Market share

Market share, in business and marketing, is the share of the targeted consumer base ('market') that a business actually reaches, for a particular service or product.

It can be shown as the amount of money a company brings in from its consumers, divided by the total amount of money paid from all consumers for that service or product. It can also be shown as the amount of products/services sold ('unit sales volume') by a company  divided by the total volume sold to all the consumers in that market.

It is necessary to use market research (generally desk/secondary research, although sometimes primary research) to estimate the total market size and a company's market share.

Increasing market share is one of the most important objectives in business. The main advantage of using market share is that it removes the effects of industry-wide macroenvironmental variables such as the state of the economy, or changes in tax policy. For example, if you were one of only two psychiatrists in Chicago, then it would not matter how bad the economy was because you would always have a huge slice of the consumer-base "pie" for your service. If your service was less needed, then advertising more would help increase your market share. 

The market shares for different companies tends to change over time, causing change in the market share values.

Related pages
 Marketing
Business

 Other websites 

 A Model of Market Shares I and A Model of Market Shares II by Fiona Maclachlan, The Wolfram Demonstrations Project.

Category:Marketing