Market share is the amount or percentage of sales that one business generates within a specific segment or category.
Market share is a critical metric, as it gives businesses a sense of how their brand stacks up against their competition.
Businesses can calculate market share by defining a specific time period (such as a month of year), and then dividing the business’s total sales during that time by the total sales of all businesses within that category during that time. The equation shows how much of the total industry landscape the business owns.
The business that generates the most sales during a given time period is the market leader, and that business tends to garner more customer loyalty and influence within the category. That’s why businesses often compete heavily to achieve and maintain the market leader position.
Companies can achieve that top spot or generate a larger market share through a number of strategies, including acquiring other businesses; innovating on products; or finding ways to boost customer retention.