Market Share

AAA

DEFINITION of 'Market Share'

The percentage of an industry or market's total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a company to its market and its competitors.

INVESTOPEDIA EXPLAINS 'Market Share'

Investors look at market share increases and decreases carefully because they can be a sign of the relative competitiveness of the company's products or services. As the total market for a product or service grows, a company that is maintaining its market share is growing revenues at the same rate as the total market. A company that is growing its market share will be growing its revenues faster than its competitors.

Market share increases can allow a company to achieve greater scale in its operations and improve profitability. Companies are always looking to expand their share of the market, in addition to trying to grow the size of the total market by appealing to larger demographics, lowering prices, or through advertising. This calculation is sometimes done over specific countries such as Canada market share or US market share.

Investors can obtain market share data from various independent sources (such as trade groups and regulatory bodies), and often from the company itself, although some industries are harder to measure with accuracy than others.

VIDEO

RELATED TERMS
  1. Micky Arison

    The CEO and chairman of cruise operator Carnival Corp. Arison ...
  2. Revenue Per Employee

    An important ratio that looks at a company's sales in relation ...
  3. Market Saturation

    When the amount of product provided in a market has been maximized ...
  4. Best Of Breed

    A stock that represents the most optimal investment choice for ...
  5. Blue Ocean

    A slang term for the uncontested market space for an unknown ...
  6. Cost Of Goods Sold - COGS

    The direct costs attributable to the production of the goods ...
Related Articles
  1. Great Expectations: Forecasting Sales ...
    Fundamental Analysis

    Great Expectations: Forecasting Sales ...

  2. Understanding The Income Statement
    Forex Education

    Understanding The Income Statement

  3. How Investors Can Screen For Stock Ideas
    Investing

    How Investors Can Screen For Stock Ideas

  4. Microeconomics
    Personal Finance

    Microeconomics

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center