Definition of Market Share
Market share refers to the percentage of the total sales or revenue a company holds within a specific industry or market, compared to its competitors. It is used as a key indicator of a company’s success, competitiveness, and growth potential. In digital marketing, market share helps businesses understand their position in the online marketplace and strategize accordingly.
Phonetic
The phonetic transcription of the keyword “Market Share” using the International Phonetic Alphabet (IPA) is:/ˈmɑrkɪt ʃɛr/
Key Takeaways
- Market share is a key indicator of a company’s competitiveness, as it represents the proportion of total sales in a specific market that is generated by that company.
- A higher market share often indicates a strong product or service, successful marketing strategies, and high customer satisfaction, whereas a lower market share may reflect the need for improvement in these areas.
- Monitoring market share is crucial for businesses to understand their position in the industry, identify trends, and make strategic decisions to grow and maintain their competitiveness.
Importance of Market Share
Market share is an important digital marketing term as it represents the percentage of an industry or market’s total sales that is earned by a particular company over a specified period of time.
Monitoring market share provides businesses with valuable insights into their competitive position and the overall growth or decline of their market.
As digital marketing channels contribute significantly to brand visibility, sales, and customer engagement, understanding market share enables businesses to assess their online marketing effectiveness and identify strategic opportunities to improve, adapt, and optimize their digital marketing efforts.
Ultimately, a higher market share indicates superior performance and a stronger presence within the market, which is crucial for driving long-term success and profitability.
Explanation
Market share is an essential aspect of digital marketing as it helps businesses and marketers understand the extent of their reach and competitiveness within the digital landscape. Its purpose is to measure the company’s portion of the total sales or revenues in a specific market segment, compared to competitors.
By assessing market share, organizations can identify their position in the market and establish informed marketing strategies. This metric enables them to keep track of their standing, recognize their strengths and weaknesses, and make well-informed decisions that can lead to growth and expansion.
The analysis and monitoring of market share are crucial for companies to learn the trends and behaviors of their target audience on various digital channels. It allows businesses to identify patterns, emerging preferences, and innovative tactics being used by their competitors, so they can adapt and stay ahead in the race.
By capturing a larger market share, companies can also maximize their economies of scale, leading to increased efficiency and profitability. Moreover, market share is indispensable to investors and shareholders as it reflects the company’s capacity to dominate its niche, making it an important indicator of the company’s overall performance and potential for future success in the digital market.
Examples of Market Share
Apple’s Market Share in the Smartphone Industry: Apple Inc. is one of the largest smartphone manufacturers in the world. As of the third quarter of 2021, Apple held approximately
31% of the global market share in the smartphone sector, thanks to the sales of their iPhones. The brand’s market share is an essential measure for Apple and other competing companies, as it indicates their relative success in capturing customers through various digital marketing strategies.
Coca-Cola’s Market Share in the Soft Drink Industry: Coca-Cola is a leading company in the soft drink industry, competing with other companies such as PepsiCo. In 2020, Coca-Cola held a market share of nearly 43% in the carbonated soft drink category in the United States. Coca-Cola achieves this sizeable market share through appealing digital marketing campaigns, social media presence, and targeted advertising. Understanding their market share helps Coca-Cola identify potential growth areas and gauge the success of their digital marketing efforts.
Amazon’s Market Share in the E-commerce Sector: Amazon, the world’s largest online retailer, has a significant share in the e-commerce market. In the United States, Amazon held approximately 41% of the online retail market share in
The company has successfully used digital marketing techniques, such as personalized recommendations, email campaigns, and sponsored ads, to attract more customers and maintain its dominant position. Monitoring their market share allows Amazon to analyze the efficiency of their marketing tactics and helps to determine potential opportunities for expansion in this competitive industry.
Market Share FAQ
What is market share?
Market share is the percentage of a specific market that is held by a company, product or service. It is calculated as the company’s sales revenue divided by the total sales revenue of the industry for a particular period. Market share gives an indication of a company’s competitive position in the market, showing its relative strength against competitors.
Why is market share important?
Market share is important because it helps a company understand its performance relative to its competitors. A higher market share generally means increased customer loyalty, stronger brand recognition, and a dominant presence in the industry. Monitoring market share can help a company identify trends, set goals, and make strategic decisions to maintain or increase its position in the market.
How is market share calculated?
To calculate market share, divide a company’s total sales revenue by the total sales revenue of all other companies in the industry, and then multiply the result by 100 to get the percentage. The formula is: Market Share (%) = (Company Revenue / Industry Revenue) x 100.
What factors can affect market share?
Various factors can affect a company’s market share, including product quality, pricing, customer service, distribution network, marketing efforts, innovation, and overall company reputation. Economic factors, industry competition, consumer preferences, and regulatory changes can all have an impact on a company’s market share as well.
How can a company increase its market share?
A company can increase its market share by implementing strategies such as product innovation, improving customer service, expanding distribution channels, lowering prices or offering discounts and incentives, targeting new market segments, and increasing marketing efforts. Additionally, mergers and acquisitions can help a company quickly gain market share by combining resources and customer bases with another business.
Related Digital Marketing Terms
- Competitive Analysis
- Market Size
- Market Penetration
- Target Market
- Market Segmentation
Sources for More Information
- Investopedia – https://www.investopedia.com/terms/m/marketshare.asp
- Corporate Finance Institute – https://corporatefinanceinstitute.com/resources/knowledge/strategy/market-share/
- Feedough – https://www.feedough.com/market-share/
- Marketing91 – https://www.marketing91.com/what-is-market-share/
