Loading the player...

What is 'Market Share'

Market share represents 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 in relation to its market and its competitors.

BREAKING DOWN 'Market Share'

A company's market share is its portion of total sales in relation to the market or industry that it operates within. For example, if a company sells $100 million in tractors per year domestically, and the total amount of tractors sold in the U.S. is $200 million, the company's U.S. market share for tractors would be 50%.

The Importance of Market Share

Investors and analysts monitor increases and decreases in market share carefully, because this 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 with its operations and improve profitability. A company can try to expand its share of the market, either by lowering prices, using advertising or introducing new or different products. In addition, it can also grow the size of its market size by appealing to other audiences or demographics

The calculation for market share is usually done for specific countries, such as a Canada-only market share or U.S.-only 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. However, some industries are harder to measure with accuracy than others.

Example of Market Share

All multinational companies measure success based on the market share of specific markets. China has been an important market for companies, as it is still a fast-growing market for many products. Apple Inc., for example, uses its market share numbers in China as a key performance indicator for the growth of its business. Apple's market share for China's smartphone market fell from 13.6% at the end of 2015 to 9.6% for 2016 despite the overall Chinese smartphone market growing by 9% in 2016. Apple sales were down in China that year as it failed to launch a new iPhone, and then it further lost market share as a number of mid-range smartphones were launched by Chinese competitors OPPO and vivo. 

RELATED TERMS
  1. Equity Market Capitalization

    Equity market capitalization is the measure of the total market ...
  2. Market Capitalization

    Market Capitalization is the total dollar market value of all ...
  3. Per Share Basis

    A measure used in the financial world to illustrate the quantity ...
  4. Leveraged Lease

    A leveraged lease is a lease agreement that is partially financed ...
  5. Earnings Per Share - EPS

    Earnings per share (EPS) is the portion of a company's profit ...
  6. Earnings

    Earnings typically refer to after-tax net income or a company's ...
Related Articles
  1. Insights

    The Rise of Local Smartphone Vendors in China (AAPL)

    China's smartphone market is getting more and more competitive with the fast rise of local vendors.
  2. Investing

    Time For China’s Smartphone Revolution

    The biggest smartphone market is just starting to blossom, as smartphone use in China grows.
  3. Investing

    Apple's iPhone Loses Grip on Chinese Market

    The iPhone lost the top spot in best-selling smartphones in China for the first time since 2012.
  4. Investing

    Apple to Open 2 New Research Centers in China

    The company wants to "curry favor" with the Chinese government, according to Bloomberg.
  5. Investing

    Who Are Apple's Main Competitors in Tech?

    The megalithic company has its share of competition.
  6. Investing

    Apple Poised to Surpass $1 Trillion in Market Cap

    As Apple outruns the S&P 500 with a near 40% rally, more upside is expected from the iPhone.
  7. Investing

    Global Smartphone Shipments Suffered Biggest Ever Fall Last Quarter

    Neil Mawston, executive director at Strategy Analytics, warned that global iPhone volumes will continue to decline until Apple introduces more affordable alternatives.
  8. Insights

    Apple's First-Quarter Results: The Mother of All Earnings

    The fact that the market as a whole is becoming more realistic about Apple's growth can benefit the company long term.
  9. Investing

    Apple Downgraded by Barclays

    The investment bank wrote that the iPhone 8 will not change Apple's fortunes.
  10. Insights

    Should Investors Bite Into Apple Stock In 2016?

    Apple started the year with a bang on the back of record sales for its blockbuster smartphone. At the end of the year, however, things look different with a number of analysts predicting a slowdown ...
RELATED FAQS
  1. What strategies do companies employ to increase market share?

    A company's market share is the percentage it controls of the total market for its products and services. Learn about the ... Read Answer >>
  2. Who are Apple's main competitors in tech?

    Explore Apple's competitive position in the many industries in which it operates. Learn about the different products and ... Read Answer >>
  3. What strategies do companies use to regain market share they have lost?

    Learn about the three simplest ways companies can regain lost market share: pricing changes, promotional changes and product ... Read Answer >>
  4. What is the difference between market capitalization and shares outstanding?

    Understand the relationship between shares outstanding and market capitalization and how market cap is interpreted to establish ... Read Answer >>
Trading Center