What is market share and why is it important?

Market share is considered to be one of the single most important metrics in the world of marketing. It’s a key indicator of how well a company is doing against its competitors. Used correctly this metric helps managers evaluate the total market growth or decline (primary demand) or trends in customer’s selection among competitors (selective demand). Primary demand is generally the most cost effective method to achieve sales growth.

Understanding your market requires careful consideration. If you define your market too narrowly you may miss opportunities or allow threats to emerge. If you define your market too broadly the effectiveness of your message may be diluted. The net result of is wasted marketing dollars or lost profit. This complex process requires assessment of either unit sales or revenue in relation to products, geographic areas, sales channels, customers and time periods.

Some additional factors that must be considered:

• Measurements taken from total shipments from manufacturers vs. consumer purchases
• Scope of your competitive universe
• Rebates
• Discounts

If you sell multiple brands and you wish to identify which ones are performing better for your organization measure based on unit sales. If, however, you have a service without particular brand names, take measurements based on revenue.

Marketing EQ can assist your company in capturing the correct information to understand opportunities and challenges, whether you are selling brands or strictly service. This robust data capture will empower your organization to make calculated decisions to create new sales growth.

2016-12-17T07:48:27-08:00

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