UNDERSTANDING
Market Share
Market share is the total share of a market, expressed as a percentage, that a particular business,
product or brand ‘owns’. Higher market share is a common objective for businesses as a strong market
share is often associated with higher profits. Market share can be increased through strategies such
as building brand loyalty amongst existing customers, using marketing effectively to attract new
customers from competitors, and creating unique selling points in the market, for example, through
quality or innovation.
CALCULATING MARKET SHARE
Market share can be calculated based on total sales value or total sales volume in the market. The
formula to calculate market share is:
Market share = Sales of one product OR brand OR business
x 100
Total market sales
Calculating Market Share
Example 1
The table below shows the sales of two businesses in a market:
(£) i) Calculate the market share of Business A.
Sales of Business A 900,000 Market share = £900,000
x 100 = 18%
Sales of Business B 200,000 £5,000,000
Total Market Sales 5,000,000 ii) Calculate the market share of Business B.
Market share = £200,000
x 100 = 4%
£5,000,000
Calculating Market Share
Example 2
The table below shows the sales of all four businesses in a market:
(£) Calculate the market share of Business C.
Sales of Business A 130,000 Total market sales = £130,000 + £260,000 +
Sales of Business B 260,000 £360,000 + £450,000 = £1,200,000
Sales of Business C 360,000 Market share = £360,000
x 100 = 30%
Sales of Business D 450,000 £1,200,000
A* Evaluation:
Market share is best assessed over time rather than at one particular point, so that businesses can
measure the effectiveness of their strategy and those of competitors. Market share data should be treated
with caution. It is not always easy to measure market size accurately or know the sales of competitors.
A business may be pleased their market share is increasing, however, if the market size is falling, so too
might overall sales and profitability. Similarly, a decrease in market share may mean an increase in sales
if the market as a whole is growing.
