Have you ever noticed how it’s difficult to find a McDonald’s location that doesn’t have a Burger King or a Wendy’s right across the street from it or less than a block away? Or how there is a very clear cola war between Pepsi and Coke? Well, businesses are always competing with one another and a key indicator of a company or brand’s success is market share.
What is Market Share?
The market share of a company is the company’s percentage of an entire industry’s total sales. Determining market share allows businesses to compare how they’re doing in terms of sales and its competitive advantage during a given time period. The formula for market share is:
Your Company or Brand ÷ Total Companies or Brands = Market Share
Market Share in Action
Let’s say you work in the healthcare industry and your CEO is working on a presentation on the service lines offered at your hospital, specifically on maternity/women’s services. He/she then asks you for a YTD report on how your hospital is doing in comparison to the other hospitals in your PSA. Although they didn’t directly ask you to analyze the market share of your hospital, this is what they were implying.
So, now what? Well, the first step would be to find out how many babies were born in your hospital since the start of the year and research how many babies were born in TOTAL from all of the hospitals in your primary service area. Once you have this data and information, you will divide the number of babies born at your hospital by the total number of babies born in your area. This number will give you your market share percentage. You will now be able to analyze what may be causing this market share percentage as well as what strategies you should implement as a marketer to increase this market share.
Now it’s time for the real fun!