Market Share in Business

Definition and Importance

• Market Share: A metric that indicates a company’s sales relative to the total sales within a market.
• Importance:
  • Provides insight into a company's performance compared to competitors.
  • Helps identify growth opportunities.
  • Aids in strategic decision-making for future business planning.

Example: UK Supermarket Sector (2022)

• Total Revenue: £163.6 billion.
• Revenue Breakdown:
  • Tesco: £56.9 billion
  • Sainsbury's: £33.1 billion
  • Asda: £22.9 billion
  • Morrisons: £17.7 billion
  • Aldi: £11.3 billion
  • Other Supermarkets (e.g., Lidl, Waitrose, Ocado): £21.6 billion

Calculating Market Share

• Formula:
  • Market Share (%) = (Individual Company Revenue / Total Market Revenue) × 100
• Example Calculation for Tesco:
  • Tesco’s Revenue: £56.9 billion
  • Total Market Revenue: £163.6 billion
  • Market Share: (\frac{56.9}{163.6} \times 100 = 34.7%)
  • Conclusion: Tesco holds 34.7% of the supermarket sector revenue, making it a market leader.

Implications of Market Share

• Assessment Tool:
  • Tracks whether market share is increasing or decreasing annually.
  • Helps compare a company's market position with competitors.
• Strategic Responses Based on Market Share:
  • Low Market Share:
    • Adjust strategies such as enhancing product lines, boosting advertising, and expanding geographically.
  • High Market Share:
    • Continue with successful strategies to maintain or grow market presence.

Conclusion

• Market share is a critical metric for businesses to gauge competitive positioning and strategize for sustained growth and market leadership.