Why Market Share?
Market Share represents the percentage of a single company and it’s total sales, when compared to the total sales that is earned by the entire group of companies, within that market, over a specified time period. This indicates a company’s size within its market.
For example, if you owned a shoe store company. Your company sells $50 million a year in shoes. If the total amount of shoes sold from all companies within the market totals $100 million, then your company has a market share equal to 50%.
Market Share = ($50 million) / ($100 million)
The purpose for us to calculate and know market share is that market share is an indicator on how well or poorly a company or product is doing against competitor companies or products of the same category in the same market. It basically allows us to determine both the market growth or decline of their company or products in a specific market.
Understanding market share also allows the us to exam trends with customers as they make selections with the competition.