Market share is a business term indicating the portion of the total sales generated in a market or industry that a single company earns. Investors use market shares to determine how dominant a company is in its field. Many companies use market shares for self-evaluation, as an indicator of their success in the market compared to their competitors. Market share information is not kept in a central location, so finding it will take some digging for information on the market and the company, along with some calculation on your part.
Determine the size of the market the company is participating in. Find the total sales amount for that market for the specified period you’re determining the market share. Industry information can usually be found in news reports carried in industry magazines or newsletters specifically related to the industry. You can also find industry size information by checking with news outlets and magazines covering financial and business news. Write the total amount of market revenue down.
Locate sales data for the company. You’ll need the total amount of sales generated in the same period of time as the total market sales amount for that industry. Look for the total gross sales revenue covering a full year for that specific market for best results. The gross revenue is the actual amount paid by consumers for sales of goods and services in that specific market without accounting for returns. These sales figures are published in the company’s income statement. Note down this sales figure.
Divide the total gross sales revenue for the company by the total market size for the same time period and multiply that number by 100. The result will give you the company’s market share in percentage form. For example, if Company A does business in Market #1, earning $1 million in gross sales revenue in a $10 million market, Company A will have a market share of 10 percent.
Use the same process to determine market share, substituting units sold instead of revenue to remove price variations from market share calculations.
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