What is Market Share: how it works, types, importance and examples

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To understand what Market Share is, let's imagine the following situation: you are a skilled craftsman in a small village, who competes with other craftsmen for the attention of the villagers with your unique creations.

You make beautiful wood carvings, while the other craftsmen produce beautiful ceramic and metal pieces. Each of you dreams of becoming the most renowned craftsman in the region.

You soon realize that in order to achieve your goal, you need to measure your position in relation to the other artisans in the village. This is when you come up with the idea of ​​calculating the percentage of sculptures sold by each artisan in relation to the total local market. From then on, you understand that this metric is a valuable compass for your future strategies.

Understand what Market Share is
As seen in the previous paragraph, we do not need to go much beyond a simple market context, such as that of artisans in a small village, to understand the proportion or market share, that is, the Market Share.

Market Share is an indicator that measures the share of a company's sales or revenue in relation to the total sales or revenue of the entire market in which it operates. This metric is essential for monitoring the company's performance in comparison to its competitors and allows us to assess its competitive position.

The concept of Market Share, like the market itself, has evolved over time and has become increasingly relevant with the growth of competition in global markets. Originally, the term was used for companies operating in well-defined and stable markets where growth was limited.

Today, with globalization and technological advancement, companies face fierce competition in different regions of the world and, in this context, Market Share has become an essential metric for the survival and success of the business .

Market Share: importance for organizations
Market share is a crucial metric for organizations for several reasons. First, it provides a clear view of a company’s competitive position in its industry. By knowing how much of the market a company has captured, it is possible to determine whether it is a leader, a follower, or whether it faces challenges to stand out.

Additionally, market share helps companies identify growth or decline trends. If market share is growing, it may be a sign that strategies are yielding positive results. On the other hand, a decline in market share may indicate that it is time to reevaluate business strategy.

Another important aspect is that Market Share allows companies to understand their customers and competitors in more depth. This enables them to make more informed decisions about pricing, marketing , distribution and research and development investments.

To illustrate the level of competitiveness that an analysis like this can indicate, we can analyze the Global Market Share of smartphones between 2010 and 2021 and verify its constant changes over the months and years.

Discover some examples of Market Share
Knowing your company's Market Share is essential to know how it compares to its india telemarketing data direct competitors, right? If it's still not clear to you how this metric works in practice, check out two examples of Market Share in practice.

The first of these is in relation to the Brazilian smartphone market. When analyzing StatCounter data from April 2023, Samsung leads the ranking by far, with a market share of 40.7% in the national market. Meanwhile, Apple, for example, appears in second place with 20.77%.

Another good example to demonstrate how Market Share works is in relation to the most influential e-commerce networks in Brazil. In this case, according to data from Conversion, Mercado Livre leads the rest, with 13.7% of Market Share. Right behind it are Amazon Brazil and Shopee, with 7.8% and 6.5% respectively.

Types of Market Share and tips on how to calculate Market Share
Two professionals analyze graphs with results of the company's market share.

Calculating a company's market share is not a complicated task, but it requires accurate and up-to-date information about the market. There are two main approaches to calculating market share: based on sales (volume market share) and based on revenue (value market share).

To calculate Market Share by volume, you need to obtain data on the quantity of products or services sold by your company and also on the total number of products or services sold in the market in question in a specific period. The formula is simple:

Market Share by Volume
bring an image with a didactic example of calculating Market Share by Volume Market Share by Volume = (Company Sales ÷ Total Market Sales) x 100.

Example:

Suppose Apple sold 40 million smartphones in a quarter, while the total number of smartphones sold in the market in that same period was 200 million.

Apple Volume Market Share = (40 million ÷ 200 million) x 100 = 20%

This means that Apple has 20% of the Volume Market Share in the smartphone market in this particular quarter.

To calculate the Market Share of value, the revenue generated by the company's sales and the total revenue of the market in question are used:

Market Share Value
Market Share Value = (Company Revenue ÷ Total Market Revenue) x 100.

Example:

Suppose Apple achieved revenue of $30 billion from smartphone sales in the same quarter, while the total revenue of the smartphone market in that period was $100 billion.

Apple Market Share Value = (30 billion ÷ 100 billion) x 100 = 30%

This means that Apple has 30% of the Market Share by Value in the smartphone market in this specific quarter. It is important to note that Market Share can be calculated for the company as a whole or for specific products/services (as shown in the smartphone example), depending on the focus of analysis.

Target audience
Target audience is a fundamental concept in the field of marketing and is directly related to Market Share. It represents the group of consumers or companies to which a given product or service is directed.

Knowing your target audience well is essential for formulating effective marketing and product strategies that meet the specific needs and desires of this group. In addition, it optimizes marketing efforts, reduces costs and maximizes results.

Through appropriate segmentation, the company can direct its actions more precisely and efficiently, winning over and retaining customers.