media to understand their preferences and incorporate their input into product development processes.

Pricing Strategies

• Competitive Pricing : Analyze competitors' pricing strategies and adjust your prices to remain competitive while still maintaining profitability.
• Value-Based Pricing : Emphasize the value proposition of your products or services to justify premium pricing and differentiate yourself from lower-priced competitors.
• Promotional Pricing : Offer discounts, promotions, or bundled pricing strategies to attract price-sensitive customers and encourage trial or repeat purchases.
• Dynamic Pricing : Utilize dynamic pricing algorithms to adjust prices in real-time based on demand, competitor pricing, or other market variables to maximize revenue and market share.

Market Penetration Tactics

• Expand Distribution Channels : Increase market penetration by expanding into new geographic regions or distribution channels to reach untapped customer segments.
• Product Bundling : Bundle complementary products or services together to offer greater value to customers and encourage larger purchases.
• Aggressive Marketing : Launch targeted marketing campaigns or promotions to raise awareness, generate interest, and drive customer acquisition.
• Price Leadership : Establish yourself as a price leader in the market by consistently offering the lowest prices or best value proposition, attracting price-conscious consumers.

Strategic Partnerships and Alliances

• Collaborative Ventures : Form strategic partnerships or alliances with complementary businesses or industry stakeholders to leverage each other's strengths and resources.
• Joint Marketing Efforts : Collaborate on marketing campaigns or co-branding initiatives to amplify reach, increase brand visibility, and attract new customers.
• Distribution Partnerships : Partner with distributors, retailers, or online platforms to expand your product's distribution reach and access new markets or customer segments.
• Technology Partnerships : Collaborate with technology partners to integrate your products or services with theirs, offering enhanced value propositions or expanded functionality to customers.

Marketing and Advertising Campaigns

• Targeted Advertising : Utilize data-driven insights to identify and target specific customer segments with personalized advertising messages and offers.
• Content Marketing : Create informative, engaging content that positions your brand as a thought leader in your industry and attracts potential customers through inbound marketing efforts.
• Social Media Marketing : Leverage social media platforms to engage with customers, build brand awareness , and drive traffic to your website or online store.
• Influencer Partnerships : Partner with influencers or industry experts to endorse your products or services and reach their followers with authentic, trusted recommendations.

Implementing a combination of these methods tailored to your business's unique strengths, market conditions, and target audience can help drive sustained growth and increase your market share over time.

Market Share Analysis Tools and Techniques

Analyzing market share requires the utilization of various tools and techniques to gather data, gain insights, and make informed strategic decisions. From traditional market research methods to advanced data analytics and software solutions, businesses have a plethora of options available to conduct comprehensive market share analysis.

Surveys and Market Research

Surveys and market research serve as foundational tools for gathering valuable insights into consumer preferences, behavior, and market dynamics. By collecting data directly from customers or target demographics, businesses can obtain actionable information to inform their market share analysis and strategic planning efforts.

• Customer Surveys : Conducting surveys allows businesses to gather feedback directly from customers regarding their preferences, satisfaction levels, and purchasing behavior. This data provides valuable insights into factors influencing market share and helps identify opportunities for improvement.
• Market Segmentation : Market segmentation studies divide the target market into distinct groups based on demographic , psychographic , or behavioral characteristics. By understanding the unique needs and preferences of different customer segments, businesses can tailor their strategies to effectively target and capture market share within each segment.

When conducting market share analysis, leveraging tools like Appinio for data collection can be a game-changer. By seamlessly integrating consumer feedback into your analysis process, you gain invaluable insights that drive strategic decision-making and bolster your market share. With Appinio's intuitive platform and global reach, unlocking actionable insights has never been easier.

Ready to supercharge your market share strategies? Book a demo today and see the power of real-time consumer insights in action!

Competitive Intelligence

Competitive intelligence involves gathering and analyzing information about competitors' strategies, strengths, weaknesses, and performance to gain insights and identify opportunities for competitive advantage. By monitoring competitors' market share, product offerings, pricing strategies, and marketing initiatives, businesses can benchmark their performance and develop strategies to outperform competitors and gain market share.

• Competitor Analysis : Conducting thorough competitor analysis allows businesses to assess competitors' market share position, identify areas of vulnerability, and capitalize on opportunities for differentiation. By understanding competitors' strategies and tactics, businesses can refine their own strategies to gain a competitive edge and increase market share.
• Benchmarking : Benchmarking compares key performance metrics, such as market share, sales growth, and profitability, against industry peers or best-in-class competitors. Benchmarking provides valuable insights into areas where a company may be underperforming relative to competitors and informs strategic initiatives to close performance gaps and improve market share.

Data Analytics and Software Solutions

Advancements in data analytics and software solutions have revolutionized market share analysis by enabling businesses to analyze large volumes of data quickly and efficiently, uncovering actionable insights and trends that drive strategic decision-making.

• Market Share Tracking Tools : Market share tracking tools aggregate data from various sources, such as sales data, customer surveys, and industry reports, to provide real-time visibility into market share trends and performance metrics. These tools enable businesses to monitor changes in market share, assess the impact of strategic initiatives, and make data-driven decisions to optimize market share growth.
• Predictive Analytics : Predictive analytics leverages historical data and statistical algorithms to forecast future market trends, customer behavior, and competitive dynamics. By identifying patterns and correlations in market data, predictive analytics empowers businesses to anticipate market shifts, proactively respond to changing conditions, and position themselves for success in the marketplace.

SWOT Analysis

SWOT analysis is a strategic planning tool that evaluates a company's strengths, weaknesses, opportunities, and threats to inform decision-making and strategy development. By conducting a SWOT analysis, businesses can assess their internal capabilities, external market conditions, and competitive landscape to identify areas for improvement and opportunities for growth.

Market Share Dashboards and Reports

Market share dashboards and reports provide comprehensive visualizations and analysis of market share data, enabling businesses to track performance, identify trends, and communicate insights effectively across the organization.

• Visualizations : Market share dashboards utilize charts, graphs, and other visualizations to present market share data in a clear and intuitive format, enabling stakeholders to quickly understand trends and performance metrics.
• Key Performance Indicators (KPIs) : Market share dashboards typically include key performance indicators, such as market share by product category, geographic region, or customer segment, to provide insights into performance drivers and areas for improvement.
• Customization : Market share dashboards can be customized to meet the specific needs of different stakeholders, allowing users to drill down into detailed data, compare performance over time, and generate actionable insights tailored to their roles and responsibilities.

By leveraging a combination of these tools and techniques, businesses can conduct comprehensive market share analysis, gain valuable insights into market dynamics, and develop strategies to increase their market share and drive sustainable growth.

Market Share Analysis Challenges

Analyzing market share comes with its own set of challenges and potential pitfalls that businesses must navigate to ensure accurate interpretation and effective decision-making. Understanding these challenges is essential for mitigating risks and maximizing the value derived from market share analysis.

• Data Accuracy and Reliability : Market share analysis relies on accurate and reliable data sources. However, obtaining accurate market share data can be challenging due to factors such as incomplete or outdated data, inaccuracies in reporting, and discrepancies between different data sources. Ensuring data accuracy and reliability requires rigorous validation processes and cross-referencing multiple sources to verify the integrity of the data .
• Interpreting Market Share Changes : Fluctuations in market share can be influenced by various factors, including changes in consumer behavior, competitive dynamics, and market conditions. However, interpreting the reasons behind these changes accurately can be complex and requires careful analysis of multiple factors. Failing to accurately interpret market share changes can lead to misguided strategic decisions or missed opportunities for growth.
• External Factors Impacting Market Dynamics : Market share analysis is influenced by external factors beyond the company's control, such as economic conditions, regulatory changes, and geopolitical events. These external factors can have a significant impact on market dynamics, customer behavior, and competitive dynamics, making it challenging to predict and respond effectively to market shifts.
• Overemphasis on Market Share Metrics : While market share is an important metric for assessing competitive positioning and performance, it should not be viewed in isolation or given undue weight in decision-making. Overemphasizing market share metrics can lead to a narrow focus on short-term gains at the expense of long-term sustainability and profitability. It's essential to consider other key performance indicators, such as profitability, customer satisfaction, and brand equity , in conjunction with market share metrics to gain a holistic view of performance.
• Competitive Response and Counterstrategies : Changes in market share can trigger competitive responses from rivals, such as price adjustments, product innovations, or aggressive marketing campaigns. Anticipating and responding effectively to competitive actions requires proactive monitoring of competitors' strategies and market dynamics. Failing to anticipate competitive responses can undermine the effectiveness of market share initiatives and impede market share growth.

Navigating these challenges requires a proactive approach to market share analysis, leveraging robust data sources, advanced analytical tools, and strategic insights to overcome obstacles and capitalize on growth opportunities. By addressing these challenges head-on and continuously refining market share analysis processes, businesses can enhance their competitive position and drive sustainable success in their respective markets.

Conclusion for Market Shares

Market share isn't just a number; it's a powerful indicator of a company's competitive prowess and market position. By understanding and leveraging market share data, businesses can make informed decisions that drive growth, innovation, and customer satisfaction. Whether it's identifying untapped market segments, refining pricing strategies, or strengthening brand positioning, market share analysis is a cornerstone of strategic planning in today's dynamic business environment. So, as you navigate the ever-changing currents of the marketplace, remember the importance of market share as your guiding compass to success. In the end, market share isn't about simply grabbing the biggest slice of the pie; it's about continuously adapting and evolving to stay ahead of the competition. By embracing market share analysis as a strategic tool, businesses can identify opportunities, anticipate challenges, and chart a course towards sustainable growth and profitability. So, as you embark on your journey in the world of business, let market share be your trusted ally, guiding you toward success in the ever-shifting landscape of commerce.

How to Conduct Market Share Analysis in Minutes?

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• Instant Insights : From posing questions to uncovering insights, Appinio delivers results in minutes, ensuring that businesses stay ahead of the curve with real-time data-driven decisions.
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• Global Reach : With access to over 90 countries and the ability to define target groups based on 1200+ characteristics, Appinio enables businesses to gather insights from diverse consumer demographics, ensuring comprehensive market share analysis.

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What Is Market Share?

Calculating market share, benefits of market share, market share impact.

• How to Increase Market Share

Market Share Example

• Market Share FAQs

The Bottom Line

• Business Essentials

Market Share: What It Is and the Formula for Calculating It

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom.

Market share is the percent of total sales in an industry generated by a particular company. Market share is calculated by dividing the company's sales over the period by the industry's total sales over the same period. This metric is used to give a general idea of the size of a company in relation to its market and competitors. The market leader in an industry is the company with the largest market share.

Key Takeaways

• Market share represents the percentage of an industry, or a market's total sales, earned by a particular company over a specified period.
• Market share is calculated by dividing a company's sales by the total sales of the industry over a period.
• This metric is used to give a general idea of the size of a company in relation to its market and competitors.
• A market leader is a company in an industry that has the highest market share and generally wields the most influence.
• Ways to increase market share include implementing new technologies, generating customer loyalty, and acquiring competitors.

Investopedia / Candra Huff

A company's market share is its portion of total sales in relation to the market or industry in which it operates. To calculate a company's market share, first determine a period you want to examine. It can be a fiscal quarter, year, or multiple years .

Next, calculate the company's total sales over that period. Then, find out the total sales of the company's industry. Finally, divide the company's total revenues by its industry's total sales. For example, if a company sold $100 million in tractors last year domestically, and the total amount of tractors sold in the U.S. was $200 million, the company's U.S. market share for tractors would be 50%.

The calculation for market share is usually done for specific countries or regions, e.g., North America or Canada. Investors can obtain market share data from various independent sources, such as trade groups and regulatory bodies, and often from the company itself; however, some industries are harder to measure accurately than others.

Formula for Market Share

Market Share = Total Company Sales / Total Industry Sales

Investors and analysts monitor increases and decreases in market share  carefully, as this can be a sign of the relative competitiveness of the company's products or services. As the total market for a product or service grows, a company that is maintaining its market share is growing revenues at the same rate as the total market. A company that is growing its market share will be growing its revenues faster than its competitors.

Gains or losses in market share can have a significant impact on a company's stock performance , depending on industry conditions.

Market share increases can allow a company to achieve greater scale with its operations and improve profitability. A company can try to expand its market share by lowering prices, using advertising, or introducing new or different products. In addition, it can also grow the size of its market share by appealing to other audiences or  demographics .

Changes in market share have a larger impact on the performance of companies in mature or cyclical industries where there is low growth. In contrast, changes in market share have less impact on companies in growth industries . In these industries, the total pie is growing, so companies can still be growing sales even if they are losing market share. For companies in this situation, the stock performance is affected more by sales growth and margins than other factors.

In  cyclical industries , competition for market share is brutal. Economic factors play a larger role in the variance of sales, earnings, and margins, more than other factors. Margins tend to be low, and operations run at maximum efficiency due to competition. Since sales come at the expense of other companies, they invest heavily in marketing efforts or even loss leaders to attract sales.

In these industries, companies may be willing to lose money on products temporarily to force competitors to give up or declare  bankruptcy . Once they gain greater market share and competitors are ousted, they attempt to raise prices. This strategy can work, or it can backfire, compounding their losses; however, this is the reason why many industries are dominated by a few big players, such as discount wholesale retail with stores including Sam's Club, BJ's Wholesale Club, and Costco.

How Can Companies Increase Market Share?

A company can increase its market share by offering its customers innovative technology, strengthening customer loyalty, hiring talented employees, and acquiring competitors.

New Technology

Innovation is one method by which a company may increase market share . When a firm brings to market a new technology its competitors have yet to offer, consumers wishing to own the technology buy it from that company, even if they previously did business with a competitor. Many of those consumers become loyal customers, which adds to the company's market share and decreases market share for the company from which they switched.

Customer Loyalty

By strengthening customer relationships, companies protect their existing market share by preventing current customers from jumping ship when a competitor rolls out a hot new offer. Better still, companies can grow market share using the same simple tactic, as satisfied customers frequently speak of their positive experiences to friends and relatives who become new customers. Gaining market share via word of mouth increases a company's revenues without concomitant increases in marketing expenses.

Talented Employees

Companies with the highest market share in their industries almost invariably have the most skilled and dedicated employees. Bringing the best employees on board reduces expenses related to turnover and training and enables companies to devote more resources to focus on their  core competencies . Offering competitive salaries and benefits is one proven way to attract the best employees; however, employees in the 21st century also seek intangible benefits such as flexible schedules and casual work environments.

Acquisitions

Lastly, one of the surest methods to increase market share is acquiring a competitor . By doing so, a company accomplishes two things. It taps into the newly acquired firm's existing customer base, and it reduces the number of firms fighting for a slice of the same pie. Shrewd executives, whether in charge of small businesses or large corporations, always have their eye out for a good acquisition deal when their companies are in a growth model.

All multinational corporations measure success based on the market share of specific markets. China has been an important market for companies, as it is still a fast-growing market for many products. Apple Inc., for example, uses its market share numbers in China as a key performance indicator for the growth of its business.

Apple's market share in China's smartphone market has varied over the years. For instance, in Q3 2022, it had 14% of the market. In Q4 of 2023, it controlled 21% of the market.

Market share shows the size of a company, a useful metric in illustrating a company’s dominance and competitiveness in a given field. Market share is calculated as the percentage of company sales compared to the total share of sales in its respective industry over a period. A company’s market share can influence its operations significantly, namely, its share performance, scalability, and prices that it asks for its products or services.

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 improve its profitability. This is because as companies increase in size, they can also scale, offering lower prices and limiting their competitors' growth .

In some cases, companies may go so far as operating at a loss in some divisions to push out the competitors or force them into bankruptcy. After this point, the company may increase its market share and further increase prices. In financial markets, market share can significantly affect stock prices, especially in cyclical industries when margins are narrow and competition is fierce. Any marked difference in market share may trigger weakness or strength in investor sentiment.

What Strategies Are Used to Gain Market Share?

To gain greater market share, a company may apply one of many strategies. First, it may introduce new technology to attract customers that may have otherwise purchased from its competitor. Second, nurturing customer loyalty is a tactic that can result in both a solid existing customer base and expansion through word of mouth. Third, hiring talented employees prevents costly employee turnover expenses, allowing the company to prioritize its core competencies instead. Finally, with an acquisition, a company can reduce the number of competitors and acquire their base of customers. 

How Do You Measure Market Share?

To determine a company's market share, you divide its total sales by its industry's total sales over a given period. For example, if a company sold $2 million worth of dishwashing liquid and the industry's total sales were $15 million, the company would have a market share of 2/15 = 13.3%

What Is a Low Market Share?

A low market share is considered to be less than half of the market share of the industry leader. So if the industry leader has a market share of 40% and another company has a market share of 10%, that company would be considered to have a low market share as 10% is less than 20% (half of 40%).

Market share is the percent of total industry sales a company has. The higher the market share, the more sales a company has than its competitors in their industry. Market share indicates how large a company is and how much influence it has in its industry. It can also be an indicator of growth and success.

Companies generally seek to increase their market share. Ways to do this are implementing new technologies, delivering a higher quality product, implementing good marketing, acquiring competitors, and generating customer loyalty.

Counterpoint. " China Smartphone Market Share: By Quarter ."

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When & How to Calculate Market Share (With Formulas)

What is Market Share?

One of the first steps to building a business is understanding the market and understanding the viability of a successful business. Regardless if the goal is to be a multi-billion dollar company or a local joint that can sustain a few employees — understanding the market, and your share of the market is vital.

As Investopedia puts it , “Market share is the percent of total sales in an industry generated by a particular company. Market share is calculated by taking the company’s sales over the period and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a company in relation to its market and its competitors. The market leader in an industry is the company with the largest market share.”

Why is Market Share Important to Understand?

Understanding the market share is vital to determining the viability, and success of a company. In the earliest days, market share will help understand if a business is worth pursuing. Later in a business’s life, it can help stakeholders understand how they are performing compared to their competitors and can help shape roadmaps for future markets and products.

When building out financial models and projections , market share can certainly play a role. Market share has the opportunity to help shape and impact your future go-to-market strategy and product development. \

On the flip side, understanding your market share can oftentimes help shape your financing options. Your ability to capture a % of a market, large or small, will help funders and lenders understand the likelihood of receiving a return at a later date. For example, if you’re pursuing venture capital you need to demonstrate you can build a large business that will generate returns for them.

How to Calculate Market Share

Revenue vs. units/customer count.

Market share can be broken down a few different ways. Generally, the 2 most common ways to break down market share is by revenue or by # of units/customer count. Calculating either follows the same general steps as below (but you will sub out units for revenue and vice versa).

1. Determine what you’re calculating

Like any startup metric, you have to first determine how and why you are calculating something. A couple of questions to ask yourself when calculating market share:

• What period of time am I analyzing?
• What specific market am I evaluating?
• Am I calculating our share of revenue or units/customers?

For example, let’s say we have a store, Visible Bread Co, and sell artisan bread in Chicago. We want to calculate our % of the artisan bread market sales over the last year in Chicago.

2. Calculate company data

First things first, you need to calculate your revenue (or units/customers) for the specified period of time. For companies that have multiple products that span different markets, make sure you are focused solely on the product and market you are evaluating.

Continuing on our example, let’s say Visible Bread Co. did $100,000 in artisan bread sales over the last year. (Keep in mind, if we were calculating our share based on units that might translate to something like 30,000 units/loaves of bread)

3. Calculate market data

Now that you understand your company’s performance in a specific market, you need to understand how the market is performing as a whole. Calculating the market data is a mix of art and science. Depending on the market, there may be publicly available reports and data you can leverage. On the flip side, if there is no publicly available data you may need to piece together your data and assumptions to estimate the market.

To help, you can check out our total addressable market template here .

For Visible Bread Co., we found sales from a local association that shows there has been $1,000,000 in total artisan bread sales in Chicago over the past year.

4. Calculate your market share

Now that we have our data in place, it is time to do a simple calculation. Simply take your sales or units and divide it by the sales or units for the market as a whole. Times by 100 and that is your market share.

For Visible Bread Co., that looks like this $100,000/$1,000,000 = .10 x 100 = 10% of Chicago artisan bread sales over the last year.

5 Things to Consider When Evaluating Market Share

There are few better ways to measure your business against competitors than by calculating market share. Knowing how big your slice of the pie is helping keep founders and investors on the same page when it comes to tracking a product or services’ participation in the market. So how do you do it the right way?

1. Is now the right time for market share?

Depending on company size, investors may disregard market share as a progress indicator. Especially in the early days, this metric doesn’t matter if your company doesn’t have already own a significant percentage to track. Sizing your company up against the market leaders may be a fruitless exercise if you’re still in the process of rolling out a product. For founders and investors talking about a startup in its first few rounds of financing, now is likely not the time to worry about your share of the market.

2. Understand your Total Addressable Market (TAM)

You can’t measure your market share without first knowing the Total Addressable Market (TAM) you’re pursuing. It’s essential to conduct a thorough assessment of long and short-term market factors , as determining TAM can be a tricky exercise. But make the best estimate of the number of customers in your market, the different types of customers you’re targeting, how much they’ll pay, how you expect the market to grow, and project revenue for 100% market penetration.

3. Measure market penetration

Now you’ve got a reasonable idea of how many total customers are there for the taking. How many are currently under contract? Treat the total number of customers like units and simply calculate your current client base percentage from the total number. For instance, if your SaaS company has an installed customer base of 200 in a TAM of 200,000, your market penetration is 1 percent.

4. Determine market share

How much are customers actually paying under each contract? In your TAM exercise, you’ve assessed your client’s propensity to pay, now determine how well that’s translated into contract value. Again, it’s a simple equation: if you currently own $1,500,000 of a total sales volume of $150,000,000, 150,000/150,000,000 = 1 percent market share.

Now, your market share and market percentages won’t align if your contract value underperforms or exceeds projections. However, both data points will help underscore your evolving market share and provide insight.

5. Track over time

Growth or decline in market share or market penetration can be powerful communication tools for your business narrative. A sagging market share may expose a surge in competition, whether that’s revealed to be a battle over price or new challengers to the game. On the other hand, it’s hard to argue with a founder that’s showing steady growth when it comes to the company’s fight for market dominance. Keeping market share in your regular investor communication will be greatly useful once you’ve determined that your company has reached a significant percentage threshold.

How to Expand Market Share

Most businesses are constantly looking to expand and grow (some are not, which is great too!) their share of the market. At the end of the day, this requires finding new customers and/or expanding your existing customer base. A few ways companies generally find success when looking to grow their customer base and capture more of a market:

1. Lower prices.

Lower prices can be a quick way to convert more customers (be aware of underpricing your product or service!). Note, lower prices can have an impact on your overall revenue, especially for SaaS businesses.

2. Innovate new products and features.

One way to grow your share of a market is by introducing new features and products. Using existing research and customer feedback, you can make an informed decision about the development of new products and features.

3. Appeal to new demographics.

Going hand-in-hand with building new products and features, is finding a new demographic. You may dominate one small segment of an overall market but have the opportunity to pursue new personas.

4. Delight your customers.

Word-of-mouth and happy customers can take your business to a new level. Having customers that are eager to spread the word about your business can be an incredible, and organic, way to grow your share of the market.

Download our Template!

In order to help calculate your market share and your potential to build a large business, it helps to calculate and understand the total addressable market and sensitivity analysis. Check out our free total addressable market template below:

What is Market Share: Definition, Formulas, and Examples

Market Share represents the success of a business in cold hard numbers.

Knowing what it is and how to measure it can help a business benchmark performance, track success, and make plans to grow.

What is market share?

Market share is a company’s percentage of the overall sales in a given industry or market.

Why is market share important?

Market share is the ultimate measure of a company’s success within its market. It’s calculated using sales revenue, not profit. Knowing how you stack up against rivals is a solid indicator that can be used for competitive benchmarking , identifying industry leaders , strategic planning, and much more.

Why do you need to grow your market share?

Market share is usually assessed over a fiscal year or quarter.  Monitoring it helps evaluate your company’s growth by examining how you progress relative to the overall market growth. A thriving company will see its market share increase  faster than that of the competition.

Any tiny shift in the market distribution in stable markets can disrupt well-balanced market forces. In growth markets, changes are expected and, therefore, less significant.  With new products or technology, a vendor could bite off a competitor’s share or attract a new target audience that wasn’t previously part of the equation.

However dynamic your market, increasing your industry share is vital for growth. Capturing a larger percentage of the market means you are increasing sales and revenue.

How do you calculate market share?

There are many ways to establish market share, and finding the right method for your business is important. It can be gained or taken quickly, so companies must use Digital Intelligence tools like Similarweb to keep track of key market share metrics in real time. Simply using revenue figures alone is no longer enough to keep up with the speed of change that most markets are experiencing .

Market share formula by revenue

Take your total annual revenue figure, divide it by the total overall revenue for your market, and then multiply it by 100 to get the percentage. For example, if your annual revenue is $1M, and the total revenue for your market is $100M, then you have a 1% share of the market.

Relative market share formula

You may want to compare your business to a specific competitor or industry leader. In this case, you can calculate the relative market share. Divide your market share by that of the relevant rival.

Read more in our full guide to market share formulas – Expand Your Reach: 4 Market Share Formulas to Get You There

Analyzing your market share

The company with the largest market share is usually considered the industry leader. But market share is no key indicator of a company’s financial health, profitability, or growth.  It measures your competitiveness and gives you a general idea of how you match up in your target arena.

What does market share mean for your position in the competitive environment? It shows how the pie is sliced and how big a piece you have relative to everyone else. When you segment your target market , you receive a more granulated view. Picture each segment as a whole pie and compare how the distribution of portions varies.

Digital companies often use traffic share to gauge their control of the online “pie.” This is particularly valuable if you are running a non-ecommerce site and can’t measure your percentage based on revenue. Measure your traffic share and segment it as you would the market. Take a look at the example in the following section to see how it’s done.

Understanding your market share

Market share is also relative to your business. A global market share of 1% is nothing to brag about for a company that sells to the worldwide market. But if you only target Texas, it’s an impressive number, and you might even be leading the local market.

As a local vendor, you should consider  benchmarking  against comparable businesses in other regions. Choose similar size companies with equivalent  audience demographics . This lets you evaluate if your market share is average for your type of company or exceptionally high or low.

To gauge market share correctly, look at your target audience segment. Your company may focus primarily on women, millennials , or high-income customers, which means your goal is leadership in a particular market segment. You’ll conquer the rest later with a new strategy.

The bottom line; when you try to gain insights from market share, make sure to view it in the proper context.

Market share example

Another way to calculate market share is to use website traffic as your key performance indicator . This way, you get a benchmark you can track in real-time, and while it’s not revenue-based, it shows how much interest and activity takes place in a market and allows you to track known industry leaders and your own site efficiently and easily.

Here’s a faster, more modern approach to measuring your share of the market. In this example, I’m using the accommodation and hotel market to demonstrate how to quickly analyze market share.

In 30 seconds, I can see who the industry leaders are and by what percent their business has grown or declined in a given period. I also see rising players; this is interesting, as these companies show notable growth in my market . So, while they have a relatively low share right now, they are emerging names with the ability to disrupt a market fast. At the bottom of the market leaders page, I can see a list of market leaders, sorted by share of traffic, with other useful traffic and engagement metrics to track, along with a yearly change %. This covers the top 10k domains in a sector, so it’s extensive and comprehensive.

You’ll have noticed a market quadrant analysis too. A quick click downloads a nice visual representation of the market leaders; which you can filter and sort according to the market share metrics that matter to you most. In this example, I chose unique visitors and traffic share.

5 ways to increase market share

• Marketing and branding With more aggressive advertising, you can expand your reach, gain more users, and increase customer loyalty. For long-term effectiveness, a strong branding strategy is essential.
• Price reduction You can tackle the issue from another angle by lowering your pricing just enough to beat the competition. This is the idea behind periodic discount campaigns, in which companies manage to steal competitors’ customers before raising prices again.
• Retention Nurturing your existing customer base is an underutilized and highly effective method. You keep your customers close when you maintain a positive relationship and send an occasional special offer.
• Innovation The best example of this strategy is Apple. The company constantly and regularly offers new product lines and innovative features for its existing products. Customers keep coming back for more.
• Acquisition If you can’t beat them, buy them. One way that helps Facebook to expand is by acquiring smaller companies and taking over their market share. Instead of winning over new customers, they take over the company.

Drawing conclusions from market analysis

Let’s look at an example of a non-ecommerce digital competitive set and the insights we gain from looking at market share.

Take the news site cnn.com. To define the target market , we look at the overall traffic to publishers and media sites . Specifically in the U.S., CNN’s traffic share is roughly 12%, putting them in second place right after Yahoo, also the global leader.

On the other hand, the news channel ranks number 85 globally. Does this mean CNN isn’t a significant news channel? Not necessarily. We can learn two things: Americans are the largest segment of news consumers, and CNN successfully targets American readers. We can also analyze traffic segments, such as specific marketing channels or devices, to learn more.

The next step

Similarweb Digital Research Intelligence is THE go-to platform for accurate traffic trend data. Compared to other market analysis tools , it provides the freshest insights, packaged in an intuitive platform that highlights the important changes and market share metrics you need to track.

Why Similarweb

• Data you can depend on
• Dynamically updates to give daily insights
• Easy-to-use platform, filled with useful market intelligence
• Highly accurate market trends data
• Try it for free and find out where your market stands.

How can I measure market share growth?

Calculate market growth by subtracting the market size for year one from the market size for year two. Divide the result by the market size for year one and multiply by 100 to convert it to a percentage.

What is the market share formula?

Divide your business revenue (traffic) by the total industry revenue (traffic). The result is your market share.

What is the quickest way to calculate market share?

Use a digital intelligence platform to capture real-time market share data. Outdated methods that rely on revenue alone fail to give you a current view of industry leaders.

How can you increase your market share?

Increase market share by using marketing and branding, price reduction, retention, innovation, and acquisition.

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Business Plan Market Analysis - Your Road Map to Success

Welcome to our comprehensive guide on the business plan market analysis section of a business plan. Market Analysis is a key part of any good business plan, which will help you better assess and understand your market. ‍ The business plan market analysis section is the heart and soul of your strategy, impacting everything from marketing to operations to the financial forecast. The market analysis helps you understand your position within the industry, the potential size of your market, the competitive landscape, and most importantly, it assists in identifying your target customers. In this blog post, we'll take you through the essentials of market analysis: what it is, why it's crucial, and the components it comprises.

Table of Contents

Business Plan Market Analysis - What Is It?

• Key Components
• How To Implement

Tips and Best Practices

• Market Analysis Case Study

Wrapping It All Up

Market analysis is a comprehensive examination of the dynamics, trends, and competitive landscape of the business environment within which a company operates. It is a vital component of a business plan as it allows entrepreneurs and business owners to understand their industry and market better, enabling them to make well-informed decisions. The business plan market analysis section has two main benefits. Firstly, it Allows you to Identify key opportunities in the market. By studying the market, a business can identify gaps, trends, or customer needs that aren't currently being met and then plan to cater to them effectively. Secondly, it also allows you to recognise potential threats and competition. By understanding your competitors, their offerings, strategies, strengths, and weaknesses, you can position yourself better against their position in the marketplace. Overall the role of market analysis in a business plan cannot be understated. It serves as the foundation upon which the marketing and sales strategies are built. In the following sections, we will take a deep dive into the key components of market analysis and how to conduct it effectively. 

Remember, the opening of your Executive Summary sets the tone for the entire document. Make it memorable and compelling to encourage the reader to continue exploring.

What Are The Key Components of Market Analysis?

Understanding the key components of a market analysis is crucial to conducting one effectively. Each element contributes a unique insight into your market, providing a comprehensive overview of the environment in which your business will operate. Here are the key components:

• Industry Description and Outlook: This involves describing the industry within which your business will operate. Look to identify the key trends influencing it and the outlook of the future of the industry based on reliable industry forecasts.
• Target Market: It's vital to identify and understand your ideal customers. This involves defining the demographics (age, gender, income, etc.), psychographics (interests, values, behaviours, etc.), and geographic location of the customers your business aims to target. Furthermore, it's important to understand their needs, preferences, and buying habits.
• Market Size and Trends: Here, you need to determine the total size of your target market. This involves quantifying the number of potential customers, the total sales volume, or the total market value. Furthermore, it's crucial to identify key market trends, which may include changes in customer behaviour, new technologies, or shifting regulatory environments.
• Market Segmentation: This involves dividing your target market into distinct groups (segments) based on certain characteristics. These might include age, location, buying habits, or customer needs. By taking the time to segment your customers you can develop better targeting strategies for your marketing campaigns.
• Competitive Analysis: This component involves identifying your key competitors and analysing their products, sales strategies, market share, strengths, and weaknesses. A competitive analysis will help your business identify its unique selling proposition (USP) and differentiate itself from competitors.
• SWOT Analysis: Finally, conducting a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis will allow your business to identify its internal strengths and weaknesses, as well as external opportunities and threats in the market. This can help your business leverage its strengths, address its weaknesses, capitalise on opportunities, and prepare for potential threats.

Business Plan Market Analysis - How to Implement 

Conducting a business plan market analysis might seem like a daunting task, but you can make it more achievable by breaking it down into key tasks.

• Industry Description and Outlook: Start by gathering data on your industry. This can include industry reports, market research data, news articles, and government statistics. Remember to cite your sources to add credibility to your analysis.
• Target Market: Identifying your target market requires an understanding of who is most likely to buy your product or service. You can conduct surveys, interviews, or focus groups to gather data on potential customers. If you already have a customer database, try to delve into this further by conducting post-purchase interviews with customers. Try to identify demographic, geographic, and psychographic characteristics, as well as buying habits and needs. The aim is to create a clear and specific profile of your ideal customer. You will aim to use this data to generate customer segments to target with your marketing campaigns.
• Market Size and Trends: Estimating market size can be challenging but can be done by looking at industry reports, government data, and market research studies. You can also look at the sales of competitors or analogous products. Identify key market trends by examining changes in customer behaviour, technological advances, and regulatory changes.
• Competitive Analysis: Identify your key competitors and analyse their offerings. Look at their products, pricing, marketing strategies, and market share. Try to understand their strengths and weaknesses. You can gather this information from their websites, customer reviews, and industry reports. Use this analysis to identify opportunities for your business to differentiate itself.
• SWOT Analysis: You can consolidate all of your initial research into a SWOT analysis which will help synthesise your learning and make it easier to develop strategies from your research.

Remember, conducting a market analysis isn't a one-time task. Markets are dynamic, with customer preferences, competition, and external factors continually changing. Your aim should be to continually update your business plan market analysis periodically. Here at Action Planr we have a full guide on how to conduct a SWOT Analysis for more detailed information on the full process.

Successfully conducting a market analysis involves more than just understanding its components and knowing where to find the necessary data. Here are some tips and best practices to help make your market analysis more robust, reliable, and useful for decision-making:

• Using Reliable Data Sources for Market Research: The quality of your analysis is directly tied to the quality of your data. Therefore, it's important to use reliable sources such as government databases, industry reports, reputable market research firms, and academic studies. Be wary of data that doesn't come from reliable sources.
• Understanding the Importance of Both Quantitative and Qualitative Research: Quantitative data, like statistics and numerical facts, provides a solid base for your analysis. But don't underestimate the power of qualitative data—opinions, anecdotes, and experiences—which can provide deeper insight into customer behaviours and preferences.
• Keeping the Analysis Current and Updated: Markets change rapidly. What was true last year—or even last month—may not hold today. Regularly updating your market analysis can help you keep up with changes and adjust your business strategies accordingly.
• Ensuring Your Analysis is Relevant to Your Specific Business Model: The insights you need depend on your business model. A B2B company will need a different kind of analysis than a B2C company. Tailor your market analysis to your specific business needs and objectives.
• Importance of Validating Assumptions: In the course of conducting a market analysis, you'll likely make assumptions. Be sure to validate these assumptions with solid data whenever possible.
• Keep your Audience in Mind: If your business plan is read by investors, they'll be interested in market size, growth opportunities, and competitive landscape. Make sure your market analysis addresses these topics and is presented in a clear, easy-to-understand format.

Business Plan Market Analysis - Case Study

To understand how the principles and processes of market analysis work in a real-world context, let's look at a case study of an innovative tech startup, "Techie Toys." Techie Toys is a company that produces educational toys based on augmented reality technology, targeting children aged 6 to 12. Their goal is to make learning fun and interactive.

• Industry Description and Outlook: Techie Toys reviewed multiple industry reports and found that the educational toy market has seen substantial growth over recent years, and this growth is expected to continue due to increasing focus on interactive learning methods. The integration of technology into educational toys, specifically augmented reality, is a significant trend shaping the industry.
• Target Market: Through surveys and focus groups, Techie Toys identified their target customers as parents of children aged 6 to 12 who value educational development and are comfortable with technology integration in toys. These parents have middle to upper-middle income, are mostly city dwellers, and are willing to invest in their children's education.
• Market Size and Trends: By analysing industry reports and sales of similar products, Techie Toys estimated a sizable target market for their augmented reality educational toys. The trend of "edutainment" was identified as a key market trend, with technology-based educational toys gaining popularity.
• Market Segmentation: Techie Toys segmented their market based on age (6-8, 9-12), type of toy preferred (science, math, language arts), and parents' willingness to spend on educational toys. They plan to tailor their products and marketing strategies according to these segments.
• Competitive Analysis: Techie Toys identified several key competitors offering educational toys but found a gap in those providing augmented reality-based learning. They also discovered that their unique selling proposition – interactive learning through augmented reality – is an aspect where they outshine their competitors.
• SWOT Analysis: Strengths identified included a strong development team, unique product offering, and alignment with market trends. Weaknesses involved a higher price point and lack of brand recognition. Opportunities included a growing market and a trend toward edutainment, while threats were potential competitors and rapid technological change.

By conducting this detailed market analysis, Techie Toys was able to effectively position itself within the market, identify its unique selling proposition, and tailor their product development and marketing strategy to their target audience. This comprehensive understanding of their market greatly contributed to their success.

The business plan market analysis section of a business plan is one of its most critical components. Conducting a detailed and accurate market analysis can be a challenging process, but as we've seen in our guide, the benefits are large. Business is all about planning and conducting an in-depth market analysis process, It will allow your business to navigate its environment with knowledge and foresight. The insight gained can help you identify growth opportunities and provide a strong basis for the development of effective marketing and sales strategies. Keep these insights, steps, and tips in mind as you work on your market analysis and remember markets are continually changing so don't make this a one-and-done exercise. If you are looking for help with other sections of the business plan, please check out our Learning Zone homepage.

How to Calculate Market Share (With Formulas and Examples)

Sep 22, 2023 | Read time: 13 min.

RJ Licata , Sr. Director of Marketing

• Market share (also called revenue market share or absolute market share) is the portion of a given industry that is owned or controlled by a single brand or entity.
• Calculating market share in different ways lets you know where you’re winning, and where you need to focus your efforts.
• You can then use your market share calculations to identify where you’re weakest and devise a strategy to dominate every channel.

Contents Jump to

There are several benchmarks that brands can use to assess the health of their business. It’s important to know where your business stands in terms of market competitors. 

Enter market share. While this metric is typically used for financials, market share can also be used to determine your business’ digital reach. Owning the market share of consumer attention in your industry helps you gain an edge over your competitors.

In this article, we’ll break down how to calculate market share and provide market share examples.

What is market share?

MARKETING TERM DEFINITION Market Share Market share is the portion of a given industry that is owned or controlled by a single brand or entity within a time frame. Market share refers to a calculation that shows, in percentages, the revenue generated by a single company, as compared to the revenue earned by the entire industry.

A low market share tells you that your business holds a smaller share of the market, while a high market share highlights that your business holds a larger share of the market. This percentage is also referred to as absolute market share or revenue market share.

Relative market share

While absolute market share paints a picture of how your business is doing compared to the entire market, the relative market share shows where your company stands in comparison to a particular company, typically the leading competitor in the market. 

Depending on the industry, relative market share can reveal where your business stands in comparison to a specific industry leader. 

Market share by units sold

If you own a business that sells products en masse, you’ll need to know how to calculate market share by the total number of units sold in a given period of time when compared to the entire market size of units sold. 

This is the same calculation as market share by revenue. You just swap out dollars for products. 

Market share by organic search traffic

If you generate leads or sales through your website, you should also know how to determine market share by organic search traffic. This is the ratio between the clicks you get out of the total available clicks for a defined set of keywords. 

It’s a great figure to have on hand when deciding how much money you need to spend on paid advertising and content strategies for your business.

Organic search traffic is often the most overlooked market share calculation, much to the detriment of businesses across virtually every industry. The majority ( 53% ) of shoppers do thorough online research before they make a purchase. So, it’s vital that you show up throughout the conversion funnel while they’re narrowing down their options.

Why market share calculations matter, an example

Tesla provides the perfect example of why you need to know how to calculate market share.

In 2023, Tesla owned an impressive 21.7 percent of the global electric vehicle (EVs) market share. This is a huge success when you consider just how many car retailers have added EVs to their fleets.

Tesla couldn’t have become the household name it is today without the help of a team of brilliant decision-makers. After they calculated Tesla’s market share within the global EV market, the company decided it could do things differently and take on long-standing competitors in the auto industry.

Tesla created a unique business model that allowed it to retain total control of the sales and all service aspects of Tesla vehicles. By doing this, it made a product that appealed to consumers in thrilling new ways.

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Had Tesla not done a deep market share analysis, the company might have missed the opportunity to truly own the market.

By learning how to calculate market share in different ways, you’ll gain strategic advantages over your competitors. When you view market share as more than a single number, you can take a more granular approach to measuring business growth (and risk) across multiple fronts.

Why you need to know how to calculate market share 

Almost every consumer market is saturated with brands competing for a limited pool of customer dollars. Brands need to fully understand multiple types of market share to know their position and that of the competition.

Calculating your market share adds transparency to your business model, provides clarity on successes and failures, and lets you iterate on inefficiencies.

1. Compares your brand with competitor performance

There are several rulers you can use to compare your performance with competitors.

If you’re a publicly traded company in the U.S., look at the United States Securities and Exchange Commission’s tool, Electronic Data Gathering, Analysis, and Retrieval system ( EDGAR ). EDGAR allows anyone to search the Securities and Exchange Commission’s database. This will give you deep insights into your competition.

How your competitors perform in Google is another indicator to monitor.

Who owns the largest market share of Google’s organic search results in your industry? Do your competitors rank well for highly valuable keywords? How do you perform for product vs. informational queries? Are you present throughout the funnel, including TOFU, MOFU, and BOFU searches ?

2. Reveals your brand’s market penetration/saturation

Market penetration is a measure of how successful a brand is in its given industry. Popular brands will saturate the market with their presence, making it difficult for other brands to break in and compete for customer attention and, ultimately, revenue.

You can measure market penetration with a simple market share formula. You’ll need to compare your sales volume for the year against the total target sales for your industry in that year. Brands use this formula to determine pricing and marketing budgets, as well as how they will promote their products to customers.

If you understand your current market penetration, then you can more effectively assess new growth marketing opportunities . As a result, you’ll box out the competition and cement your position as the market leader.

3. Pinpoints new market opportunities for your brand

Market penetration is a quadrant on the Product-Market Growth Matrix , or the Ansoff Matrix. This grid tool used in brand strategic planning helps organizations assess new market opportunity feasibility to determine which opportunities best suit the overall strategic vision of a brand.

The Ansoff Matrix provides businesses with a step-by-step strategic growth process to follow and helps mitigate risk by thoroughly evaluating every proposed business pivot or opportunity. It can also lay the foundation to generate new business opportunities.

Here’s a quick review of the Ansoff Matrix quadrants:

• Market penetration — Boosting sales of your existing products in the market that you currently occupy
• Product development — The ideation and creation of new products or services
• Market development — Plans and strategies on how to enter new markets with the products or services you currently have
• Diversification — Breaking into new markets with new products or services

It’s clear that while understanding market penetration is one step in growing a successful business, it’s part of a larger puzzle. Brands that win approach this puzzle holistically and look for opportunities that competitors will miss or disregard.  Knowing where you stand regarding market share is the first step of the process.

How to calculate market share

Outlined below are the types of market share formulas you need to understand.

You might need some sales analytics on your total revenue for last year (or any recent fiscal year or fiscal quarter) as well as metrics on the industry’s total revenue to figure out your company’s market share. Just plug those numbers into Excel and you will have a treasure trove of data to analyze.

How to calculate market share by revenue

• Select your fiscal period
• Calculate your company’s total sales
• Calculate the total market sales for your industry
• Divide your company’s total sales by your industry’s overall market sales
• Multiply the sum by 100 to get the percentage

How to calculate relative market share

• Calculate your company’s absolute market share
• Calculate your competitor’s absolute market share
• Divide your company’s market share by your competitor’s market share

How to calculate market share by units sold

• Calculate your company’s total unit sales
• Calculate the total units sold for your industry
• Divide your company’s total units sold by your industry’s total units sold

How to calculate market share by organic search traffic

• Calculate the total available clicks within a defined set of keywords based on total search volume and click-through rate (CTR)
• Calculate your share of those clicks based on the CTR of your ranking position and the search volume for each term
• Divide your share of clicks by the total number of clicks in the term
• Multiply the sum by 100

Examples of organic search market share reports

Here are two real world organic search market share report examples that Terakeet recently published on the beauty and cosmetics industry as well as the financial services industry . Download these reports below.

How to increase your market share

With the knowledge to calculate and assess your brand’s share of the market through several lenses, it’s time to learn how to improve your brand’s overall competitiveness, and ultimately, your company’s total revenue.

By expanding what you offer, how you offer it, and where you offer it, you can begin to take the lion’s share of your market.

Grow organic search market share

In terms of marketing return on investment (ROI), organic search is the most powerful customer acquisition channel you can leverage. According to Google, it drives 5x greater results compared to pay-per-click (PPC) .

This is because consumer shopping behavior has changed. For years, customers have been warming up to online or hybrid buying experiences. However, the pandemic accelerated the trend, pushing consumers deeper into the digital shopping ecosystem.

Potential customers don’t just buy online; they research, compare, ask questions, and make decisions based on what they discover.

The online publication Byrdie managed to capture a significant portion of organic search market share from massive beauty brands by creating informational content. When Terakeet calculated its market share within 9 sectors of the beauty industry, they were near the top of the leaderboard.

Shifting your investment 

As a marketing executive, you must recognize that shift in consumer behavior and increase your investments in comprehensive, engaging, authoritative, search-optimized content. This content, delivered through a network of owned brand assets, captures customers across the buyer’s journey and builds priceless trust with your audience. 

Brands that foster trust and authentic connections with consumers gain market share with each new connection, capitalizing on earned brand loyalty and, ultimately, achieving market leadership.

If that aligns with your goals, we recommend learning about owned asset optimization (OAO). See our OAO foundational guide .

Make Connections that Matter

Uncover what your customers are looking for in real time and meet their needs with valuable content.

Develop new products or services

If you want to launch your business into the public consciousness, then develop new products or new services.

Look at Coca-Cola, for example, a legacy brand that decided to think differently about the soft drinks industry. As other competitors entered the market, Coca-Cola knew it could offer its flagship product in different flavors, so the brand did it.

Developing new products always comes with a certain amount of risk. Especially when it comes to food and beverages. Consumers are often creatures of habit. So, Coca-Cola had to do a tremendous amount of market research and brand awareness campaigns to get people on board. The rest, of course, is history.

There are nearly 57 billion drinks served each day, and nearly 2 billion are drinks owned or licensed by Coca-Cola. Now that’s market saturation.

Mergers and acquisitions

Another way Coca-Cola discovered that it could increase market share was by diversifying its portfolio of products to include other types of drinks such as Vitaminwater. As a sole entity, Vitaminwater was initially doing $350 million in annual sales on its own. When Coca-Cola purchased the company, that annual revenue grew to 1 billion dollars in sales.

Acquiring other companies removes some of the grunt work of establishing a new business. You get a built-in customer base and many of the starting operational costs are already taken care of. That said, it can be a major investment to acquire other companies, especially when they are already profitable. But, in the case of Coca-Cola and so many others (like Nestle and major media corporations)

Imagine new ways of doing business

Not only does Coca-Cola know how to increase market share through acquisitions, the company has transformed over the years. 

Coca-Cola was created by pharmacist Dr. John Stith Pemberton in Atlanta in 1886. It was created to be a tonic. Back then, it included wine and cocaine to “treat” several alignments.

Not long after Pemberton created the beverage, prohibition passed in his state. So, Coca-Cola was almost quashed before it even began. But, Pemberton was a true entrepreneur. He removed the wine and replaced it with syrup , making the earliest iterations of the Coca-Cola most of us are familiar with.

Imaging new ways of doing business has always been at the heart of Coca-Cola’s story, and it has been an unbelievably successful story. That’s what makes them the drink market leader.

So, maybe your brand needs its own Coca-Cola story. You could create an incredible digital customer experience on your website. Or, perhaps you invest in a new digital transformation initiative that’s been on the burner for several years.

Improve customer retention

When you improve customer retention, you lower the costs of doing business. Elastic Path says it can cost five times more to acquire a new customer than to keep current customers. That type of fiscal drain adds up over time. When you reduce your customer acquisition costs (CAC) , you increase profit margins and you free up room in your budget to put into growing your business in other ways, like the ones outlined above.

Increasing customer loyalty and retention increases profitability by a significant margin, so you must prioritize customer relationships.

Acquiring new customers costs 5x more than keeping current customers

Existing customers are 50% more likely to buy a new product or service

Increasing customer retention by 5% increases profits 25-95%

Expand your customer base

When you expand your customer base to include new demographics, you unlock greater business potential.

In some cases, this may require nothing more than a shift in marketing messaging. Or, you might need to introduce a modified product or service with different features. In other cases, you may need to expand your customer acquisition efforts across different channels, bridging the gap between online and offline brand interactions.

Use market share calculations to build better strategies

It’s vital to know how to calculate market share to gather insights such as your company’s sales revenue compared to the industry’s total sales, or whether a specific competitor has a significant market share in Google search. You must have access to these data points to build more effective strategies.

For example, you could have the highest total revenue because your products are more expensive. On the other hand, you might sell the most products, but at lower prices, shrinking your revenue numbers. 

Or, you may have the highest revenue and the most product sales, but you overspend on paid ads and affiliate marketing which reduces your profit margins. You may even have a high market share in one specific market, but almost no penetration overall within the industry.

If you analyze any one of these metrics in a vacuum, you might conclude that you’re the market leader. However, at closer examination, you’d realize that you’re behind.

Ultimately, it’s important to consider all the variables when calculating market share so your business remains profitable and competitive.

Owned Asset Optimization (OAO) | The Foundational Guide

Takeaways on organic market share.

Knowing your market share and implementing a combination of market share growth strategies is a key way to gain an edge over your business’ competitors and lead to market share increases. Especially in areas where your competitors may not be thinking of such as organic growth.

Knowing where you stand is the first step to tackling the bigger goal of market share dominance. Keep in mind that there are many forms of market share to pursue, and one that’s often overlooked but incredibly important is organic market share. Attention is everything in today’s digital spaces.

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How to Write the Market Analysis Section of a Business Plan

Written by Dave Lavinsky

What is the Market Analysis in a Business Plan?

The market analysis section of your business plan is where you discuss the size of the market in which you’re competing and market trends that might affect your future potential such as economic, political, social and/or technological shifts.

This helps you and readers understand if your market is big enough to support your business’ growth, and whether future conditions will help or hurt your business. For example, stating that your market size is $56 billion, has been growing by 10% for the last 10 years, and that trends are expected to further increase the market size bodes well for your company’s success.

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What Should a Market Analysis Include?

You’ll want to address these issues in your market analysis:

• Size of Industry – How big is the overall industry?
• Projected Growth Rate of Industry – Is the industry growing or shrinking? How fast?
• Target Market – Who are you targeting with this product or service?
• Competition – How many businesses are currently in the same industry?

Learn how to write the full market analysis below.

How to Write a Market Analysis

Here’s how to write the market analysis section of a business plan.

• Describe each industry that you are competing in or will be targeting.
• Identify direct competition, but don’t forget about indirect competition – this may include companies selling different products to the same potential customer segments.
• Highlight strengths and weaknesses for both direct and indirect competitors, along with how your company stacks up against them based on what makes your company uniquely positioned to succeed.
• Include specific data, statistics, graphs, or charts if possible to make the market analysis more convincing to investors or lenders.

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Industry overview.

In your industry overview, you will define the market in which you are competing (e.g., restaurant, medical devices, etc.).

You will then detail the sub-segment or niche of that market if applicable (e.g., within restaurants there are fast food restaurants, fine dining, etc.).

Next, you will describe the key characteristics of your industry. For example, discuss how big the market is in terms of units and revenues. Let the reader know if the market is growing or declining (and at what rate), and what key industry trends are facing your market.

Use third-party market research as much as possible to validate the discussion of your industry.

Here is a list of additional items you may analyze for a complete industry overview:

• An overview of the current state of the industry . How big is it, how much does it produce or sell? What are its key differentiators from competitors? What is its target customer base like – demographic information and psychographics? How has the industry performed over time (global, domestic)?
• Analyze the macro-economic factors impacting your industry . This includes items such as economic growth opportunities, inflation, exchange rates, interest rates, labor market trends, and technological improvements. You want to make sure that all of these are trending in a positive direction for you while also being realistic about them. For example, if the economy is in shambles you might want to wait before entering the particular market.
• Analyze the political factors impacting your industry . This is an often-overlooked section of any business plan, but it can be important depending on what type of company you are starting. If you’re in a highly regulated industry (such as medical devices), this is something that you’ll want to include.
• Analyze the social factors impacting your industry . This includes analyzing society’s interest in your product or service, historical trends in buying patterns in your industry, and any effects on the industry due to changes in culture. For example, if there is a growing counter-culture trend against big oil companies you might want to position yourself differently than a company in this industry.
• Analyze the technological factors impacting your industry . This includes analyzing new technologies being developed in software, hardware, or applications that can be used to improve your product or service. It also includes emerging consumer trends and will be highly dependent on your business type. In a technology-related venture, you would analyze how these changes are impacting consumers. For an educational-related venture, you would analyze how these changes are impacting students, teachers, and/or administrators.

For each of these items, you want to provide some detail about them including their current state as well as what external factors have played a role in the recent past. You can also include many other important factors if they apply to your business including demographic trends, legal issues, environmental concerns, and sustainability issues.

When you are done analyzing all of these factors, wrap it up by summing them up in a statement that includes your view on the future of the industry. This should be positive to attract investors, potential customers, and partners.

If you’re having trouble thinking about all of these factors then it might be helpful to first develop a SWOT analysis for your business.

Once you have an understanding of the market, you’ll need to think about how you will position yourself within that potential market.

Picking Your Niche

You want to think about how large your market is for this venture. You also want to consider whether you’d like to pick a niche within the overall industry or launch yourself into the mainstream.

If you have an innovative product it can be easier to enter the mainstream market – but at the same time, you might face some additional competition if there are similar products available.

You can choose to specialize in a niche market where you’ll face less competition – but might be able to sell your services at a higher price point (this could make it easier for you to get potential customers).

Of course, if your product or service is unique then there should be no competition. But, what happens if it isn’t unique? Will you be able to differentiate yourself enough to create a competitive advantage or edge?

If you are planning on entering the mainstream market, think about whether there are different sub-niches within your specific market. For example, within the technology industry, you can choose to specialize in laptops or smartphones or tablets, or other categories. While it will be more difficult to be unique in a mainstream market, you will still be able to focus on one type or category of products.

How Will You Stand Out?

Many companies are able to stand out – whether by offering a product that is unique or by marketing their products in a way that consumers notice. For example, Steve Jobs was able to take a business idea like the iPhone and make it into something that people talked about (while competitors struggled to play catch up).

You want your venture to stand out – whether with an innovative product or service or through marketing strategies. This might include a unique brand, name, or logo. It might also include packaging that stands out from competitors.

Write down how you will achieve this goal of standing out in the marketplace. If it’s a product, then what features do you have that other products don’t? If it’s a service, then what is it about this service that will make people want to use your company rather than your competition?

You also need to think about marketing. How are you going to promote yourself or sell your product or service? You’ll need a marketing plan for this – which might include writing copy, creating an advertisement, setting up a website, and several other activities. This should include a description of each of these strategies.

If you’re struggling with the details of any of these sections, it might be helpful to research what other companies in your market are doing and how they’ve been successful. You can use this business information to inform your own strategies and plans.

Relevant Market Size & Competition

In the second stage of your analysis, you must determine the size and competition in your specific market.

Target Market Section

Your company’s relevant market size is the amount of money it could make each year if it owned a complete market share.

It’s simple.

To begin, estimate how many consumers you expect to be interested in purchasing your products or services each year.

To generate a more precise estimate, enter the monetary amount these potential customers may be ready to spend on your goods or services each year.

The size of your market is the product of these two figures. Calculate this market value here so that your readers can see how big your market opportunity is (particularly if you are seeking debt or equity funding).

You’ll also want to include an analysis of your market conditions. Is this a growing or declining market? How fast is it growing (or declining)? What are the general trends in the market? How has your market shifted over time?

Include all of this information in your own business plan to give your readers a clear understanding of the market landscape you’re competing in.

The Competition

Next, you’ll need to create a comprehensive list of the competitors in your market. This competitive analysis includes:

• Direct Competitors – Companies that offer a similar product or service
• Indirect Competitors – Companies that sell products or services that are complementary to yours but not directly related

To show how large each competitor is, you can use metrics such as revenue, employees, number of locations, etc. If you have limited information about the company on hand then you may want to do some additional research or contact them directly for more information. You should also include their website so readers can learn more if they desire (along with social media profiles).

Once you complete this list, take a step back and try to determine how much market share each competitor has. You can use different methods to do this such as market research, surveys, or conduct focus groups or interviews with target customers.

You should also take into account the barriers to entry that exist in your market. What would it take for a new company to enter the market and start competing with you? This could be anything from capital requirements to licensing and permits.

When you have all of this information, you’ll want to create a table like the one below:

Once you have this data, you can start developing strategies to compete with the other companies which will be used again later to help you develop your marketing strategy and plan. 

Writing a Market Analysis Tips

• Include an explanation of how you determined the size of the market and how much share competitors have.
• Include tables like the one above that show competitor size, barriers to entry, etc.
• Decide where you’re going to place this section in your business plan – before or after your SWOT analysis. You can use other sections as well such as your company summary or product/service description. Make sure you consider which information should come first for the reader to make the most sense.
• Brainstorm how you’re going to stand out in this competitive market.

Formatting the Market Analysis Section of Your Business Plan

Now that you understand the different components of the market analysis, let’s take a look at how you should structure this section in your business plan.

Your market analysis should be divided into two sections: the industry overview and market size & competition.

Each section should include detailed information about the topic and supporting evidence to back up your claims.

You’ll also want to make sure that all of your data is up-to-date. Be sure to include the date of the analysis in your business plan so readers know when it was conducted and if there have been any major changes since then.

In addition, you should also provide a short summary of what this section covers at the beginning of each paragraph or page. You can do this by using a title such as “Industry Overview” or another descriptive phrase that is easy to follow.

As with all sections in a business plan, make sure your market analysis is concise and includes only the most relevant information to keep your audience engaged until they reach your conclusion.

A strong market analysis can give your company a competitive edge over other businesses in its industry, which is why it’s essential to include this section in your business plan. By providing detailed information about the market you’re competing in, you can show your readers that you understand the industry and know how to capitalize on current and future trends.

Business Plan Market Analysis Examples

The following are examples of how to write the market analysis section of a business plan:

Business Plan Market Analysis Example #1 – Hosmer Sunglasses, a sunglasses manufacturer based in California

According to the Sunglass Association of America, the retail sales volume of Plano (non-prescription) sunglasses, clip-on sunglasses, and children’s sunglasses (hereinafter collectively referred to as “Sunwear”) totaled $2.9 billion last year. Premium-priced sunglasses are driving the Plano Sunwear market. Plano sunglasses priced at $100 or more accounted for more than 49% of all Sunwear sales among independent retail locations last year. 

The Sunglass Association of America has projected that the dollar volume for retail sales of Plano Sunwear will grow 1.7% next year. Plano sunglass vendors are also bullish about sales in this year and beyond as a result of the growth of technology, particularly the growth of laser surgery and e-commerce.

Business Plan Market Analysis Example #2 – Nailed It!, a family-owned restaurant in Omaha, NE

According to the Nebraska Restaurant Association, last year total restaurant sales in Nebraska grew by 4.3%, reaching a record high of $2.8 billion. Sales at full-service restaurants were particularly strong, growing 7% over 2012 figures. This steady increase is being driven by population growth throughout the state. The Average Annual Growth Rate (AGR) since 2009 is 2.89%.

This fast growth has also encouraged the opening of new restaurants, with 3,035 operating statewide as of this year. The restaurant industry employs more than 41,000 workers in Nebraska and contributes nearly $3 billion to the state economy every year.

Nebraska’s population continues to increase – reaching 1.9 million in 2012, a 1.5% growth rate. In addition to population, the state has experienced record low unemployment every year since 2009 – with an average of 4.7% in 2013 and 2014.

Business Plan Market Analysis Example #3 – American Insurance Company (AIC), a chain of insurance agencies in Maine

American Insurance Company (AIC) offers high-quality insurance at low prices through its chain of retail outlets in the state of Maine. Since its inception, AIC has created an extensive network of agents and brokers across the country with expanding online, call center and retail business operations.

AIC is entering a market that will more than double in size over the next 50 years according to some industry forecasts. The insurance industry is enjoying low inflation rates, steady income growth, and improving standards of living for most Americans during what has been a difficult period for much of American business. This makes this a good time to enter the insurance industry as it enjoys higher margins because customers are purchasing more coverage due to increased costs from medical care and higher liability claims.

American Insurance Company provides affordable homeowners, auto, and business insurance through high-quality fulfillment centers across America that have earned a reputation for top-notch customer service.

AIC will face significant competition from both direct and indirect competitors. The indirect competition will come from a variety of businesses, including banks, other insurance companies, and online retailers. The direct competition will come from other well-funded start-ups as well as incumbents in the industry. AIC’s competitive advantages include its low prices, high quality, and excellent customer service.

AIC plans to grow at a rate that is above average for the industry as a whole. The company has identified a market that is expected to grow by more than 100% in the next decade. This growth is due to several factors: the increase in the number of two-income households, the aging population, and the impending retirement of many baby boomers will lead to an increase in the number of people who are purchasing insurance.

AIC projects revenues of $20M in year one, which is equivalent to 100% growth over the previous year. AIC forecasts revenue growth of 40%-60% each year on average for 10 years. After that, revenue growth is expected to slow down significantly due to market saturation.

The following table illustrates these projections:

Competitive Landscape

Direct Competition: P&C Insurance Market Leaders

Indirect Competition: Banks, Other Insurance Companies, Retailers

Market Analysis Conclusion

When writing the market analysis section, it is important to provide specific data and forecasts about the industry that your company operates in. This information can help make your business plan more convincing to potential investors.

If it’s helpful, you should also discuss how your company stacks up against its competitors based on what makes it unique. In addition, you can identify any strengths or weaknesses that your company has compared to its competitors.

Based on this data, provide projections for how much revenue your company expects to generate over the next few years. Providing this information early on in the business plan will help convince investors that you know what you are talking about and your company is well-positioned to succeed.  

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Other Resources for Writing Your Business Plan

How to Write a Great Business Plan Executive Summary How to Expertly Write the Company Description in Your Business Plan The Customer Analysis Section of Your Business Plan Completing the Competitive Analysis Section of Your Business Plan The Management Team Section of Your Business Plan Financial Assumptions and Your Business Plan How to Create Financial Projections for Your Business Plan Everything You Need to Know about the Business Plan Appendix Best Business Plan Software Business Plan Conclusion: Summary & Recap  

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Market Share: Understanding Its Impact and Calculation

One term frequently emerges as a cornerstone for understanding competitive success for businesses: Market Share. But why does it matter so much for businesses and investors alike? Let's delve into this concept, explore examples of market share, and look at a case study of Google's market share.

What is Market Share?

The Market Share definition is quite straightforward. It refers to the portion or percentage of sales in the market that is controlled by a particular company. In essence, it's a clear indicator of the dominance (or lack thereof) of a company in its respective industry. Market share is vital for any company as it reflects a company's competitiveness, efficiency, and appeal to consumers. For many business models , higher market share also entails several benefits such as higher profitability and stronger returns on invested capital due to economies of scale and network effects, for instance.

"Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity and correspondingly stronger returns on invested capital." – Jeff Bezos

How to Calculate Market Share

Calculating market share is a relatively simple process. It involves dividing the company's total sales or revenues by the industry's total sales over a specific period. This figure is then multiplied by 100 to get a percentage. This calculation provides critical insights into a company's market position relative to its competitors.

What is an Example of a Market Share?

To illustrate, imagine a company, 'Company A,' operating in the smartphone industry. If the industry's total annual sales amount to 100 million units and Company A sells 15 million units, then Company A's market share would be (15 million / 100 million) × 100 = 15%. This means Company A controls 15% of the market share in the smartphone industry.

However, market share can also be calculated based on revenue. This distinction is important as it can reflect different strategies and market positions. For instance, consider 'Company B,' which might sell fewer units but at a higher price point, focusing on a premium segment and thus generating more revenue per unit sold.

In contrast, Company A might be operating in a more volume-driven segment, focusing on selling more units at possibly lower prices. This distinction is crucial for understanding the dynamics of the market and the competitive strategies of different players in the industry.

Google's Market Share

Alphabet , the parent company of Google, is renowned for its near-monopoly in the search domain. For over a decade, Google has consistently maintained a dominating position, with its market share hovering around 90% globally. This remarkable figure not only underscores Google's supremacy in the search engine sector but also highlights the significant challenges faced by its competitors.

This dominance, or more precisely, the challenges competitors face in vying for market share against Google, is crucial for Alphabet's profitability and return on invested capital. Despite being one of the world's largest R&D spenders, Alphabet still boasts a free cash flow margin close to 30% as of 2023.

Why Market Share Matters

Attractiveness to Investors: Companies with substantial market shares are typically more attractive to investors because they are hard to compete with, often providing an investment that offers lower risk.

Economies of Scale: Higher market share can lead to economies of scale, reducing costs and increasing profitability – both of which directly increases the intrinsic value of a company.

Consumer Perception: From a consumer's perspective, a company with a high market share is often perceived as a trusted leader in its field, signifying a strong brand.

Market Share Insights via Quartr Web App

Communicating complex business concepts such as market share and key performance indicators (KPIs) can be challenging when relying solely on text. Diagrams, charts, and other graphical elements not only clarify a company's market position relative to its competitors but also facilitate strategic decision-making.

In our financial research platform, Quartr Web App , we have extracted individual slides from the presentations of approximately 9,000 public companies. This makes each mention on every one of these slides – spanning millions in total – individually searchable. We've also tagged each slide based on its content, allowing users to search for terms like "Market Share" and access all slides on this topic across the public markets in seconds. Let's take a closer look:

Spotlight: Sampo

Sampo, a prominent player in the banking and insurance sectors, has demonstrated exceptional skill in expanding and solidifying its market share. By analyzing market dynamics, Sampo efficiently adapts its product offerings and strategies to appeal to a diverse range of customers, from individual policyholders to large corporate clients. This focused approach not only ensures a broader market reach but also reinforces customer loyalty and drives sustainable growth. Here's Sampo's own breakdown of Property & Casual (P&C) Insurance market shares :

Spotlight: Nordnet

Nordnet, renowned for its innovative approach, stands as a leading online broker in the Nordics. Understanding customer behaviors and market trends, Nordnet skillfully designs its services an>d investment solutions. These offerings meet the diverse needs of a broad clientele, ranging from novice individual investors to seasoned traders and large financial institutions. To fully grasp the intricacies of Nordnet's strategies for market expansion and client acquisition, let's explore their comprehensive market share analysis :

Spotlight: HelloFresh

HelloFresh, a dominant force in the global meal kit industry, has carved a niche for itself with its customer-centric approach. By deeply analyzing consumer preferences and culinary trends, HelloFresh expertly tailors its meal offerings to balance convenience, variety, and nutritional value seamlessly. This strategic positioning enables the company to effectively serve a wide demographic, ranging from busy families in need of quick, healthy meals to culinary enthusiasts exploring new taste experiences. To better understand the extent of HelloFresh's market dominance, let's take a look at their own breakdown :

In Conclusion

Whether you're a company striving to increase your market share or an investor analyzing potential investments, grasping the nuances of market share offers valuable insights. As exemplified by Google's dominant position within search, market share not only reflects a company's current success but can also be indicative of its future trajectory and margin structure.

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With a broad global customer base spanning from equity analysts, portfolio managers, to IR departments, the reasons naturally vary, but here are four that we often hear:

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How to Write the Market Analysis Section of a Business Plan

Alyssa Gregory is an entrepreneur, writer, and marketer with 20 years of experience in the business world. She is the founder of the Small Business Bonfire, a community for entrepreneurs, and has authored more than 2,500 articles for The Balance and other popular small business websites.

The market analysis section of your business plan comes after the products or services section and should provide a detailed overview of the industry you intend to sell your product or service in, including statistics to support your claims.

In general, the market analysis section should include information about the industry, your target market, your competition, and how you intend to make a place for your own product and service. Extensive data for this section should be added to the end of the business plan as appendices, with only the most important statistics included in the market analysis section itself.

What Should a Market Analysis Include?

The market analysis section of your small business plan should include the following:

• Industry Description and Outlook : Describe your industry both qualitatively and quantitatively by laying out the factors that make your industry an attractive place to start and grow a business. Be sure to include detailed statistics that define the industry including size, growth rate , trends, and outlook.
• Target Market : Who is your ideal client/customer? This data should include demographics on the group you are targeting including age, gender, income level, and lifestyle preferences. This section should also include data on the size of the target market, the purchase potential and motivations of the audience, and how you intend to reach the market.
• Market Test Results : This is where you include the results of the market research you conducted as part of your initial investigation into the market. Details about your testing process and supporting statistics should be included in the appendix.
• Lead Time : Lead time is the amount of time it takes for an order to be fulfilled once a customer makes a purchase. This is where you provide information on the research you've completed on how long it will take to handle individual orders and large volume purchases, if applicable.
• Competitive Analysis : Who is your competition? What are the strengths and weaknesses of the competition? What are the potential roadblocks preventing you from entering the market?

7 Tips for Writing a Market Analysis

Here is a collection of tips to help you write an effective and well-rounded market analysis for your small business plan.

• Use the Internet : Since much of the market analysis section relies on raw data, the Internet is a great place to start. Demographic data can be gathered from the U.S. Census Bureau. A series of searches can uncover information on your competition, and you can conduct a portion of your market research online.
• Be the Customer : One of the most effective ways to gauge opportunity among your target market is to look at your products and services through the eyes of a purchaser. What is the problem that needs to be solved? How does the competition solve that problem? How will you solve the problem better or differently?
• Cut to the Chase : It can be helpful to your business plan audience if you include a summary of the market analysis section before diving into the details. This gives the reader an idea about what's to come and helps them zero in on the most important details quickly.
• Conduct Thorough Market Research : Put in the necessary time during the initial exploration phase to research the market and gather as much information as you can. Send out surveys, conduct focus groups, and ask for feedback when you have an opportunity. Then use the data gathered as supporting materials for your market analysis.
• Use Visual Aids : Information that is highly number-driven, such as statistics and metrics included in the market analysis, is typically easier to grasp when it's presented visually. Use charts and graphs to illustrate the most important numbers.
• Be Concise : In most cases, those reading your business plan already have some understanding of the market. Include the most important data and results in the market analysis section and move the support documentation and statistics to the appendix.
• Relate Back to Your Business : All of the statistics and data you incorporate in your market analysis should be related back to your company and your products and services. When you outline the target market's needs, put the focus on how you are uniquely positioned to fulfill those needs.

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Table of Contents

• Introduction

Market Share: Definition, Purpose, Formula, Variants, Factors, Limitations

Strike Fundamental Analysis Guide Market Share: Definition, Pu...

Market share is a key metric that investors analyze to understand a company’s competitive positioning and growth potential. Market share provides valuable insights into how well a business is performing relative to its peers in the marketplace. Simply put, market share refers to the percentage of total industry sales or volume that a company comprises. It is calculated by taking the company’s sales over a period and dividing it by the total market size for that same timeframe.

Understanding a company’s market share within its defined industry is crucial for investors. It conveys how big or small the company’s portion of the pie truly is. Larger market shares indicate stronger brand power, distribution reach, and mindshare with customers. Market leaders with dominant shares enjoy important advantages like economies of scale, pricing power, and barriers to entry that bolster profits. Meanwhile, analyzing market share trends over time reveals whether a business is gaining or losing ground versus competition. This fundamental metric offers a lens into evaluating the competitive strength and future trajectory of companies.

What is the market share of a company?

Market share refers to the percentage of total sales in an industry that is captured by a particular company. Market share is calculated by taking a company’s sales over a period and dividing it by the total sales in the market over the same period. It is an important metric in evaluating a stock, as a company’s market share gives insight into its competitive position and growth potential. Investors look at market share to gauge how dominant a company is in its industry and to assess future profitability.

For instance, Company A has considerable size and has a substantial percentage of the overall smartphone sales if it holds a 25% market share in the smartphone business. The higher the market share, the more power and pricing advantage a company potentially has over competitors. Market share trends over time also show whether a company is gaining or losing ground against rivals. As such, increasing market share is usually a positive sign for future revenue and stock price growth. However, an extremely high market share also indicates a company is nearing a saturation point in its market. Market share provides a simple but important data point for investors evaluating a stock.

What is the purpose of using market share?

The purpose of using market share in the stock market is to evaluate a company’s competitive position, growth opportunities, risks, and valuation relative to industry peers. Companies with large and rising market share are often seen as competitively advantaged in their industry. High market share suggests the company offers products or services that are in high demand and take business from rivals. Investors view market share as a signal of dominance and favour companies gaining a share. Losing share over time indicates challenges for a business. Comparing market share between industry peers helps establish their relative competitive positions.

Market share data reveals growth trajectories and opportunities. Gaining share points to a company successfully expanding in its addressable market. This organic growth is attractive to investors. On the other hand, losing shares sometimes prompts concerns about missteps or increased competition. Comparing market share trends to revenue and earnings growth also indicates how effectively a company is capitalizing on opportunities. The total addressable market size contextualizes existing share and potential expansion possibilities. Declining market share is a potential warning sign of future struggles for a company. Eroding shares often leads to lower sales and earnings as rivals take away business. This risk is especially high in competitive or cyclical industries. Even large dominant players are at risk of disruption from new innovations or competitors. Investors analyze share shifts to identify companies losing ground and assess the potential impacts.

What is the formula for market share?

To calculate a company’s market share, take the company’s total sales over a specified time period and divide it by the total sales of the entire market over the same time period. The result is the company’s market share expressed as a percentage.

The basic formula for calculating market share is as stated below.

Company’s Sales / Total Market Sales = Company’s Market Share

For example, assuming a company has Rs. 10 million in sales and the total market sales are Rs. 100 million, then the company’s market share is 10%.

Rs. 10 million / Rs. 100 million = 10% market share

While this basic calculation is straightforward, there are five additional factors to keep in mind when determining market share. The market must be clearly defined. This might be an entire industry, a geographic region, a product category, etc. The more narrowly the market is defined, the easier it is to obtain meaningful market share figures. Private companies must be excluded from the total market sales figure, as their sales data is not publicly available. Market shares are only calculated for public companies. Sales revenues must be measured over the same time period for both the company and the total market, often annually. This provides an apples-to-apples comparison. A company’s market share is determined independently for each of its product lines or market groups. Units sold rather than sales revenue are also used in the formula, depending on the availability of data. 

How to calculate the market share of a company?

To determine market share, you first need the company’s revenue or sales figures for a given period of time. Then, you need the total sales revenue for the entire industry over the same time period. With those two figures, the calculation is as stated below.

Company’s market share = (Company revenue ÷ Total industry revenue) x 100

The company’s revenue is divided by the total revenue for all competitors in the industry. This gives the percentage of market share held by that company. The market share is typically displayed as a percentage or fraction of the total market. A higher market share signals that the company has a stronger position and level of control in its industry. Market share provides insight into how competitive a company is and its strategic positioning against peers.

For a sample year, let’s assume Tata Motors’ annual revenue was Rs 80,000 crores. The total annual revenue of the entire Indian automobile industry was Rs 4,00,000 crores. To calculate Tata Motors’ market share, we take its revenue and divide it by the total industry revenue.

So Tata Motors’ market share would be as follows. 

(Tata Motors Revenue/Total Industry Revenue) x 100

(80,000/4,00,000) x 100 = 20%

Therefore, Tata Motors captured a 20% share of the total Indian automobile market in that example year. This market share indicates that Tata Motors holds a considerable presence and position in the Indian automobile industry. A 20% market share means 1 out of every 5 rupees spent on automobiles in India goes to Tata Motors.

What are the variants of market share?

The key variants of market share in equities are classic market share or overall exchange portion, unit market share among a sector, revenue market share in an industry, relative market share compared to competitors, customer market share by investor type, and market share growth over time.

Classic market share

Market share refers to the percentage of a market accounted for by a specific company or product. It is an important metric used by investors to evaluate the competitive position of a company’s stock relative to its peers in the industry. 

To calculate market share, you would divide a stock’s total revenue or sales by the total revenue or sales of the entire market or industry. For instance, Tech Company A’s market share would be 5% (Rs. 5 billion / Rs. 100 billion) if it had reported Rs. 5 billion in total sales last year and the whole tech sector had reported Rs. 100 billion in total revenue. Investors compare Tech Company A’s 5% market share to that of its competitors to understand how much of the tech market each company captures. Market share gives a sense of the relative size and competitiveness of a stock within its market or sector.

Unit market share

Unit market share refers to the percentage of total unit sales or volume accounted for by a specific company or product. It provides a sense of the competitive position and sales volume of a stock relative to peers in its industry.

To calculate unit market share, you would divide the total unit sales or volume of a stock by the total unit sales or volume of its entire market or industry. In the event that Tech Company A sold two million smartphones last year and the smartphone industry as a whole sold one hundred million, its unit market share would be 2% (2 million/100 million). This indicates that Tech Company A accounted for 2% of total smartphone unit sales. Investors compare Tech Company A’s 2% unit market share to that of competitor stocks to evaluate which companies are selling more volume and capturing a larger share of units sold in the tech product market. Unit market share is an important complementary metric to revenue-based market share.

Revenue market share

Revenue market share refers to the percentage of total market or industry revenue accounted for by a specific company or product. It provides a sense of the competitive position and sales performance of a stock compared to industry peers based on revenue generated. 

To calculate revenue market share, you would divide a stock’s total revenue by the total revenue of its entire market or industry. For instance, Tech Company A’s revenue market share would be 5% (Rs. 5 billion/Rs. 100 billion) if it had reported Rs. 5 billion in total revenue last year, and the tech industry as a whole brought in Rs. 100 billion. This indicates that Tech Company A accounted for 5% of all revenue generated in the tech market. Investors use revenue market share to evaluate how effectively a stock is monetizing sales compared to competitors. A high revenue market share indicates strong sales execution and pricing power. Comparing revenue market share over time shows how a stock is gaining or losing market share and competitive standing within its industry.

Relative market share

Relative market share refers to a company’s market share compared to that of its leading competitor in the industry. It provides perspective on a stock’s market share relative to the top competitor in its market. 

To calculate relative market share, you divide a stock’s market share by the market share of the leading competitor in that industry or market. For instance, Tech Company A’s relative market share is 40% (10%/25%) if it holds a 10% market share in the tech sector, while Tech Company B, the industry leader, holds a 25% market share. This indicates that Tech Company A’s market share is 40% of the leading competitor’s share. A relative market share of less than 1 or 100% indicates a competitive disadvantage versus the market leader. Investors use this metric to evaluate how competitive a stock’s market share is compared to the dominant player in the industry. Monitoring relative market share over time shows how a stock is gaining or losing ground on the leading competitor in its market.

Customer market share

Customer market share refers to the percentage of total customers or accounts in a market that is served by a specific company or product. It provides insight into how broadly a stock’s customer base penetrates its addressable market.

To calculate customer market share, you divide the number of customers that a company serves by the total number of customers in that industry or market. For instance, Tech Company A’s customer market share is 10% (50 million/500 million) if it has 50 million paying subscribers and the entire addressable market in the tech sector is 500 million prospective customers. This means Tech Company A has captured 10% of the total available customers in its market. Investors use customer market share to evaluate how effectively a stock is acquiring and retaining customers relative to the total customer opportunity in its market. Gaining more customer accounts improves a company’s competitive position and often leads to higher revenue and market share overall.

Market share growth

Market share growth refers to the increase in a company’s market share over a specified period of time. It demonstrates whether a stock is gaining or losing market share relative to competitors. 

Market share growth is calculated by subtracting the previous year’s market share from the current year’s market share. For instance, Tech Company A’s market share growth would be 2 percentage points, or 20%, if it had a 10% market share in 2020 and a 12% market share in 2021 (12% – 10% = 2 percentage points increase; 2/10 = 20% growth). This positive market share growth indicates Tech Company A captured additional market share over the past year compared to its competitors. Investors monitor market share growth to evaluate whether a stock is becoming more competitive and gaining strength in its industry. Sustained market share growth typically signals a company’s products or services are in high demand. It often leads to higher revenue growth and reflects a company’s effective business strategy and execution.

Market share is a key metric for assessing a company’s competitive position and performance in its industry, with variants looking at overall share, unit share, revenue share, relative share versus competitors, customer share of a total market, and market share growth over time.

What are the factors affecting market share?

Companies gain greater market share in the stock market through competitive advantages, product uniqueness, reputation, sales execution, distribution reach, technological capabilities, operational efficiency, financial strength, economic conditions, industry growth rates, and favourable regulations. The competitive landscape significantly impacts market share. The number of competitors and their size affect how much market share a company is able to capture. In a highly fragmented market with small players, it is easier for a large company to gain significant market share. However, in a consolidated market dominated by a few large players, gaining market share requires aggressive strategies to lure customers away from entrenched incumbents. 

The Indian stock market is quite fragmented, with over 4,000 listed companies. The top 200 companies account for over 75% of total market capitalization, indicating consolidation at the top. However, beyond the top players, thousands of small and mid-cap companies fiercely compete for investors. Large financial institutions and fund houses with significant capital more easily gain market share in the mid and small-cap space. The quality and features of a company’s product or service impact its competitive position. Companies that provide superior quality products and services tend to gain market share versus competitors. Unique value propositions and product differentiation make it easier to attract customers.

How do you increase a company’s market share?

Companies increase market share in the stock market by improving product quality, expanding distribution networks, enhancing marketing reach, leveraging technological innovations, and executing strategic mergers and acquisitions. Embracing new technologies and staying up-to-date with the latest innovations helps a company gain a competitive edge and increase its market share. Investing in automation, data analytics, artificial intelligence, etc., helps streamline operations, cut costs, and provide better insights into customer preferences. Companies that rapidly adopt new technologies are able to disrupt the market, meet changing consumer demands quicker, and take market share away from laggard competitors. Investors should look for companies that have a strong technology roadmap and are quick to implement cutting-edge solutions.

Providing an exceptional customer experience helps boost customer retention, brand loyalty and word-of-mouth promotion for a company. Companies that invest in customer service training, offer robust self-service options, and implement customer feedback systems tend to have higher customer satisfaction. This builds a loyal customer base that continues to purchase from the company rather than competitors. Investors should analyze customer satisfaction scores, retention rates, and brand reputation to identify companies that are customer-centric. Companies with strong customer loyalty are better positioned to gain market share over time.

How do you protect a company’s market share?

Companies protect their market share in the stock market by constantly enhancing their core competitive strengths, innovating with new offerings and strategies, focusing intensely on customer needs and relationships, and hiring exceptional talent. The first step is to analyze the current market share and understand where it stands relative to competitors. This involves looking at market share percentages over time to identify any declining trends. Research industry data, news, competitor moves, and other factors that could be eroding market share. Determine which product segments, customer groups or geographic regions are being lost and why. Understanding the root causes will help guide an effective counterstrategy. 

Next, companies need to focus on and reinforce their core competitive advantages. A strong brand, patented technology, proprietary data or distribution network are typical advantages that set a company apart. Invest in enhancing those strengths through R&D, marketing, intellectual property protection and supply chain improvements. Dominating a niche or feature that competitors cannot easily replicate provides a shield against losing customers and shares. Communicating these competitive strengths to investors is equally important to maintain share price. Introducing innovative products and services that disrupt the market is another offensive tactic. Analysts and investors get excited by new offerings that could become significant future revenue drivers with first-mover advantage. Bold innovation signals a company is not standing still. However, innovation carries risk and investment. Rigorously analyze market demand and get customer feedback before sizable investment. Phase in rollouts to minimize risk.

Make strategic acquisitions of competitors or related businesses to immediately boost market share and expand into new segments. Acquisitions also eliminate rivals while gaining their customers and capabilities. Investors typically reward acquisitions that strategically fit a company’s core business and have strong financial synergies. However, Wall Street punishes deals deemed too costly, or that take a company too far outside its core strengths. Management must make a compelling case for any acquisition.

How do you find a company’s market share?

Strike is the go-to resource for identifying a company’s market share positioning. Through its robust company profiles, Strike assembles key data points that shed light on the percentage of market demand a business has captured in its industry or sector. By comparing a firm’s revenue to total sales for its market category, investors can use Strike to gain insight into how large or small a player it is relative to its competition.

How do we compare the market share of the two companies?

To effectively compare the market share of two companies, you need to analyze metrics like total revenue, units sold, and percentage of total industry sales for each company to determine which one has captured a bigger portion of the overall market.

You need to define the total addressable market or industry being analyzed. The worldwide athletic footwear business, for instance, would probably be a suitable market to compare two sports footwear companies. Carefully defining the market is crucial, as the share calculation varies dramatically depending on the market definition. Once the market is defined, you will be able to determine the total market size, usually based on metrics like overall industry sales, units sold, or other relevant volume metrics. With the market clearly defined and sized, you will be able to look at the absolute revenues or unit sales for each company. Compare their respective sales and determine what percentage each one accounts for relative to the overall market. The company with higher absolute sales and market share is in a stronger competitive position. Consider historical trends as well – a company with increasing market share indicates growing competitive strength in the market.

Market share analysis should go beyond just a single snapshot in time – looking at historical trends over the past 5-10 years will provide more insight into relative momentum. Has one company been steadily gaining share at the expense of the other? Or have both maintained relatively stable positions? Over time, small gains in share become enormously impactful. It’s also instructive to look at market share breakdown by segment, category or region. Is one company stronger in certain segments or geographies? For example, a company has a dominant market share in a key growth category, indicating future opportunities. Or it has significant exposure to fast-growing emerging markets. Segment analysis provides colour into where each company’s strengths and weaknesses lie.

To complement market share analysis, also consider factors like production capacity, distribution footprint, branding, R&D budgets and intellectual property. These qualitative factors give insight into which company is better positioned to gain future market share. Competitive strategy and execution are also vital – who has more effective product development, marketing, or partnerships that could drive above-market growth?

Financial metric analysis is also important when comparing market share. Look at revenue growth rates, profitability margins and return on invested capital metrics. A company with superior financial performance is often better positioned competitively. Valuation multiples are also affected by relative market share trends.

What is meant by high market share?

A company with a high market share has a large percentage of the total sales or usage in its product category or industry. Firms with high market shares benefit from economies of scale, which enables them to negotiate better deals with suppliers, spread fixed costs over a larger revenue base, and reinvest in innovation. These advantages allow market leaders to achieve higher profit margins. Additionally, companies with significant market shares leverage their brand reputation and distribution networks to reach the widest customer base. For these reasons, stocks of market-leading companies tend to outperform the broader market.

High market share for a company means that it has a sizable portion of the total market capitalization or trading volume. The stock market capitalization refers to the total value of all outstanding shares of stock issued by publicly traded companies. Trading volume indicates the total number of shares traded for a particular stock or the entire market during a given period. A high market capitalization signifies that investors have confidence in the future prospects of the company and are willing to pay a premium for its shares. It also implies that the company has sizable assets, profits and cash flows. Four ways a company attains a high market capitalization are through organic growth, acquisitions, stock splits or issuance of new shares.

What is meant by low market share?

A company with a low market share has a small percentage of the total sales or usage in its product category or industry. While large market shares signal brand strength, low shares do not necessarily indicate weak stocks. Category leaders with vast distribution networks and strong consumer habits become entrenched over time. This grants them pricing power and economies of scale that boost margins. However, low shares at the outset present opportunities to capture growth before competitors saturate the market. Investors must identify disruptive companies positioned to gain significant market share through differentiation.

A low market share implies that a company has captured only a small fraction of the total market demand. This has important implications for the company’s competitive position, growth prospects, profitability, and investor perception.

What is a good market share?

A company with a market share between 20-40% in its industry is generally considered to have a strong and favourable position. Investors look at market share as one indicator of a company’s potential for growth and profitability. A higher market share typically means a company has competitive advantages over rivals, will benefit from economies of scale, and has pricing power. This allows it to generate strong revenues and profits over time.

Generally, a market share above 40% is considered a monopoly or dominant position. Between 20-40% is a strong market share, 10-20% is good, and under 10% is weak. However, acceptable market share levels differ significantly by industry. 

In fragmented industries with small competitors, even a 10-15% market share is respectable. Industries like retail, restaurants, and consumer products are highly fragmented. On the other hand, industries with huge barriers to entry and just a few major players require a minimum 25-30% share to be competitive. Industries like aerospace, telecom, and pharmaceuticals are highly concentrated.

What are the limitations of market share?

The most obvious limitation of market share is that it provides a snapshot of a company’s position at a single point in time. Market share figures on their own do not reveal anything about the trajectory of a company – whether it is gaining or losing ground against competitors. A company could have a dominant 50% market share today but be on the decline, rapidly losing share. On the other hand, a company with only a 10% market share could be gaining share rapidly and be on track to overtake the leader. Investors need to look at the trends in market share over time rather than a single data point.

Market share also reveals nothing about the profitability of sales. A company could be generating significant revenues to achieve a high market share but still be losing money on those sales due to slim or negative profit margins. Two companies with identical market shares could have vastly different bottom-line profitability. Investors should look at metrics like profit margins and return on investment to gauge the financial success and health of a company rather than simply looking at market share. A lower market share leader could actually be more valuable than a high share laggard, earning weak or negative returns.

The scope of the defined market itself also limits the usefulness of market share as a metric. Market share is calculated by looking at a company’s sales as a percentage of total sales within its defined market or industry. Differences in how analysts and companies choose to define the boundaries of their market significantly impact the relative market share. Companies have an incentive to define their markets as narrowly as realistically possible in order to boost their apparent market share. Investors must be aware of discrepancies in market definitions when comparing market share figures.

How can market share contribute to business success?

Higher market share signals competitive strength that leads to greater sales, higher margins, and superior earnings growth for a company over the long term. Companies with larger market shares benefit from economies of scale, which leads to lower average costs. By producing and distributing products on a larger scale, fixed costs are spread over a larger output, resulting in lower per-unit costs. For example, in the Indian banking sector, larger banks like HDFC and ICICI, with bigger customer bases and branch networks, are able to offer services at competitive rates. Their higher volumes allow them to negotiate better deals with suppliers and creditors. This results in higher profit margins and returns for shareholders.

A larger market share creates higher brand visibility and mind share. Consumers are more aware of bigger brands like HUL, Asian Paints and Pidilite in the Indian FMCG sector. This leads to higher sales as consumers prefer purchasing from established and familiar brands. The brand equity accrued over years of marketing and customer experience gives these market leaders a distinct competitive advantage. Their stocks are perceived as stable long-term investments by investors. A higher market share leads to increased bargaining power with channel partners like distributors and retailers. Top companies negotiate better trade margins, incentives and display spaces. For instance, automakers like Maruti Suzuki and vehicle financiers like Shriram Transport Finance have significant bargaining power due to their scale and dominant position in their respective industries. This helps improve profitability and stock returns.

A higher market share helps create strong entry barriers for new entrants and smaller players. Established distribution networks, strong brand equity, patents and proprietary technology make it difficult for new firms to enter and gain scale. For example, in the cigarettes segment, ITC enjoys a strong monopoly due to high entry barriers for new players. Its stock is viewed as a stable defensive investment.

How does market share impact profitability?

A higher market share typically allows a company to achieve greater economies of scale, pricing power, leverage over suppliers, and barriers to entry, which increase profit margins and boost stock valuations. In many industries, the company with the largest market share is seen as the market leader. This dominant position allows the leader to set industry trends, influence consumer perceptions, and deter new entrants. With their brand power and reach, market leaders charge premium pricing, spread costs over higher production volumes, negotiate discounts from suppliers, and withstand price wars more successfully than smaller rivals. As a result, market leaders often enjoy higher profit margins that boost their stock price and market capitalization. 

Companies with the largest market shares in their industries are considered market leaders. These dominant firms use their scale and reach to shape consumer preferences, set industry standards, and prevent new competition. With strong brands and distribution, leaders maintain premium pricing, lower costs via scale efficiencies, and withstand competitive pressures better than smaller players. Thus, market leaders in India tend to enjoy fatter profit margins that translate into higher market caps and stock returns.

Profitability ratios, such as gross margin and return on assets, are significantly impacted by economies of scale, which market leaders often exploit. By spreading fixed production and operating costs over a higher output, these companies lower their per-unit costs, directly enhancing their profitability ratios . This cost advantage over smaller-scale rivals bolsters both profitability and stock valuations. Indian firms with leading market shares leverage their scale in functions like manufacturing, distribution, marketing, and procurement to achieve lower costs and higher margins. These efficiencies are reflected in their superior profitability ratios, making them more attractive to investors who often assess a company’s financial health through these ratios.

How can market share help forecast revenue?

Market share data helps with forecasting possible revenue streams and stock research valuation models by examining a company’s percentage of overall sales volume for a good or service in comparison to rival companies. For example, in the Indian auto sector, Maruti Suzuki has maintained a formidable 50%+ market share in passenger vehicles over the last decade. Its dominant share signifies unmatched scale, distribution reach, brand, and product appeal with Indian car buyers. This steady market share leadership enables Maruti Suzuki to deliver stable growth in sales volumes and earnings year after year, making it a relatively predictable auto stock. 

In contrast, Tata Motors has seen its Indian passenger vehicle market share decline from 15% to under 5% in the last 5 years amid intensifying competition. Its loss in market share has weighed on Tata’s domestic auto business revenue and created uncertainty on turnaround potential. The Indian IT services space also witnesses fierce competition for market share between TCS, Infosys, HCL, Wipro, etc. Leadership in digital services shares points to future revenue growth from hot areas like cloud computing, analytics, AI, etc. For example, Infosys gaining market share in digital over rivals has supported higher growth and P/E multiples for Infosys stock.

Among Indian banks, consistent gains in deposit and loan market shares by private banks like HDFC Bank, ICICI Bank, and Kotak Mahindra Bank reflect their competitive strength over public sector banks. Growing market share signals rising future revenue and profits as private banks grab business from PSUs.

What is the relationship between market share & ROI?

Companies with larger market shares tend to have higher profit margins and, thus, higher returns on investment for shareholders in the stock market. Larger market share allows companies to leverage economies of scale in India’s massive consumer market. A corporation is able to manufacture at a cheaper cost per unit when it owns a significant portion of the industry’s total sales. Lower fixed costs per product are the result of mass manufacturing. Larger companies also negotiate discounts on raw materials and benefit from bulk purchasing. The cost savings from economies of scale directly improve profit margins and ROI. High market share companies like Reliance, Tata, and Infosys leverage their dominant positions to keep costs low.

Significant market share enables firms to wield pricing power over Indian consumers. Companies that control a substantial portion of a market set prices that customers have little choice but to pay. This ability to dictate prices, rather than having prices forced down by competition, is extremely valuable. It enhances profitability and gives high market share to companies like HDFC Bank, Airtel, and Asian Paint’s command over monetizing their products and services.

How does knowing market share help in fundamental analysis?

Market share data helps investors assess a company’s competitive position and growth potential in fundamental analysis. The size of a company’s market share impacts its ability to earn attractive profits. A company with a dominant market share has more pricing power compared to smaller competitors. It potentially charges higher prices or generates higher sales volumes. This enables the company to earn strong profit margins and generate more cash flows. A declining market share over time squeezes profit margins as competition intensifies. Evaluating the trends and size of market share indicates the strength of a company’s competitive position.

In fundamental analysis, understanding a company’s market share is crucial as it offers insights into its competitive position and growth potential. Market share, a key element in fundamental analysis, reflects the size of a company’s opportunity for future growth. When a company gains market share in a growing market, it signifies a tremendous opportunity. Conversely, a declining market share in a slowing market can be a red flag in fundamental analysis, signaling potential troubles for future revenues and profits. Fundamental analysis involves overlaying market share data with market growth trends to assess a company’s growth potential comprehensively.

The sources of market share gains are also pivotal in fundamental analysis . Increases in market share driven by temporary price discounting are generally seen as less sustainable than gains from launching innovative products or superior marketing strategies. In fundamental analysis, the more a company gains share through enduring competitive advantages rather than temporary promotions, the better positioned it is for financial stability. Therefore, in the process of fundamental analysis, reviewing the drivers behind changes in market share is a valuable exercise to gain deeper insights into a company’s long-term prospects.

Arjun Remesh

Head of Content

Arjun is a seasoned stock market content expert with over 7 years of experience in stock market, technical & fundamental analysis. Since 2020, he has been a key contributor to Strike platform. Arjun is an active stock market investor with his in-depth stock market analysis knowledge. Arjun is also an certified stock market researcher from Indiacharts, mentored by Rohit Srivastava.

Shivam Gaba

Reviewer of Content

Shivam is a stock market content expert with CFTe certification. He is been trading from last 8 years in indian stock market. He has a vast knowledge in technical analysis, financial market education, product management, risk assessment, derivatives trading & market Research. He won Zerodha 60-Day Challenge thrice in a row. He is being mentored by Rohit Srivastava, Indiacharts.

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12 Tips to Estimate Market Share for New Businesses

Are you thinking of starting a business? Before you do, it’s important to have an estimate of the market share you can expect to achieve. This will help you set realistic goals and make informed decisions about your business strategy.

There are a number of factors to consider when estimating market share, including the size and growth of the overall market, the competition, your target audience, and your unique selling proposition. To get started, here are 12 tips to help you estimate market share for new businesses:

Know your target market

If you’re starting a new business, one of the first things you need to do is estimate your potential market share. To do this, you need to understand your target market. Who are your potential customers? What needs do they have that your product or service can address? What are their buying habits? Once you have a good understanding of your target market, you can begin to estimate what portion of that market you can realistically expect to capture.

There are a number of factors that will affect your market share. The most important is probably the competition. If there are already established businesses serving your target market, it will be more difficult to gain market share. You’ll need to offer a unique product or service that meets the needs of your target market better than what’s currently available.

Another important factor is pricing. If your prices are too high, you’ll struggle to attract customers. On the other hand, if your prices are too low, you may not be able to make a profit. Finding the right price point is crucial for success.

Promotion is also key when it comes to gaining market share. You need to let people know about your business and what it has to offer. The best way to do this is by creating a strong marketing campaign that targets your specific audience.

Finally, remember that gaining market share takes time and patience. It’s not something that happens overnight. Be prepared for a long-term commitment and focus on building relationships with customers over time.

Research your industry and competitors

If you’re starting a new business, one of your first questions might be “What is the size of my potential market?” To answer that, you need to research your industry and your competitors. Here’s how:

First, identify the overall size of your industry. This can be done by researching industry reports or contacting trade associations. Once you have an estimate of the total market size , you can begin to estimate your share of that market.

Second, research your competitors. How many are there? What is their market share? What are their strengths and weaknesses? Knowing this information will help you determine what portion of the market you can realistically capture.

Third, consider what segment of the market you will target. Are there certain demographics or customer types that are more likely to buy from you? By targeting a specific segment, you can further refine your estimate of market share.

Finally, use all this information to come up with an estimate for your business’s potential market share. Keep in mind that this is only an estimate; as your business grows, you’ll be able to refine it further.

Know your competitors

In order to estimate market share for a new business, it is important to first understand the competitive landscape. This means taking a close look at the existing businesses in the same industry or market, and understanding their strengths and weaknesses. This can be done through research, talking to industry experts, or even talking to customers of these businesses. Once you have a good understanding of the competition, you can start to estimate what share of the market your new business could realistically achieve.

There are a number of factors that will affect your market share estimation, including your pricing strategy, marketing mix, target audience, and unique selling proposition. If you have a clear understanding of these factors and how they relate to your competition, you will be in a much better position to make an accurate estimation.

It is also important to keep in mind that market share is not static – it can fluctuate over time based on changes in the marketplace or economy. As such, it is important to regularly monitor your competition and adjust your estimation accordingly.

Analyze your sales data

If you’re looking to Estimate Market Share for New Business, there are a few things you’ll need to analyze. First, take a look at your sales data and see how your business has been performing. This will give you an idea of what kind of market share you currently have and how much room you have to grow.

Next, research your competition and see how they’re doing in the market. This will help you understand what kind of share of the market they have and where they might be vulnerable. Finally, put together a plan for how you can grow your business and take market share away from your competitors.

This may involve investing in marketing or developing new products or services that appeal to your target audience. By taking the time to Estimate Market Share for New Business, you can develop a plan to make your business more successful.

Use market share analysis tools

If you’re looking to estimate market share for a new business, there are a few different market share analysis tools you can use. One popular method is to look at the market share of similar businesses in your industry. This can give you a good idea of what kind of market share you can expect to achieve.

Look at the overall size of the market and try to estimate what percentage of that market your new business could realistically capture. Finally, you can also survey potential customers and ask them how likely they would be to purchase from your new business. While no one method is perfect, using a combination of these methods should give you a pretty good idea of what kind of market share you can expect for your new business.

Use customer surveys

If you’re planning to start a new business, one of the first things you’ll need to do is estimate your potential market share. This will help you determine how much of the overall market you can realistically expect to capture.

There are a number of different ways to estimate market share. One common method is to conduct customer surveys. This involves asking potential customers questions about their buying habits and preferences. Based on the responses you receive, you can get a good idea of how much of the market would be willing to purchase your product or use your service.

Another way to estimate market share is to look at similar businesses in your industry and see what percentage of the overall market they hold. This can give you a good starting point for estimating your own business’s potential market share.

Once you have an idea of your potential market share, you can start making plans for how to achieve it. Remember that it takes time and effort to build a successful business, so don’t be discouraged if you don’t reach your goal right away. With perseverance and hard work, you can make your new business a success!

Use social media listening tools

As the world progresses, so does the way we advertise and estimate market share for new businesses. In the past, businesses would have to rely on things like surveys and customer feedback in order to get an idea of how well their product was doing in comparison to others. However, with the advent of social media, there is now a much easier way to get an accurate estimate of market share.

There are a number of social media listening tools available that can help you track mentions of your brand or product. This data can then be used to give you an idea of how popular your product is in comparison to others on the market. Additionally, these tools can also help you track sentiment around your brand, which can be useful for gauging customer satisfaction levels.

Overall, using social media listening tools is a quick and easy way to get a good estimate of your new business’ market share. It’s important to keep track of this data over time so that you can see how your business is growing in comparison to others.

Use Google AdWords Keyword Planner

If you’re looking to estimate the market share for a new business, one of the best tools to use is the Google AdWords Keyword Planner. This tool allows you to see how much competition there is for certain keywords, as well as get an estimate of how many searches are being performed for those keywords each month.

To use the Keyword Planner, simply enter in a few relevant keywords for your new business and then click “Get ideas.” From there, you’ll be able to see estimated monthly searches for those keywords, as well as the competition level. The competition level is indicated by a number from 0-1, with 1 being the highest level of competition.

Keep in mind that these numbers are only estimates, but they can give you a good idea of what kind of market share you can expect to achieve with your new business. If you’re targeting highly competitive keywords, you’ll need to put in more effort to stand out from the crowd. However, if you’re targeting less competitive keywords, you may have an easier time achieving a higher market share.

Use Google Trends

If you’re looking to estimate market share for a new business, one helpful tool you can use is Google Trends. You can use Google Trends to compare the relative popularity (based on data from Google) of two or more terms over time. This can be helpful in estimating market share, as you can see how the popularity of your business’s products or services compares to that of your competitors.

To use Google Trends, simply go to the website and enter in the terms you want to compare. You’ll then see a graph showing the relative popularity of those terms over time.

Use Alexa Traffic Rank

If you’re in the process of starting a new business, one of the first things you’ll need to do is estimate your potential market share. There are a number of ways to do this, but one simple method is to use Alexa Traffic Rank.

Alexa Traffic Rank is a measure of website traffic, and it’s a good proxy for overall market share. To get started, just go to Alexa.com and enter the URL of your website. From there, you’ll be able to see how much traffic your site is getting relative to other sites in your industry.

This information can be helpful in a number of ways. First, it can help you gauge the overall size of your potential market. If you’re in a large industry with lots of competition, you’ll need to fight for every scrap of market share. On the other hand, if you’re in a small industry with few competitors, even a small amount of market share can mean big profits.

Second, Alexa Traffic Rank can help you understand where your potential customers are coming from. If most of your traffic is coming from search engines like Google or Bing, that means people are actively looking for businesses like yours. On the other hand, if most of your traffic is coming from social media sites like Facebook or Twitter, that means you’ll need to work harder to reach potential customers who may not even know they need what you’re selling yet.

Finally, Alexa Traffic Rank can help you track your progress over time. As you grow your business and attract more visitors to your site, you should see your Alexa Traffic Rank increase accordingly. This will give you a good idea of how well your marketing efforts are paying off and whether or not you’re on track to achieve your desired market share

Use BuzzSumo

If you’re looking to estimate market share for a new business, one tool you can use is BuzzSumo. BuzzSumo is a tool that allows you to see how much social media engagement a particular piece of content gets. You can use this data to infer how popular a particular topic or brand is.

To use BuzzSumo, simply enter in a search term or URL into the search bar. You’ll then be shown the most popular content for that search term, as well as the number of social media interactions it received. You can also filter the results by time period, which can be helpful if you’re trying to compare market share over time.

BuzzSumo is just one tool you can use to estimate market share. Other methods include looking at web traffic data, conducting surveys, and analyzing customer data. Whichever method you choose, market share estimation is an important part of understanding your place in the market and formulating a successful business strategy.

Use competitor analysis tools

In order to estimate the market share for a new business, it is necessary to first understand the competitive landscape. This can be done through various competitor analysis tools, such as conducting a SWOT analysis or using market share models.

A SWOT analysis is a great way to understand the strengths and weaknesses of your competitors, as well as the opportunities and threats they face. This information can then be used to create a market share model that takes into account all of these factors.

There are many different ways to create a market share model, but one of the most commonly used methods is the Boston Consulting Group (BCG) matrix. This model looks at four different factors: market growth, relative market share, competitive strength, and profitability. By taking into account all of these factors, you can get a good idea of where your new business will fit into the competitive landscape and what kind of market share you can expect to achieve.

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Market Share

Why is market share important, how to gain market share, how to increase market share, .css-uphcpb{position:absolute;left:0;top:-87px;} what is market share, definition of market share.

Market Share is, very simply, the percentage of a certain sector that your product, service or software is responsible for, calculated by sales. 

Market share is used to give you an idea of how large, powerful or important your business is within its particular sector. You can calculate your share by taking your total sales and dividing the figure by the total sales of the entire sector or market you are selling in.

A company that maintains its share over time is growing its revenues in line with its competitors. But an increase shows a speedier, market-leading, boost in revenue.

Market share is a useful metric, delivering insights far beyond illustrating an organization’s relative size within the market it is operating in. 

Knowing your responsibilities in the market also indicates how successful your business is in relation to competitors, and how effective your marketing, advertising, and new product development have been.

Leveraging Product Strategy

Understanding and analyzing market share is vital for an organization looking to scale up or improve profitability.

Companies looking to increase their share have a few options.

They can look to marketing and advertising to attract new customers , develop new products for the market, lower prices to undercut the competition, or attempt to expand the size of their target market by appealing to new demographics.

Innovation and disruption are also great ways of increasing market penetration .

After all, offering a new technology — one that competitors do not have access to — is a highly effective way of convincing users to migrate to your product or service.

Increasing market share means increasing the effort put into sales as a company and using additional or new strategies to facilitate your journey to get there.

Companies looking to increase their market share can take several approaches, including:

Finding your niche and making products that fit into it

Tap into your company’s unique characteristics that set you apart from your competition. Are you known for brilliant design? Do you build powerful user interfaces that are easy to navigate? Identify the things that help customers remember your products and keep them coming back for more. If you incorporate these things into your products, you can create a clear brand identity, which helps you increase your market share.

Understanding your direct competitors

To increase your market share, you first need to understand the market.

Get to know what other leaders in your market are doing and how your offerings compare with theirs. If there are gaps in your offerings, look for unique and innovative ways to fill those gaps better than your competition does. 

Innovate and change your products as society changes

There's a reason the Commodore 64 isn't the world's best-selling computer anymore, even though it once was. Other companies changed their products along with society's changes and found new, innovative ways to build computers that addressed customers' needs better than Commodore could. 

That's why it's important to keep innovating and iterating on your products. If you don’t, you'll be left behind.

Engage with your customers 

Since you’re trying to increase your market share, and your market is represented by customers, it makes sense to engage with them. Customers know what they want and what their needs are, so asking them through a survey or social media is a great way to find out what else your company could do for them. Plus, when customers notice you’re interested in their feedback, they’ll be more likely to buy and recommend your products.

Keep delivering great products and making customers happy   

This is as obvious as it is important — you can’t increase your market share with unhappy customers. If you focus on delivering great products and features, excellent customer service and engagement, and keep innovating, you're much more likely to increase your market share.

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Money blog: 'Loud budgeting' - The money-saving trend that has nothing to do with giving up your daily coffee

Created accidentally by a comedian, "loud budgeting" is breaking down the taboo of speaking about money. Read this and the rest of our Weekend Money features, and leave a comment, and we'll be back with rolling personal finance and consumer news on Monday.

Saturday 11 May 2024 09:05, UK

Weekend Money

• 'Loud budgeting': The money-saving trend that has nothing to do with giving up your daily coffee
• What is most in-demand period property?
• £12m tea advert, downsizing, £320 tasting menus and job interview mistakes: What readers have said this week
• Free childcare applications about to open for new age band
• Where has huge week for UK economy left us?

Best of the week

• How to avoid a holiday data roaming charge (while still using the internet)
• Mortgage rates up again this week - here are the best deals on the market
• My daughter discovered undeclared £600 management fee after buying her flat - can we complain?
• Best of the Money blog - an archive

Ask a question or make a comment

By Jess Sharp , Money team 

Money saving trends are constantly popping up on social media - but one in particular has been gaining huge amounts of attention.

Created accidentally by a comedian, loud budgeting is breaking down the taboo of speaking about money.

The idea is based on being firmer/more vocal about your financial boundaries in social situations and setting out what you are happy to spend your money on, instead of "Keeping up with the Joneses". 

On TikTok alone, videos published under the hashtag #loudbudgeting have garnered more than 30 million views - and that figure is continuing to climb. 

We spoke to Lukas Battle - the 26-year-old who unintentionally created the trend as part of a comedy sketch. 

Based in New York, he came up with the term in a skit about the "quiet luxury" hype, which had spread online in 2023 inspired by shows like Succession. 

The term was used for humble bragging about your wealth with expensive items that were subtle in their design - for example, Gwyneth Paltrow's  £3,900 moss green wool coat from The Row, which she wore during her ski resort trial...

"I was never a big fan of the quiet luxury trend, so I just kind of switched the words and wrote 'loud budgeting is in'. I'm tired of spending money and I don't want to pretend to be rich," Lukas said. 

"That's how it started and then the TikTok comments were just obsessed with that original idea." 

This was the first time he mentioned it...

Lukas explained that it wasn't about "being poor" but about not being afraid of sharing your financial limits and "what's profitable for you personally". 

"It's not 'skip a coffee a day and you'll become a millionaire'."

While talking money has been seen as rude or taboo, he said it's something his generation is more comfortable doing. 

"I've seen more debate around the topic and I think people are really intrigued and attracted by the idea," he said. 

"It's just focusing your spending and time on things you enjoy and cutting out the things you might feel pressured to spend your money on."  

He has incorporated loud budgeting into his own life, telling his friends "it's free to go outside" and opting for cheaper dinner alternatives.

"Having the terminology and knowing it's a trend helps people understand it and there's no awkward conversation around it," he said. 

The trend has been a big hit with so-called American "finfluencers", or "financial influencers", but people in the UK have started practising it as well. 

Mia Westrap has taken up loud budgeting by embarking on a no-buy year and sharing her finances with her 11.3k TikTok followers. 

Earning roughly £2,100 a month, she spends around £1,200 on essentials, like rent, petrol and car insurance, but limits what else she can purchase. 

Clothes, fizzy drinks, beauty treatments, makeup, dinners out and train tickets are just some things on her "red list". 

The 26-year-old PHD student first came across the idea back in 2017, but decided to take up the challenge this year after realising she was living "pay check to pay check". 

She said her "biggest fear" in the beginning was that her friends wouldn't understand what she was doing, but she found loud budgeting helped. 

"I'm still trying my best to just go along with what everyone wants to do but I just won't spend money while we do it and my friends don't mind that, we don't make a big deal out of it," she said. 

So far, she has been able to save £1,700, and she said talking openly about her money has been "really helpful". 

"There's no way I could have got this far if I wasn't baring my soul to the internet about the money I have spent. It has been a really motivating factor."

Financial expert John Webb said loud budgeting has the ability to help many "feel empowered" and create a "more realistic" relationship with money.

"This is helping to normalise having open and honest conversations about finances," the consumer affair manager at Experien said. 

"It can also reduce the anxiety some might have by keeping their financial worries to themselves." 

However, he warned it's important to be cautious and to take the reality of life into consideration. 

"It could cause troubles within friendship groups if they're not on the same page as you or have different financial goals," he said.

"This challenge isn't meant to stop you from having fun, but it is designed to help people become more conscious and intentional when it comes to money, and reduce the stigma around talking about it." 

Rightmove's keyword tool shows Victorian-era houses are the most commonly searched period properties, with people drawn to their ornate designs and features.

Georgian and Edwardian-style are second and third respectively, followed by Tudor properties. Regency ranked in fifth place.

Rightmove property expert Tim Bannister said: "Home hunters continue to be captivated by the character and charm of properties that we see in period dramas.

"Victorian homes remain particularly popular, characterised by their historic charm, solid construction, and spacious interiors. You'll often find Victorian houses in some of the most desirable locations which include convenient access to schools and transport links."

Throughout the week Money blog readers have shared their thoughts on the stories we've been covering, with the most correspondence coming in on...

• A hotly contested debate on the best brand of tea
• Downsizing homes
• The cost of Michelin-starred food

Job interview mistakes

On Wednesday we reported on a new £12m ad from PG Tips in response to it falling behind rivals such as Twinings, Yorkshire Tea and Tetley....

We had lots of comments like this...

How on earth was the PG Tips advert so expensive? I prefer Tetley tea, PG Tips is never strong enough flavour for me. Shellyleppard

The reason for the sales drop with PG Tips could be because they increased the price and reduced the quantity of bags from 240 to 180 - it's obvious. Royston

And then this question which we've tried to answer below...

Why have PG Tips changed from Pyramid shape tea bags, to a square? Sam

Last year PG Tips said it was changing to a square bag that left more room for leaves to infuse, as the bags wouldn't fold over themselves.

We reported on data showing how downsizing could save you money for retirement - more than £400,000, in some regions, by swapping four beds for two.

Some of our readers shared their experiences...

We are downsizing and moving South so it's costing us £100k extra for a smaller place, all money from retirement fund. AlanNorth

Interesting read about downsizing for retirement. We recently did this to have the means to retire early at 52. However, we bought a house in the south of France for the price of a flat in our town in West Sussex. Now living the dream! OliSarah

How much should we pay for food?

Executive chef at London's two-Michelin-starred Ikoyi, Jeremy Chan, raised eyebrows when he suggested to the Money blog that Britons don't pay enough for restaurant food.

Ikoyi, the 35th best restaurant in the world, charges £320 for its tasting menu. 

"I don't think people pay enough money for food, I think we charge too little, [but] we want to always be accessible to as many people as possible, we're always trying our best to do that," he said, in a piece about his restaurant's tie up with Uber Eats... 

We had this in... 

Are they serious? That is two weeks' worth of food shopping for me, if the rich can afford this "tasting menu" then they need to be taxed even more by the government, it's just crazy! Steve T

If the rate of pay is proportionate to the vastly overpriced costs of the double Michelin star menu, I would gladly peel quail eggs for four-hour stints over continuing to be abused as a UK supply teacher. AndrewWard

Does this two-star Michelin star chef live in the real world? Who gives a toss if he stands and peels his quails eggs for four hours, and he can get the best turbot from the fishmonger fresh on a daily basis? It doesn't justify the outrageous price he is charging for his tasting menu. Topaztraveller

Chefs do make me laugh, a steak is just a steak, they don't make the meat! They just cook it like the rest of us, but we eat out because we can't be bothered cooking! StevieGrah

Finally, many of you reacted to this feature on common mistakes in job interviews...

Those 10 biggest mistakes people make in interviews is the dumbest thing I've ever read. They expect all that and they'll be offering a £25k a year job. Why wouldn't I want to know about benefits and basic sick pay? And also a limp handshake? How's that relevant to how you work? Jre90

Others brought their own tips...

Whenever I go for an interview I stick to three points: 1. Be yourself 2. Own the interview 3. Wear the clothes that match the job you are applying Kevin James Blakey

From Sunday, eligible working parents of children from nine-months-old in England will be able to register for access to up to 15 free hours of government-funded childcare per week.

This will then be granted from September. 

Check if you're eligible  here  - or read on for our explainer on free childcare across the UK.

Three and four year olds

In England, all parents of children aged three and four in England can claim 15 hours of free childcare per week, for 1,140 hours (38 weeks) a year, at an approved provider.

This is a universal offer open to all.

It can be extended to 30 hours where both parents (or the sole parent) are in work, earn the weekly minimum equivalent of 16 hours at the national minimum or living wage, and have an income of less than £100,000 per year.

Two year olds

Previously, only parents in receipt of certain benefits were eligible for 15 hours of free childcare.

But, as of last month, this was extended to working parents.

This is not a universal offer, however.

A working parent must earn more than £8,670 but less than £100,000 per year. For couples, the rule applies to both parents.

Nine months old

In September, this same 15-hour offer will be extended to working parents of children aged from nine months. From 12 May, those whose children will be at least nine months old on 31 August can apply to received the 15 hours of care from September.

From September 2025

The final change to the childcare offer in England will be rolled out in September 2025, when eligible working parents of all children under the age of five will be able to claim 30 hours of free childcare a week.

In some areas of Wales, the Flying Start early years programme offers 12.5 hours of free childcare for 39 weeks, for eligible children aged two to three. The scheme is based on your postcode area, though it is currently being expanded.

All three and four-year-olds are entitled to free early education of 10 hours per week in approved settings during term time under the Welsh government's childcare offer.

Some children of this age are entitled to up to 30 hours per week of free early education and childcare over 48 weeks of the year. The hours can be split - but at least 10 need to be used on early education.

To qualify for this, each parent must earn less than £100,000 per year, be employed and earn at least the equivalent of working 16 hours a week at the national minimum wage, or be enrolled on an undergraduate, postgraduate or further education course that is at least 10 weeks in length.

All three and four-year-olds living in Scotland are entitled to at least 1,140 hours per year of free childcare, with no work or earnings requirements for parents. 

This is usually taken as 30 hours per week over term time (38 weeks), though each provider will have their own approach.

Some households can claim free childcare for two-year-olds. To be eligible you have to be claiming certain benefits such as Income Support, Jobseeker's Allowance or Universal Credit, or have a child that is in the care of their local council or living with you under a guardianship order or kinship care order.

Northern Ireland

There is no scheme for free childcare in Northern Ireland. Some other limited support is available.

Working parents can access support from UK-wide schemes such as tax credits, Universal Credit, childcare vouchers and tax-free childcare.

Aside from this, all parents of children aged three or four can apply for at least 12.5 hours a week of funded pre-school education during term time. But over 90% of three-year-olds have a funded pre-school place - and of course this is different to childcare.

What other help could I be eligible for?

Tax-free childcare  - Working parents in the UK can claim up to £500 every three months (up to £2,000 a year) for each of their children to help with childcare costs. 

If the child is disabled, the amount goes up to £1,000 every three months (up to £4,000 a year).

To claim the benefit, parents will need to open a tax-free childcare account online. For every 80p paid into the account, the government will top it up by 20p.

The scheme is available until the September after the child turns 11.

Universal credit  - Working families on universal credit can claim back up to 85% of their monthly childcare costs, as long as the care is paid for upfront. The most you can claim per month is £951 for one child or £1,630 for two or more children.

Tax credits -  People claiming working tax credit can get up to 70% of what they pay for childcare if their costs are no more than £175 per week for one child or £300 per work for multiple children.

Two big economic moments dominated the news agenda in Money this week - interest rates and GDP.

As expected, the Bank of England held the base rate at 5.25% on Wednesday - but a shift in language was instructive about what may happen next.

Bank governor Andrew Bailey opened the door to a summer cut to 5%, telling reporters that an easing of rates at the next Monetary Policy Committee meeting on 20 June was neither ruled out nor a fait accompli.

More surprisingly, he suggested that rate cuts, when they start, could go deeper "than currently priced into market rates".

He refused to be drawn on what that path might look like - but markets had thought rates could bottom out at 4.5% or 4.75% this year, and potentially 3.5% or 4% next.

"To make sure that inflation stays around the 2% target - that inflation will neither be too high nor too low - it's likely that we will need to cut Bank rate over the coming quarters and make monetary policy somewhat less restrictive over the forecast period," Mr Bailey said.

You can read economics editor Ed Conway's analysis of the Bank's decision here ...

On Friday we discovered the UK is no longer in recession.

Gross domestic product (GDP) grew by 0.6% between January and March, the Office for National Statistics said.

This followed two consecutive quarters of the economy shrinking.

The data was more positive than anticipated.

"Britain is not just out of recession," wrote Conway. "It is out of recession with a bang."

The UK has seen its fastest growth since the tailend of the pandemic - and Conway picked out three other reasons for optimism.

1/ An economic growth rate of 0.6% is near enough to what economists used to call "trend growth". It's the kind of number that signifies the economy growing at more or less "normal" rates.

2/ 0.6% means the UK is, alongside Canada, the fastest-growing economy in the G7 (we've yet to hear from Japan, but economists expect its economy to contract in the first quarter).

3/ Third, it's not just gross domestic product that's up. So too is gross domestic product per head - the number you get when you divide our national income by every person in the country. After seven years without any growth, GDP per head rose by 0.4% in the first quarter.

GDP per head is a more accurate yardstick for the "feelgood factor", said Conway - perhaps meaning people will finally start to feel better off.

For more on where Friday's figures leaves us, listen to an Ian King Business Podcast special...

The Money blog is your place for consumer news, economic analysis and everything you need to know about the cost of living - bookmark news.sky.com/money .

It runs with live updates every weekday - while on Saturdays we scale back and offer you a selection of weekend reads.

Check them out this morning and we'll be back on Monday with rolling news and features.

The Money team is Emily Mee, Bhvishya Patel, Jess Sharp, Katie Williams, Brad Young and Ollie Cooper, with sub-editing by Isobel Souster. The blog is edited by Jimmy Rice.

If you've missed any of the features we've been running in Money this year, or want to check back on something you've previously seen in the blog, this archive of our most popular articles may help...

Loaves of bread have been recalled from shelves in Japan after they were found to contain the remains of a rat.

Production of the bread in Tokyo has been halted after parts of a "small animal" were found by at least two people.

Pasco Shikishima Corp, which produces the bread, said 104,000 packages have been recalled as it apologised and promised compensation.

A company representative told Sky News's US partner network, NBC News, that a "small black rat" was found in the bread. No customers were reported to have fallen ill as a result of ingesting the contaminated bread.

"We deeply apologise for the serious inconvenience and trouble this has caused to our customers, suppliers, and other concerned parties," the spokesman said.

Pasco added in a separate statement that "we will do our utmost to strengthen our quality controls so that this will never happen again. We ask for your understanding and your co-operation."

Japanese media reports said at least two people who bought the bread in the Gunma prefecture, north-west of Tokyo, complained to the company about finding a rodent in the bread.

Record levels of shoplifting appear to be declining as fewer shopkeepers reported thefts last year, new figures show. 

A survey by the Office for National Statistics shows 26% of retailers experienced customer theft in 2023, down from a record high of 28% in 2022.

This comes despite a number of reports suggesting shoplifting is becoming more frequent. 

A  separate ONS finding , which used police crime data, showed reports of shoplifting were at their highest level in 20 years in 2023, with law enforcements logging 430,000 instances of the crime.

Let's get you up to speed on the biggest business news of the past 24 hours. 

A privately owned used-car platform is circling Cazoo Group, its stricken US-listed rival, which is on the brink of administration.

Sky News has learnt that Motors.co.uk is a leading contender to acquire Cazoo's marketplace operation, which would include its brand and intellectual property assets.

The process to auction the used-car platform's constituent parts comes after it spent tens of millions of pounds on sponsorship deals in football, snooker and darts in a rapid attempt to gain market share.

The owner of British Airways has reported a sharp rise in profits amid soaring demand for trips and a fall in the cost of fuel.

International Airlines Group said its operating profit for the first three months of the year was €68m (£58.5m) - above expectations and up from €9m (£7.7m) during the same period in 2023.

The company, which also owns Aer Lingus, Iberia and Vueling, said earnings had soared thanks to strong demand, particularly over the Easter holidays.

The prospect of a strike across Tata Steel's UK operations has gained further traction after a key union secured support for industrial action.

Community, which has more than 3,000 members, said 85% voted in favour of fighting the India-owned company's plans for up to 2,800 job losses, the majority of them at the country's biggest steelworks in Port Talbot, South Wales.

Tata confirmed last month it was to press ahead with the closure of the blast furnaces at the plant, replacing them with electric arc furnaces to reduce emissions and costs.

In doing so, the company rejected an alternative plan put forward by the Community, GMB and Unite unions that, they said, would raise productivity and protect jobs across the supply chain.

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Source: Department of Environment, Malaysia

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