Market Share Online Business

Market Share is the percentage or proportion of the total available market or market segment that is being serviced by a company that can be expressed as a company’s sales revenue divided by the total sales revenue available in that market or as a company’s unit sales volume in that market divided by the total volume of units sold in that market. Unit can be a product or services.

For example, in the 2008 there are 1000 units 2000cc sedan sold in a country. Toyota sells 600 units of them, then Toyota has a 60% market share for 2000cc sedan in 2008 at that country.

Because different companies may charge slightly different prices for the same cc of sedan. There is another method for calculating market share won’t always provide the same answer.

For example, in the 2008 Toyota sold the 2000cc sedans for a total of $10,000,000 and the people in that country spend a total cost of $17,000,000 for the same cc of sedans, then the market share of Toyota is S10,000,000/$17,000,000 or 59% for 2000cc sedan in 2008 at that country.

Market share for the next year can be predicted from the previous year. Generally necessary market research to estimate the total market size and a company’s market share. The market leader must have a strategy to maintain its market share. For the others, must have a strategy to take over. Market share is very influenced by macro environmental variables such as the state of the economy, changes in tax policy and others.

In the business, market share is used to :

1. Determine company’s competitive strength in a market segment as compared to other companies in the same segment

2. Measure the company performance relative to competitors

3. Accurately assess company’s performance from year to year

4. See if the company is doing better or worse compared to other companies that are facing the same challenges and opportunities that it is

If the company don’t take into account the market conditions that may has improved or decreased  their sales. Their sales may has gone up because of increased popularity of their product or services, or their sales may has gone down because of a drought or recession or other economic conditions.

There are some specific reasons that a company may seek to increase its market share :

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