What Is Market Share? Here Is The Definition, How To Calculate, The Benefits, And How To Improve It

Illustration of the market (Franki Chamaki on Unsplash)

YOGYAKARTA – It turns out that there are still business people who don't really understand what market share is. In fact, this knowledge is needed to market their products, even related to the pros and cons of a business. For more details, the following is a summary.

What is Market Share

In general, market share is a term that is very commonly used in business activities in the form of goods and services.

Understanding what is market share is certainly not that simple. Some people define market share or market share as the total demand for products from a group of consumers that can be divided according to certain criteria such as age, gender, domicile, occupation, and many more.

In simple terms, the notion of market share is the presentation of a company's products that are successfully sold in the community as a whole which is the target consumer.

How to Calculate Market Share

To find out the market share, companies or SMEs can calculate using a formula. But first determine the sales period for which the market share will be known. After that, how to calculate market share is with the following formula

The company's sales during the specified period are divided by [:] the total industry sales in the same period and then multiplied by (X) 100%. The results will show the percentage of your company's market share.

In addition to this method, market share can also be determined by calculating the number of products or units that can be sold by the company and then comparing it with the total units sold by other companies in the same industry. This method can be done as long as the sales data of other companies can be known.

Benefits of Knowing Market Share

Companies that know data related to market share will make it easier for them in several ways, namely as follows.

1. Know Business Potential

One way to find out the potential of a business is to analyze the market including how much market share a company gets. It can be done by knowing the market share of the company itself or other similar companies.

2. Know Company Position

Companies that have started distributing their products must know their position in the eyes of consumers. The company's position concerns the needs provided by the product to the level of trust in consumers. This can be seen from the number of market share achieved by the company.

3. Knowing Competitors

Companies must also know which competitors have succeeded in gaining the highest market share so that analytical steps can be carried out for the benefit of marketing strategies and product development.

4. Market Development

Companies cannot do market development without knowing how much market share they have achieved. Market development is carried out by conducting market analysis, especially those related to consumer categorization.

How to Increase Market Share

Increasing market share means increasing sales of the company's products. To do this, there are several strategies that are commonly used, namely as follows.

1. Providing Products According to Market Needs

A good product is a product that answers the needs of the market. This principle must be met first so that sales continue to follow market demand.

2. Consider Good Price

Price also determines the behavior of a company's product or not. Determining the price can be done in many ways, starting from calculating the BEP by calculating which market to target.

3. Don't be afraid to innovate

Providing market needs alone is not enough because everyone's needs will continue to evolve according to the times. Therefore, companies must dare to innovate, especially in technology products.

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