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

Loading the player...
RELATED TERMS
  1. Micky Arison

    The CEO and chairman of cruise operator Carnival Corp. Arison ...
  2. Revenue Per User - RPU

    A ratio used to express the profitability of a company on a per-user ...
  3. Top Line

    A reference to the gross sales or revenues of a company, or an ...
  4. Net Sales

    The amount of sales generated by a company after the deduction ...
  5. Operating Income

    The amount of profit realized from a business's operations after ...
  6. Cost Of Goods Sold - COGS

    The direct costs attributable to the production of the goods ...
RELATED FAQS
  1. How does brand image and marketing affect market share?

    A company's marketing efforts have a direct impact on sales and market share, but they are not the only factors that influence ... Read Full Answer >>
  2. Is there a benefit to outsourcing internationally over outsourcing within the country?

    Businesses choosing to outsource internationally often benefit from differences in labor and production costs. Price dispersion ... Read Full Answer >>
  3. What strategies do companies employ to increase market share?

    Companies increase market share through innovation, strengthening customer relationships, smart hiring practices and acquiring ... Read Full Answer >>
  4. What factors in a business most affect its core competencies?

    A business's core competencies are the capabilities that give it an advantage over its competitors. Businesses can maximize ... Read Full Answer >>
  5. How has the shift to e-commerce affected the profitability of companies in credit ...

    The shift to e-commerce has positively affected the profitability of companies in the credit services industry. However, ... Read Full Answer >>
  6. Is the airline industry in an oligopoly state?

    The United States airline industry is an oligopoly. An oligopoly exists when a market is controlled by a small group of firms, ... Read Full Answer >>
  7. Why do companies merge with or acquire other companies?

    Some of the reasons for mergers and acquisitions (M&A) include: 1. Synergy: The most used word in M&A is synergy, ... Read Full Answer >>
Related Articles
  1. Fundamental Analysis

    Great Expectations: Forecasting Sales Growth

    Predicting sales growth can be something of a black art, unless you ask the right questions.
  2. Forex Education

    Understanding The Income Statement

    Learn how to use revenue and expenses, among other factors, to break down and analyze a company.
  3. Investing

    How Investors Can Screen For Stock Ideas

    Find out how to pick your own investments like a pro.
  4. Personal Finance

    Microeconomics

    This tutorial teaches the basics of one of the most important economic topics. A must for all investors.
  5. Entrepreneurship

    Biggest Merger and Acquisition Disasters

    Find out which companies collapsed after merging.
  6. Retirement

    Where Top Down Meets Bottoms Up

    Find the investing "sweet spot" by combining these two styles.
  7. Economics

    Selecting A Second-Tier Company

    Find out why an industry's "little guys" can be big winners.
  8. Markets

    Introduction To Fundamental Analysis

    Learn this easy-to-understand technique of analyzing a company's financial statements and reports.
  9. Fundamental Analysis

    What is a Null Hypothesis?

    In statistics, a null hypothesis is assumed true until proven otherwise.
  10. Investing

    What's Marginal Revenue?

    In microeconomics, marginal revenue is the additional revenue generated by increasing sales revenue by one unit. Another way of saying this is that the marginal revenue is the revenue generated ...

You May Also Like

Hot Definitions
  1. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  2. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  3. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  4. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  5. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
  6. Currency Carry Trade

    A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase ...
Trading Center