What elements are taken into account in Market Share ?
Posted: Mon Jan 20, 2025 7:06 am
Before understanding how to calculate market share, let's review all the elements that are taken into account to obtain a realistic result.
They influence the type of calculation, as well as the index being sought, from the simplest and most objective to the most complex.
We have separated the main factors, along with a brief explanation of each. Check:
Billing
The calculation of the value ratio takes into account a company's revenue compared to the revenue of its sector.
Perhaps the main problem is, precisely, knowing this last measure.
Some sectors disclose results publicly, especially in the case of publicly traded companies.
However, if your organization does not have the necessary panama whatsapp data data, it will be necessary to make estimates in conjunction with specialized consultancies or even studies.
Brand penetration
In the case of brand penetration, this is a factor that will depend on market research tools and the help of specialized consulting firms.
It is not necessary in the calculation of market share, but it can be included, which increases its degree of complexity, especially since we are talking about an index with a certain margin of error.
Market value
When we talk about market share by market value, what is considered is the monetary value that your company represents.
That is, if your organization was valued at $5 million and you have three competitors worth $3, $5, and $7 million respectively, your market share would be:
Target audience
One of the ways to understand Market Share, which we have not mentioned until now, is through the analysis of the target audience.
That is, the percentage of clients gained by your company within a given profile in relation to the total number of potential clients with that profile.
So, let's say your city has 100,000 female inhabitants, between the ages of 20 and 30.
In your customer base, with the help of a CRM, you can identify that, in the same location, you have 25 thousand customers with this profile.
We are therefore talking about a 25% market share within this specific target audience.
How to calculate Market Share ?
Now that you know the different factors that can impact and change the Market Share calculation, you understand how to do the calculations, right?
Let's review the formulas to simplify your understanding:
Share by Sales Volume : (Company Sales Volume ÷ Total Market Sales Volume) x 100
Share by value : (Total value of company sales ÷ Total value of market sales) x 100
However, there are different ways to perform this calculation, as we mentioned.
An example is considering brand penetration, which takes into account different metrics such as market share by sale and penetration rate, not surprisingly, we reinforce how subjective this index can be.
In addition, aspects such as customer activity must be taken into account.
That is, a person can buy lunch boxes every working day of the week, which makes him a loyal consumer of this type of product.
However, his activity varies: to save money, he buys from two different suppliers, one cheaper (on three days) and one more expensive (on the other two days).
Thus, there is 60% activity with the cheapest provider and 40% with the most expensive one.
How to increase a company's Market Share ?
Now that you know what market share is and how to calculate it, you may be wondering: “ How can I increase my market presence?”
This is an important point in a company's growth strategy.
They influence the type of calculation, as well as the index being sought, from the simplest and most objective to the most complex.
We have separated the main factors, along with a brief explanation of each. Check:
Billing
The calculation of the value ratio takes into account a company's revenue compared to the revenue of its sector.
Perhaps the main problem is, precisely, knowing this last measure.
Some sectors disclose results publicly, especially in the case of publicly traded companies.
However, if your organization does not have the necessary panama whatsapp data data, it will be necessary to make estimates in conjunction with specialized consultancies or even studies.
Brand penetration
In the case of brand penetration, this is a factor that will depend on market research tools and the help of specialized consulting firms.
It is not necessary in the calculation of market share, but it can be included, which increases its degree of complexity, especially since we are talking about an index with a certain margin of error.
Market value
When we talk about market share by market value, what is considered is the monetary value that your company represents.
That is, if your organization was valued at $5 million and you have three competitors worth $3, $5, and $7 million respectively, your market share would be:
Target audience
One of the ways to understand Market Share, which we have not mentioned until now, is through the analysis of the target audience.
That is, the percentage of clients gained by your company within a given profile in relation to the total number of potential clients with that profile.
So, let's say your city has 100,000 female inhabitants, between the ages of 20 and 30.
In your customer base, with the help of a CRM, you can identify that, in the same location, you have 25 thousand customers with this profile.
We are therefore talking about a 25% market share within this specific target audience.
How to calculate Market Share ?
Now that you know the different factors that can impact and change the Market Share calculation, you understand how to do the calculations, right?
Let's review the formulas to simplify your understanding:
Share by Sales Volume : (Company Sales Volume ÷ Total Market Sales Volume) x 100
Share by value : (Total value of company sales ÷ Total value of market sales) x 100
However, there are different ways to perform this calculation, as we mentioned.
An example is considering brand penetration, which takes into account different metrics such as market share by sale and penetration rate, not surprisingly, we reinforce how subjective this index can be.
In addition, aspects such as customer activity must be taken into account.
That is, a person can buy lunch boxes every working day of the week, which makes him a loyal consumer of this type of product.
However, his activity varies: to save money, he buys from two different suppliers, one cheaper (on three days) and one more expensive (on the other two days).
Thus, there is 60% activity with the cheapest provider and 40% with the most expensive one.
How to increase a company's Market Share ?
Now that you know what market share is and how to calculate it, you may be wondering: “ How can I increase my market presence?”
This is an important point in a company's growth strategy.