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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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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?

Market share represents the portion of total sales or revenue that a company captures within a specific industry or market segment. It serves as a metric for assessing a company's relative strength and competitive position compared to its peers. Calculating market share involves dividing a company's sales or revenue by the total market sales or revenue and expressing the result as a percentage. Market share can be measured in terms of units sold, revenue generated, or other relevant metrics, depending on the industry and market dynamics.

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

To effectively utilize market share data, it's crucial to understand the nuances of market share analysis. This involves not only grasping the different types of market share but also discerning its relationship with market size and recognizing the significance of market share trends and patterns .

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?

Introducing Appinio , the real-time market research platform that revolutionizes market share analysis. With Appinio, companies can conduct their own market research in minutes, gaining actionable insights that drive strategic decision-making and enhance their market share.

Here's why Appinio is your ultimate tool for market share analysis:

• 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.
• User-Friendly Platform : Appinio's intuitive interface empowers users of all levels to conduct market research effortlessly, without the need for specialized research expertise.
• 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: 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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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.

Download our Ultimate Business Plan Template here

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.  

How to Finish Your Business Plan in 1 Day!

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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  

Other Helpful Business Planning Articles & Templates

How to Calculate Market Share for Start-Up Companies

• Small Business
• Setting Up a New Business
• Starting a Company
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How to Determine Market Size for a Business Plan

Main steps in business planning, how to calculate stock volatility.

• How to Calculate a Transaction Value if a Company Purchases a Percentage
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Understanding the market and the competition is paramount for any new company. Such information is invaluable and allows you, as an entrepreneur, to respond better to market changes.

According to the Corporate Finance Institute , market share in business plan terms informs you of how much of the pie is there for the taking. If the market is not already over-saturated, then your company has an opportunity to grab a share of the market and establish itself as a leader within the industry. Obtaining market share information may be difficult if there is not a lot of public information available, particularly if there are many private companies in the marketplace.

Research Your Industry

You'll want to start by researching as much information as you can about the industry. As a start-up, you need to have a keen understanding of who your competitors are, the size of the market and other market drivers, such as whether there is any seasonality to your business. Finding these things out requires real detective work, particularly for new and emerging industries.

For instance, if your company manufactures carburetors, then you may start your research by determining how many carburetor manufacturers there are in the United States.

Note that many publicly-traded companies provide industry information, which you can then use to calculate your market share. Many of the large publicly-traded companies form the bulk of their industry's sales, which many analysts and observers use as proxy for total revenue of the industry's sales.

Start Calculating the Market Share

You can calculate your market share once you have sufficient information and relevant statistics. You may calculate your market share in one of two ways.

The first method calculates the number of units sold by your company as a percentage of total units sold by other companies in the industry. For example, if your company sold 155,000 carburetors and the total carburetors sold were 5,721,000, then your market share is 2.7 percent, calculated as 155,000 divided by 5,721,000. The second method of calculating market share compares your firm's revenue to the total industry's revenue, explains AccountingTools .

Monitor the Market Share

Along with determining the market share in the business plan step, you'll want to track your market share over time. A steady and improving market share during this time is a good sign of less competition or a successful business strategy. Declining market share may indicate an influx of competitors, aggressive price competition or a combination of both.

Monitoring your market allows you to adjust your business strategy to avoid market downturns, which prevents you from losing ground to the competition.

• CFI: Market Share
• AccountingTools: How to Calculate Market Share
• Many publicly-traded companies provide industry information, which you can then use to calculate your market share. Many of the large publicly-traded companies form the bulk of their industry's sales, which many analysts and observers use as proxy for total revenue of the industry's sales.

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Business Plan Section 5: Market Analysis

Find out the 9 components to include in the market analysis portion of your business plan, plus 6 sources for market analysis information.

This is the part of your business plan where you really get to shine and show off that awesome idea you have. Of course, your product or service is the best! Now, let’s talk about how you know it’s a hit. Be prepared to show you know your market AND that it’s big enough for you to build a sustainable, successful business .

In writing up your market analysis, you’ll get to demonstrate the knowledge you’ve gained about the industry, the target market you’re planning to sell to, your competition, and how you plan to make yourself stand out.

A market analysis is just that: a look at what the relevant business environment is and where you fit in. It should give a potential lender, investor, or employee no doubt that there is a solid niche for what you’re offering, and you are definitely the person to fill it. It’s both quantitative, spelling out sales projections and other pertinent figures, and qualitative, giving a thoughtful overview of how you fit in with the competition. It needs to look into the potential size of the market, the possible customers you’ll target, and what kind of difficulties you might face as you try to become successful. Let’s break down how to do that.

What Goes Into A Business Plan Market Analysis?

Industry description and outlook.

Describe the industry with enough background so that someone who isn’t familiar with it can understand what it’s like, what the challenges are, and what the outlook is. Talk about its size, how it’s growing, and what the outlook is for the future.

Target Market

Who have you identified as your ideal client or customer ? Include demographic information on the group you’re targeting, including age, gender and income level. This is the place to talk about the size of your potential market, how much it might spend, and how you’ll reach potential customers. For example, if women aged 18 to 54 are your target market, you need to know how many of them there are in your market. Are there 500 or 500,000? It’s imperative to know. Similarly, if your product or service is geared toward a high-end clientele, you need to make sure you’re located in an area that can support it.

Market Need

What factors influence the need for your product or service? Did the need exist before or are you trying to create it? Why will customers want to do business with you, possibly choosing you over someone else? This is where you can briefly introduce the competitive edge you have, although you’ll get into that in more depth in following sections. Focus on how the product or service you’re offering satisfies what’s needed in the market.

Market Growth

While no one can predict the future, it’s important to get a possible idea of what business may be like down the road and make sales projections. Have the number of people in your target market been increasing or decreasing over the last several years? By how much per year? To make an intelligent forecast, you have to start with current conditions, then project changes over the next three to five years.

Market Trends

You need to take a look at trends the same way you look at population and demographics. Is there a shift to more natural or organic ingredients that might impact your business? How might energy prices figure in? The easy availability of the internet and smartphone technology? The questions will be different for every type of business, but it’s important to think about the types of changes that could affect your specific market. In this section, you can cite experts from the research you’ve done-a market expert, market research firm, trade association, or credible journalist.

Market Research Testing

Talk about what kind of testing and information gathering you’ve done to figure out where you stand in the market. Who have you spoken to about the viability of your product? Why are you confident of its success? Again, if you can, cite experts to back up your information.

Competitive Analysis

There’s no way to succeed unless you’ve examined your competition. It might be helpful to try analyzing your position in the market by performing a SWOT analysis. You need to figure out their strengths and the weaknesses you can exploit as you work to build your own business. You do need to be brutally honest here, and also look at what the potential roadblocks are-anything that might potentially stand in your way as you try to meet your goals and grow your business.

Barriers to Entry

Lenders and investors need to have a reasonable assurance they’ll be paid back, so they’ll want to know what would stop someone else from swooping in, doing what you do, and grabbing half the available business. Do you have technical knowledge that’s difficult to get? A specialized product no one else can manufacture? A service that takes years to perfect? It’s possible your industry has strict regulations and licensing requirements. All of these help protect you from new competition, and they’re all selling points for you.

Regulations

As we touched on above, you should cover regulations as a barrier to entry. If your field is covered by regulations, you do need to talk about how they apply to your business and how you’ll comply with them.

Six Sources for Market Analysis Information

The Market Analysis section of your business plan is far more than a theoretical exercise. Doing an analysis of the market really gives YOU the information you need to figure out whether your plans are viable, and tweak them in the early stages before you go wrong.

So, where do you start? Research is the key here, and there are several sources available.

1. The Internet

Some of the first information you need is about population and demographics: who your potential customers are, how many there are, and where they live or work. The U.S. Census Bureau has an impressive amount of these statistics available. USA.gov’s small business site is another good source for links to the U.S. Departments of Labor and Commerce, among others.

2. Local Chamber of Commerce

A lot of local information can be gotten from the chamber of commerce in the area where you plan to operate. Often, they can provide details into what the general business climate is like, and get even more specific about how many and what type of businesses are operating in their jurisdiction.

3. Other Resources

When actual statistical information isn’t available, you’ll often be able to put together a good picture of the market from a variety of other sources. Real estate agents can be a source of information on demographics and population trends in an area. Catalogs and marketing materials from your competition are useful. Many industry associations have a great amount of relevant information to use in putting your analysis together. Trade publications and annual reports from public corporations in your industry also contain a wealth of relevant information.

4. Customer Mindset

Take yourself out of the equation as the owner and stand in your customer’s shoes when you look at the business. As a customer, what problems do you have that need to be solved? What would you like to be able to do better, faster, or cheaper that you can’t do now? How does the competition work to solve those issues? How could this business solve them better?

5. the Competition

If you have a clothing store, visit others in your area. If you’d like to open a pizzeria, try pies from surrounding restaurants. If you’re a salon owner, park across the street and see what the store traffic is like and how customers look when they come out. Check out websites for pricing and other marketing information. Follow their Facebook pages. If you can’t be a customer of the competition, ask your customers and suppliers about them. Always be aware of what’s going on in the market.

6. Traditional Market Research

While you can gather a lot of data online, your best information will come from potential customers themselves. Send out surveys, ask for input and feedback, and conduct focus groups. You can do this yourself or hire a market research firm to do it for you.

What to Do With All That Data

Now that you’ve gathered the statistics and information and you’ve done the math to know there’s a need and customer base for your product or service, you have to show it off to your best advantage. You can start the market analysis section with a simple summary that describes your target customers and explains why you have chosen this as your market. You can also summarize how you see the market growing, and highlight one or two projections for the future.

If your information is dense with numbers and statistics, someone who reads your business plan will probably find it easier to understand if you present it as a chart or graph. You can generate them fairly easily with tools built into Google docs and free infographic apps and software .

Don’t assume that your readers have an understanding of your market, but don’t belabor simple points, either. You want to include pertinent, important information, but you don’t want to drown the reader in facts. Be concise and compelling with the market analysis, and remember that a good graphic can cover a lot of text, and help you make your point. It’s great to say you project sales to increase by 250% over the next five years, but it makes an even bigger wow when you show it in a graphic.

Always relate the data back to your business. Statistics about the market don’t mean much unless you describe how and where you fit in. As you talk about the needs of your target market, remember to focus on how you are uniquely positioned to fill them.

Don’t hesitate to break down your target market into smaller segments, especially if each is likely to respond to a different message about your product or service. You may have one market that consists of homes and another of small businesses. Perhaps you sell to both wholesale and retail customers. Talk about this in the market analysis, and describe briefly how you’ll approach each. (You will have more of an opportunity to do this in detail later in the plan.) Segmentation can help you target specific messages to specific areas, focusing in on the existing needs and how you fill them.

Remember to tailor your information to the purpose at hand. If your business plan is for internal use, you may not have to go into as much detail about the market since you and your team may already know it well. Remember, however, that the very act of doing the research may help you learn things you didn’t know, so don’t skimp on doing the work. This is a great opportunity to get information from outside that might affect your business.

It’s not about your ability to do professional-level market research; a plan intended for a bank or other lender needs to show your understanding of where your business fits into the grand scheme of things. Yes, you need to detail the information, but your main goal is to show how you’ve incorporated that knowledge into making solid decisions about the direction of your company. Use this section of your business plan to explain your understanding of your industry, your market and your individual business so that lenders and investors feel comfortable with your possibility for success.

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Define Market Share: Part 1

Then conduct a marketing swot analysis.

Define market share , and the share of the market that your business has (and wants) as part of your planning process. The next steps in building your marketing plan include: conducting a marketing SWOT analysis, defining the marketing mix, segmenting and targeting your market, building an action plan (with measurable performance indicators). Make sure that your plan includes a strong focus on increasing your market share (as there is strength in size).

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From a marketing and sales perspective, it is important to understand and define market share; this is a necessary activity for businesses that want to grow.

For example, if your business sells $1.5 million of products in your market you need to know if that represents 5% or 95% (or somewhere in between) of the overall market.

Because it will be much more difficult to grow your share if you already have a significant amount of the market potential and you will need to build your marketing strategies accordingly.

A good analogy for market share is that it is a 'piece of the whole pie' ... with the pie being the market, and the piece of pie being what the business sales represent.

Definition of Market Share

How to calculate market share.

A more traditional definition of market share is that it is the business' 'share' or percent of the total market.

One of the ways to calculate market share is:

Business Sales Revenue divided by total Market Sale Revenue

For example, if you owned a computer services business, if sales last year were $500,000, and if the total market size was $50,000,000, then the computer market share is 0.1 or 1%. It is fair to say that you are not a big player in the market; from a market perspective, you are not a market leader, you are, by size alone, a market follower.

More formally, market share information is calculated by comparing individual business revenues to the total defined market.

The big challenge in either equations or calculations, and in understanding how to increase market share, is in first accurately defining what is market size.

If your total defined market is a country; then the total domestic market is "calculated by adding manufacturing shipments to imports and subtracting total exports." (Statistics Canada) However duplication of manufacturing data in most country statistics can result in a distorted total figure.

Define Market Share: More on Research Sources

In some cases, particularly for global markets, you may have to buy some research data to obtain market size information. Usually, however, you should be able to gather the market size information through secondary research, such as:

• Industry Canada which is the Canadian government's business and industry site.
• The US Department of Commerce site is a good source of information on business in the United States and provides access to economic indicator reports and industry performance data.
• Industry or trade associations are also good sources of market size data. For example: Business owners interested in manufacturing and exporting from Canada can access information through the Canadian Manufacturers and Exporters (CME) trade association website. In addition to industry resources, this site also provides a number of publications and reports for entrepreneurs.

There are also many market research sources available on a per fee basis. A couple of those sources are listed below:

Defining market size is the first part of the marketing planning process. During marketing planning, you need to segment your market , target your market , define marketing mix and build the marketing mix program, and a variety of other activities.

Understanding what share of the market you have, and want, is only part of your marketing process: you also need to do a marketing SWOT analysis (strengths, weaknesses, opportunities and threats) and to define marketing mix.

Additionally, to define market share for your business, you need to recognize where you fit in the overall market.

Once you understand both market size and your share of the market, you need to learn how to increase market share (or not). Part 2 of Define Market Share will help you to understand why market share is important to your business and how you can manage market share to target business growth.

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For more timely and regular monthly information on managing your small business, please subscribe here., additional reading:.

Understand Competition Analysis and how to manage your competitive tactics.

Conduct an Industry Analysis to learn more about your marketplace.

Build strong Market Strategies to win more market share.

Or for more on how understanding market share will help your business compete, return from Define Market Share, Part 1 to What is Market Share? Part 2 .

Why is Product Differentiation a Necessity to your Marketing Plan ?

Return to Definition of Marketing .

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Marketing and life–cycle.

Marketing is a requirement for all businesses: without marketing strategies and tactics your business will struggle to survive.

Not all marketing activities are planned: you might be building your brand recognition through a social media campaign (that's marketing); you might be conducting market research to analyze your competitors and/or segment and target your potential market or to develop the most desirable features, advantages and benefits of your products or services (that's all marketing).

Marketing is pretty all–encompassing; and a challenge for many business owners. The additional challenge is recognizing that the different stages of your business life–cycle: start–up, mid–cycle, mature or late–in–life.

During start–up you need to develop your marketing strategies to grow sales; for example, you might want to use a market penetration pricing strategy to build sales quickly.

During mid–cycle, you need to grow your customer base (often through lead generation) and that need requires different marketing strategies, such as cold calling on prospective clients, email marketing, newsletter and blog sign ups and distribution (all to grow your list of prospects).

During the mature cycle, you need to build your marketing efforts around your brand; your competitive advantage can be in your reputation, history, and identity and on what differentiates your business from your competitors.

Marketing your products and services is not something that you do once (such as a marketing plan) and then never change or do again. You need to be continually researching and building your strategies and tactics to be ahead of the market, and ahead of your competition.

The market is constantly evolving; ever more rapidly with the impacts of globalization and technology. You need to invest resources into marketing to ensure that you build and sustain your business.

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Execute the plan yourself or have us at Voice Marketing Inc. manage the execution for you.

Once the plan is implemented, we report on the actions we've taken, the performance of the tactics employed, and on the results.

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How to Write a Business Plan: Target Market Analysis

The Business Plan and the Importance of Defining Your Target Market

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Conducting a Market Analysis

Polling your target market, writing the market analysis, online tools for market research, u.s. online market research sources, canadian online market research, local sources of market research, doing your own market research.

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The market analysis is basically the target market section of your business plan . It is a thorough examination of the ideal people to whom you intend to sell your products or services.  

Even if you intend on selling a product or service only in your community, you won't be selling that service to everyone who lives there. Knowing exactly what type(s) of people might be interested in buying your product or service and how many of them reside in your projected area or region is fundamental in creating your market analysis.

Once target market data has been established, you'll also work on sales projections within specific time frames, as well as how prospective sales might be affected by trends and policies.

Research is key and cornerstone of any solid  business plan .

Don't Skip This Step!

Don't skip market research; otherwise, you could end up starting a business that doesn't have a paying market.

Use these general terms as linchpins in research data for the market analysis section of your business plan, and to identify your target market:

But don't stop here. To succinctly define your target market, poll or survey members of your prospective clients or customers to ask specific questions directly related to your products or services. For instance, if you plan to sell computer-related services, ask questions relating to the number of computing devices your prospective customers own and how often they require servicing. If you plan on selling garden furniture and accessories, ask what kinds of garden furniture or accessories your potential customers have bought in the past, how often, and what they expect to buy within the next one, three, and five years.

Answers to these and other questions related to your market are to help you understand your market potential.

The goal of the information you collect is to help you project how much of your product or service you'll be able to sell. Review these important questions you need to try to answer using the data you collect:

• What proportion of your target market has used a product similar to yours before?
• How much of your product or service might your target market buy? (Estimate this in gross sales and/or in units of product/service sold.)
• What proportion of your target market might be repeat customers?
• How might your target market be affected by demographic shifts?
• How might your target market be affected by economic events (e.g. a local mill closing or a big-box retailer opening locally)?
• How might your target market be affected by larger socio-economic trends?
• How might your target market be affected by government policies (e.g. new bylaws or changes in taxes)?

One purpose of the market analysis is to ensure you have a viable business idea.

Find Your Buying Market

Use your market research to make sure people don't just like your business idea, but they're also willing to pay for it.

If you have information suggesting that you have a large enough market to sustain your business goals, write the market analysis in the form of several short paragraphs using appropriate headings for each. If you have several target markets, you may want to number each. 

Sections of your market analysis should include:

• Industry Description and Outlook
• Target Market
• Market Research Results
• Competitive Analysis

Remember to properly cite your sources of information within the body of your market analysis as you write it. You and other readers of your business plan, such as potential investors, will need to know the sources of the statistics or opinions that you've gathered.

There are several online resources to learn if your business idea is something worth pursing, including:

• Keyword searches can give you an overall sense of potential demand for your product or service based on the number of searches.
• Google Trends analysis can tell you how the number of searches has changed over time.
• Social media campaigns can give you an indication of the potential customer interest in your business idea.

The U.S. Small Business Administration (SBA) has information on doing your market research and analysis , as well as a list of free small business data and trends resources you can use to conduct your research. Consider these sources for data collection:

• SBA  Business Data and Statistics  
• The U.S. Census Bureau maintains a huge database of demographic information that is searchable by state, county, city/town, or zip code using its census data tool . Community, housing, economic, and population surveys are also available.
• The U.S. Department of Commerce Bureau of Economic Analysis (BEA) has extensive statistics on the economy including consumer income/spending/consumption, business activity, GDP, and more, all of which are searchable by location.

The Government of Canada offers a guide on doing market research and tips for understanding the data you collect. Canadian data resources include:

• Statistics Canada  offers demographic and economic data.
• The  Business Development Bank of Canada (BDC)  offers market research and consulting with industry experts.
• The Canada Business Network provides business information to entrepreneurs by province/territory, including market research data.

There are also a great many local resources for building target market information to explore, including:

• Local library
• Local Chamber of Commerce
• Board of Trade
• Economic Development Centre
• Local government agent's office
• Provincial business ministry
• Local phone book

All of these will have information helpful in defining your target market and providing insights into trends.

The above resources are secondary sources of information, in which others have collected and compiled the data. To get specific information about your business, consider conducting your own market research . For instance, you might want to design a questionnaire and survey your target market to learn more about their habits and preferences relating to your product or service.

Market research is time-consuming but is an important step in affording your business plan validity. If you don't have the time or the research skills to thoroughly define your target market yourself, hiring a person or firm to do the research for you can be a wise investment.​

Small Business Administration. " Market Research and Competitive Analysis. " Accessed Jan. 13, 2020.

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• The Benefits of Market Share

How to Gain Market Share

• Market Share FAQs

The Bottom Line

• Fundamental Analysis

What Strategies Do Companies Employ to Increase Market Share?

Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest.

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

A company’s market share is the percentage it controls of the total market for its products and services. Market share is an essential metric for businesses because it’s an indicator of a company’s profitability and success. It can signal dominance in an industry and how well a company’s revenue-generating efforts are working to achieve business goals.

Market share can affect operations, pricing of products and services, and, potentially stock market performance. A growing market share corresponds to growing revenue. That, in turn, means a business can scale up its operations and opportunity for greater profitability. To gain market share should be a serious business goal.

There are a number of strategies a company can put to work to increase market share. These include improving innovation, building and solidifying customer loyalty, employing a talented, dedicated workforce, acquiring other companies, deploying effective advertising, and pricing products and services efficiently.

Key Takeaways

• Market share is a company’s total sales in relation to total industry sales for the same period.
• Market share can highlight dominance over competitors.
• Market share helps a company measure the effectiveness of its strategies and strategic execution.
• Gaining market share should be one of management’s primary goals because of its effect on operations and profitability.
• The enormous benefits of market share underscore the importance of the strategies that can increase it.

Understanding the Benefits of Market Share

Market share is calculated by measuring the percentage of sales or percentage of units a company has in the overall market. Using the percentage of sales method, if a company has $1 million in annual sales and the total sales for the year in its industry are $100 million, the company’s market share is 1%. Under the percentage of units method, a company that sells 50,000 units annually in an industry where 5 million units are sold per year also has a market share of 1%.

A higher market share places companies at a competitive advantage :

• Companies with high market share often receive better prices from suppliers, as their larger order volumes increase their  buying power .
• Increased market share and greater production go hand-in-hand, with the latter providing a company with the opportunity to decrease the cost to produce an individual unit due to economies of scale .
• Higher market share can help improve sales when existing, brand-loyal customers buy more of a company’s products.
• Market share may also widen a company’s overall customer base as potential new customers follow the lead of existing ones.
• Gaining market share can strengthen and spotlight a company’s reputation. In addition to boosting sales and increasing bargaining power, that can attract new, more talented employees.

Using sales, the formula to determine market share for a specific period of time is (total company revenue/total market revenue) x 100. Using units sold, the formula is (total number of units sold by company/total number of units sold in the industry)/100.

The importance of market share lies not simply in maintaining your company’s current share of the market. After all, as the industry grows, a company’s market share must grow as well to stay competitive and profitable. Increasing market share is crucial and involves gaining a bigger share than you have already. That would indicate that your growth is greater than average and you’re outperforming your competition.

Here are some areas a company can focus on to increase market share.

Innovation that attracts customers can come in different forms. One is useful, new technology that a company develops, introduces, and continues to improve before competitors gain a foothold. Consumers excited about the technology buy it, use it, and can become repeat customers. Innovative technology can build a company’s customer base with consumers new to the industry as well as consumers who leave another company for it.

A few other ideas for innovating to gain market share can include product innovation, production method improvements, and marketing strategies. The potential for high-value innovation exists throughout a company.

Customer Loyalty

Building and reinforcing relationships with existing customers by cultivating their loyalty is a smart strategy to gain market share. First of all, existing customer loyalty can help prevent customers from leaving a company for others when new products come to market. What’s more, a company can broaden its base with the word-of-mouth marketing so often provided by satisfied, happy customers.

Take advantage of chances to engage with customers who desire a closer connection and to deepen their positive experience. An added benefit is that this organic opportunity to welcome new customers and increase market share often can come without specifically related increases in a company’s marketing costs. Plus, loyal customers can sometimes share ideas for innovations to the products they love.

Skilled Workforce

A company that focuses on attracting and keeping talented employees is focused on increasing its market share. That’s because skilled employees can become dedicated employees. That, in turn, can cut expenses related to hiring and training. Plus, a skilled workforce that excels at its tasks can allow a company to maintain its focus on producing exceptional products and sales. Attracting the best requires competitive salaries and a strong selection of benefits, including options for flexible work schedules and relaxed office settings.

Acquisitions

To win market share and dominate an industry, a company can consider buying its competition. Such a move actually offers multiple strategies to increase market share in one action. With an acquisition , a company takes a competitor out of the market and assumes its market share. It captures its customer loyalty. Moreover, it can put products, services, and other strategic opportunities already developed by its acquisition to work immediately. If a company can’t buy another due to financial constraints, it can consider acquiring key employees to improve its own workforce and for the customer loyalty connected to those employees.

Advertising

Effective, frequent advertising offers a good opportunity to gain market share. Innovative branding and marketing through advertising can garner the attention of consumers, build connections with existing customers, and spur widespread desire for the products and services a company offers. High-impact advertising in different forms can help buyers understand and align with a company. No matter which advertising media is used, it’s wise to maintain continuity across design, voice, and message to ensure a strong, positive, and lasting impression. Companies should also make sure that their advertising actually targets the right market segment for their products and services.

Price Reductions

Lowering prices is a solid strategy to help a company win market share. Lower, more attractive prices can attract consumer attention and loyalty. That can increase the all-important sales that drive market share higher. In addition to decreasing the actual price for products, a company can consider promotions, coupons, bonus items, and other customer benefits. For instance, incentives such as referral programs and free shipping can generate extra interest and added sales.

How Can I Improve My Market Position?

One way a company can increase its market share is by improving the way its target market perceives it. This kind of positioning requires clear, sensible communications that impress upon existing and potential customers the identity, vision, and desirability of a company and its products. In addition, you must separate your company from the competition. As you plan such communications, consider these guidelines:

• Research as much as possible about your target audience so you can understand without a doubt what it wants. The more you know, the better you can reach and deliver exactly the message it desires.
• Establish your company’s credibility so customers know who you are, what you stand for, and that they can trust, not simply your products or services, but your brand.
•  Explain in detail just how your company can better customers’ lives with its unique, high-value offerings. Then, deliver on that promise expertly so that the connection with customers can grow unimpeded and lead to new customers excited to join your base.
• Highlight the advantages that your company offers customers that competitors can’t match. Underscore your expertise in what you do and why that matters.
• Create messaging that is focused, personal to customers, meaningful for those who might become customers, and actionable in a way that can achieve results for both the target audience and company.

How Can I Attract New Customers?

One way to win market share is to win new customers. A company can increase its customer base in a variety of ways. Here are a few to consider:

• Improve marketing communications directed at potential new customers as well as existing customers.
• Refresh contact with customers not heard from lately with warm greetings, special offers, and discounts.
• Introduce existing customers to a referral program with appealing rewards as an incentive for providing the contact information of their friends and families. Or, if a program isn’t possible, ask for referrals from your most satisfied customers.
• Ask your most active customers to serve as brand ambassadors and actively spread the word about your company using their chosen medium.
• Review your website to be sure it has the look, feel, and message you wish to convey. A website review is a great opportunity to explain your company’s mission and goals as well as the goals developed to better the lives of customers and others.
• Monitor sites and platforms that promote business ratings and reviews. Respond to both complaints and compliments sincerely. Make every effort to help those whose posts require action. Consider linking positive reviews to the company site.

How Can I Prevent Loss of Market Share?

To avoid losing its market share, a company should monitor its market share metric, keep an eye on the performance of its competitors, and take steps to improve the aspects of its business that can affect its market share standing. These can include things like product and service quality and pricing, customer satisfaction, the growth of its customer base, marketing, and advertising, the quality of its staff, and the potential for the acquisition of competing companies.

Increasing market share can be vitally important to the financial health and continued success of a business. A company has a number of opportunities at hand to, not just maintain, but gain market share. Every company should understand the value a strong market share offers and commit to the ongoing effort that it can take to build it. 

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I moved to Chicago from Portland for an affordable big city life. It's been easy to make friends and I'm never bored.

• Jessica Kirshner is an interior designer who moved from Portland to Chicago in August 2023.
• She loves the affordability, walkability, and cultural vibrancy, despite a higher cost of living.
• Kirshner intends to stay in Chicago for a few years before planning a move to Europe.

This as-told-to essay is based on a conversation with Jessica Kirshner, a 26-year-old interior designer in Chicago. It has been edited for length and clarity.

I'm originally from the Bay Area, and I moved to Eugene, Oregon , in 2015 to study interior architecture. When I graduated, I moved to Portland for a job at a large firm.

After three years in Portland, I moved to Chicago in August 2023. I wanted to live in a bigger but still affordable city, and I'm familiar with the area because I have family here. I live 10 minutes from downtown, and I love it.

Affordability and job market

Chicago is affordable compared to other big cities like LA, San Diego, the Bay Area, or New York.

The biggest difference I noticed from Oregon to Illinois was the income tax because Oregon's is high. The pay is definitely better in Chicago, but the cost of living is higher here, too, so it evens out.

When I first moved, I kept my Oregon-based job and worked remotely for seven months. Once I started looking, it took me about two months to find a new job in Chicago.

For my interior design profession, there were many options in Chicago. It was also good timing for me because Portland had very few options. I tried to use LinkedIn but ultimately found my job through a friend.

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I now work as an interior designer at a large international firm. I wanted to work somewhere with offices worldwide because I eventually want to move to Europe.

Quality of life

My dad is from Chicago, so I came here often while growing up.

After living in Oregon for eight years, I missed my family, but I didn't want to move back to the Bay Area just because it's so expensive. I also wanted a bigger Jewish community, and Chicago is a good option for that.

I love how lively Chicago is during the summer, with everyone out and about. I went to an air and water show last summer, and everyone was out on the lake all day long. It was so fun to people-watch.

I love the architecture, too. It's great to walk around all the different neighborhoods and see the diversity in the buildings.

Culture and walkability

I'm never really bored here. When I first moved, I joined a kickball league to meet people. I'm taking a sewing class because I want to make my own clothes. I plan to apply for German citizenship soon, so I'm going to enroll in German classes.

I didn't know anyone except my family, but making friends has been easy. I've mainly met people through work, organizations like IIDA, and reconnecting with college and high school friends who I knew lived here.

I chose an apartment that's within walking distance from grocery stores. I found it online and didn't see it before signing the lease, but I watched a 3D walkthrough. The cost of a one-bedroom apartment here is similar to a two-bedroom in Portland.

There's a mall, many shops, and outdoor areas within a five-minute walk from me. I'm near bars, clubs, restaurants, and whatever I want to do. I didn't want to have to rely on a car anymore, and as a pedestrian, it's very easy to get around.

I plan to stay for a while

My worst experience was my first time seeing a rat. You don't see rats on the street in Portland. I clearly haven't had any really bad experiences if that's the worst that's happened to me so far.

One downside is the biking culture is kind of nonexistent. There are bikes you can rent through an app, but there are no bike lanes and it feels almost dangerous to bike here, which was quite shocking to me coming from Portland.

I feel like I can do anything I want here. I moved halfway across the country, so I will probably stay here for a few years before moving to Europe when the time is right.

I love Chicago. I'm 100% sure I made the right decision, and I'm happier than I was in Oregon.

Watch: How the last artificial flower factory in New York City survived a century

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Shell reveals $3.5bn share buyback as it faces AGM showdown over emissions

Group of major shareholders plans to table resolution, accusing company of watering down climate pledge

Shell will shower its shareholders with another $3.5bn (£2.8bn) in share buybacks over the next quarter after reporting better than expected profits of almost $8bn for the first three months of the year.

The company announced it would hand investors the multibillion-dollar payouts as it prepared to face a shareholder battle over its climate agenda at its annual general meeting later this month.

Shell’s “staggering cashflows” resulted in adjusted earnings of $7.7bn for the first quarter, below the $9.6bn earned in the same quarter last year but still well above the $6.5bn predicted by analysts.

Its chief executive, Wael Sawan, said the results released on Thursday had given the company the confidence to start another $3.5bn buyback programme for the next three months. Its shareholder payouts in the first quarter came to $5bn, of which $2.2bn was dividend payments and $2.8bn was share buybacks.

The oil company , which handed investors $23bn in payouts last year, had one of its most profitable years on record in 2023 when it reported better than expected profits of more than $28bn for the year. Shell paid £1.1bn in overall tax in the UK for 2023, of which £240m was taxed under the government’s windfall tax, known as the Energy Profits Levy.

Ed Miliband, Labour’s shadow energy and climate minister, said: “These results show yet again why it is so damning the Rishi Sunak refuses to bring in a proper windfall tax on the oil and gas giants. These are companies that have made record profits at the expense of working people. Labour says tax these companies fairly so we can invest in clean homegrown energy that will end the cost of living crisis and make Britain energy independent.”

Despite the payouts the oil company is coming under growing pressure from some shareholders to address its carbon emissions. A group including French asset manager Amundi, insurance giant Axa, and the UK government’s National Employment Savings Trust (Nest) have warned Shell that is not aligned with the Paris climate agreement.

The company has been accused of watering down its green ambitions in an attempt to increase the company’s valuation by growing its liquified natural gas business and holding its oil production rates steady for the rest of the decade. Shell’s latest results showed overall oil and gas production rose by 3% in the quarter to 2.91m barrels of oil equivalent a day.

The group of large European investors, coordinated by the campaign group Follow This, plans to bring a climate resolution to Shell’s AGM to push the company to do more to reduce its emissions.

Mark van Baal, the founder of Follow This, said: “Large shareholders hold the key to tackling the climate crisis with their votes at shareholders’ meetings. Shell will only change if more shareholders vote for change. The resolution is designed to give Shell a shareholder mandate to drive the energy transition.”

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The company signalled this year that it could slow the pace of its emissions reductions for this decade by setting a new plan to reduce the carbon emissions intensity of the energy it sells by 15-20% by the end of the decade, compared with its previous target of 20%. The plan, combined with cost-cutting from its low-carbon business units, has helped to improve Shell’s share price relative to European rivals including BP.

Shell’s share price reached a record high of just over £29 a share earlier this week, in part due to geopolitical upheavals of recent years that have supported higher gas and oil prices. But the company believes it could be worth more .

Its former chief executive, Ben van Beurden, last month stoked fears that the oil company would quit the London Stock Exchange in favour of a New York listing because US investors were “more positive” about fossil fuels. Biraj Borkhataria, an analyst at RBC Capital Markets, said Shell made bigger operating cashflows for the first quarter than Exxon – after adjusting for working capital, and a similar spending budget – but still lagged behind its larger US rival in terms of market valuation. “The valuation disconnect continues to look extreme to us,” he said.

The comments reignited concerns in the City over an exodus of London’s largest listed companies to rival exchanges. These concerns were compounded this week when shareholders of Flutter, the owner of Paddy Power, voted to move its primary listing to New York . It follows the Australian miner BHP’s unsolicited takeover bid for Anglo-American, which could mean the miner disappears from the London Stock Exchange.

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More on this story

Is Shell trying to kill the London stock market?

Shell’s former chief fuels fears it could quit London for New York

Shell waters down emissions cut pledge despite crucial climate decade

Shell to raise dividends again despite 30% fall in annual profits

Shell to face human rights claims in UK over chronic oil pollution in Niger delta

Shell Energy fined £1.4m for failing to flag end of mobile and broadband contracts

Shell angers climate activists with plan for $23bn shareholder payout

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Ocean Fresh seeks ACE Market listing

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Saturday, 04 May 2024

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From left: Ocean Fresh Bhd non-independent non-executive director Datuk Seri Chia Hooi Huak, Ocean Fresh executive director Teo Chee Han, Ocean Fresh executive director Siang Hai Yong, KAF Investment Bank CEO Rohaizad Ismail and KAF Investment Bank corporate finance director Yap Chin Fatt.

KUALA LUMPUR: Ocean Fresh Bhd has signed an underwriting agreement with KAF Investment Bank Bhd (KAF IB) for its initial public offering (IPO) in conjunction with its listing on the ACE Market of Bursa Malaysia.

Ocean Fresh is principally involved in the processing and trading of frozen seafood products as well as the provision of frozen seafood processing services to its customers within Malaysia as well as in Turkey, China, Thailand, Vietnam and Japan amongst others.

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Tags / Keywords: OceanFreshIPO , ACEMarket , FrozenSeafood , ExportGrowth , ChinaMarket , ColdStorageExpansion , NewListing

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