The progress, health and strength of an organization is vivid in the market share figure.  For investors X holds a lot of importance.  For any industry the following table is valid. A particular business sector will have multiple organizations offering sevices with diversified portfolios and business intensions. Investers keep a close watch on it

Market Share 2000-01 2001-02 2002-03
A 13 20 30
B 25 19 13
C 15 28 40

(Small & Distributed Players )

47 33 17

        The table above suggests that the A & C companies have grown fast in the market capturing the share from B & others who have not performed so well lately.  These number are calculated in two ways.

  1. Sales Calculations – Total products sold in the market is lets say 100 then A has sold 13 in 2000-01.  
  2. Revenue Calculations – Total revenue that was generated in the sector is $100 then A has $13 out of it.

Sales calculations are usually not a prominent way of doing it because a product organization might have different products in their inventor like Intel ( P1, P2, P3, P4 etc ).  Some products are more profitable than other products.

Companies adopt different Pricing strategiesand Marketing strategies to increase the market share and they also keep a close watch on this number to understand how well/bad they are doing in the business and what needs to be done next to increase the market share to increase profitability of the organization. Needless to say, leader of the market always holds the highest market share.

This type of markets are called Red Oceans where competitors lose business to each other and fight for numbers.

Having said that more market share does not mean that one is more profitable. The cost of having a market share will be in the Advertising, Marketing and R&D expenses of a particular organization. Sometimes if these are costing more than the yield from the market share concept then the organization is in trouble.

    ( Costs for Ads + Costs for Marketing campaigns + R&D costs + Others ) – ( X % Market Share Profitability ) =  -Net

There are different ways to increase/defend the market share. A few are quoted below.

1. Intensified/Provocative  sales/marketing/advertising campaigns

2. Start working on solutions that customers need than want. Innovating on product line ups. 

3. Create Market Disruptions.

4. Create White spaces.

5. Horizontal movement of the organization into other business that are related to it.

6. Merger could be an option in a tough time, especially if you are defending the market share.