Impacts of Market Share

1. Economies of Scale: Growth in the market share of a company allows the company to scale up its operations and improve profitability. This further allows the company to obtain a cost advantage over other competitors.

2. Growth in Sales: The total sales of the company can be increased with growth in the market share. When customers observe brand loyalty among their peers towards a particular company, the other customers also get attracted to purchase the product from that particular company.

3. Improve Customer Base: As the market share of a company increases, the customer starts believing in that company and this broadens the customer base. When most customers follow a particular brand or product, the other customers will also get drawn to that brand or product.

3. Goodwill: If the market share of a company improves, the goodwill or reputation of the company also increases. A good reputation has the potential to increase sales and widen the customer base.

4. Industry Dominance: A company can increase its dominance over its operating industry if the market share increases.

5. Enhance Bargaining Power: If a company can dominate the industry, then it can entertain bargaining power and certain other powers. With the increase in market share, the company can have an upper hand and will be able to negotiate with their suppliers and distributors to their advantage.

6. Type of Industry: If a change in the market share of a company, the performance of the company gets impacted at a larger scale, than it is in the mature or cyclical industry. If the change brings minimal impact to the company’s performance, then it is in the growth industry.

The part or percent or amount of a market obtained by a company is termed the Market share. In simple words, market share defines the total sales of a company compared to the total sales of the entire industry in which it operates. This gives a proportionate percentage of the company among its operating industry. If market share is viewed from the customer’s perspective, then market share would be the percentage a company holds among all the purchases made by the customer in a particular product or service. For example, if a consumer purchases 100 bottles of shampoo as a whole and a certain shampoo maker sells 30 bottles, then the particular company holds a 30% market share. This calculation of the market share holds a company’s total sales over a particular time frame and the total sales of the industry operating within that period.

Geeky Takeaways:

• Market share is the part or percentage of a market gained by an organization or a company. The total sales of a company about total sales of the industry is the market share of the company.
• If market share is viewed from the customer’s perspective, then market share would be the percentage a company holds among all the purchases made by the customer in a particular product or service.
• This calculation of the market share holds a company’s total sales over a particular time frame and the total sales of the industry operating within that period.
• The company that has the highest market share and usually holds the maximum influence over the market is known as the Market leader in an industry.
• There can be two types of market share: Value share and Volume share.