A market share is the percentage of total industry sales that a particular company generates over a given time period. It is used to measure the size of a business in relation to its market and competitors. Market share is calculated by taking the company’s sales over the period and dividing it by the total sales of the industry over the same period.
When you start losing market share, it’s really tough to gain it back; you need the product portfolio and presence in many markets.
Hans Vestberg, CEO of Verizon Communications
In Simpler Terms
Imagine you’re at a food festival with various food stalls. Each stall represents a company, and the total amount of food sold at the festival represents the entire market. If one stall is consistently crowded and sells more dishes than the others, it has a larger ‘slice’ of the food festival market. This is what market share is about—it’s like measuring how popular and dominant a stall (or business) is compared to all the others at the festival.
But market share isn’t just about bragging rights. Companies with higher market shares can benefit from ‘economies of scale,’ meaning they can lower their costs by producing or selling in larger quantities. While having a large market share can be a sign of success, it’s not the only thing that matters. Companies also need to focus on profitability, customer satisfaction, and sustainable growth.Â
