Market share is defined as the proportion of the total sales that a particular Company earns.
An Example of Market Share
If you operate within a particular niche market and sell £5m worth of product, where the total market is £100m, then your market share is 5%.
What Does Market Share Indicate?
Market share indicates the amount of the market you control in comparison to your competitors.
If you are creating a business plan or considering starting a new business, you may want to consider the market available to you as a whole so you understand how big the market is that you intend to sell to. Or if you are going for investment you may want to demonstrate how much your market share will increase once you achieve your growth plans.
Why Increase Market Share?
Increasing your market share means business growth and profits. Even if the market your business operates in is not growing, increasing your market share means you can continue to grow your business.
Weakening Your Competitors
Stealing market share means increasing business turnover while weakening your competitors turnover at the same time.
Economies of Sale
By selling more, businesses can develop a cost advantage firstly by being able to negotiate better pricing with suppliers and then being able to pass these cost savings onto customers, securing and growing market share even further.
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