Market share is instrumental in depicting the success of a business. It is an essential tool that can be used to measure the effectiveness and success of a company’s marketing strategy within a specified target market. Market share can be used to assess a company’s competitive position in an industry and where it has a competitive advantage. Market share identifies the market leader; the company with the highest market share in an industry. This ranking is indicative that the company succeeded in generating the largest percentage of sales in a specified market as well as grow their revenues faster than their competitors by increasing their market share. Moreover, it shows the company was successful in surpassing their competitors relative to other metrics such as brand loyalty, price, and profitability.
Market share is crucial in helping businesses understand their target market, what their customers want, and how to serve their customers efficiently and effectively. It provides vital insight about a company’s growth, revenues, and net profits. Market share tells the company where they stand and how they’re performing in the market compared to their competitors. It is important for a business to monitor increases and decreases in market share because it can indicate the level of competitiveness of their business goods or services. It motivates them to explore marketing strategies that will improve their performance and help them gain competitive advantage.
Market share increases can allow a business to improve profitability, achieve a greater scale with their operations, and expand its share in the market. The key methods to consider when increasing a company’s market share include:
Additionally, strengthening customer relationships, building and maintaining customer loyalty, and engaging with customers is crucial to increase market share. For instance, in 2016, when Nike, a frontrunner in the footwear industry, started experiencing a mild decline in their growth compared to Adidas, who at the time had a mega resurgence, decided they were not going to give up market share without a fight. As a result, they strategized to drive growth and increase their market share by focusing on accelerating their innovation, product creation, product delivery, and direct connection to their consumers. In 2017, they initiated a series of initiatives including Consumer Direct Offense to serve the consumers personally and deepen one-on-one connections. Their consumer-focused approach for growth was successful in increasing Nike’s gains by 7%.
Companies can assess and interpret their market share in different ways. They can gain insight needed to improve their marketing strategies, find the best opportunities to expand, increase growth and revenues, and achieve overall success.