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A marketing share, also known as a market share, is a company's portion of the sales in the available market for the product or service over a measured period of time. Investors use marketing share information to determine how a company competes with other companies of its type. An increase in marketing share means that the company has sold a higher percentage of the product on the market than a competing company over the last reporting period. Marketing share information helps determine the likelihood of an organization's future success.
Information about marketing share comes through market share analysis. By analyzing its market share, a company can determine its market power. Market research can help a company plan its future. Company planning executives use market share information in a business technique called strategic management. In strategic management, executives first evaluate the company's standings before they set goals and frame long-term plans intended to help the company reach those goals.
Mathematically, marketing share can be calculated using the product units or dollars sold by the company in comparison with the total for that market or market segment. Generally, a market is the buying audience for a particular product or service. A market segment is a subgroup of a market determined by special consumer needs or desires. A consumer is a person or group with purchasing power. Potential consumers include individuals, households and businesses.
When a company's marketing share increases to include more consumers in its market, the company often receives greater capital and has an opportunity to expand its operations to meet the demand of its growing consumer pool. Market share analysis can help a company determine if the growth will continue and how much the company should expect to grow its portion of the available market. Though analysis is not a total guarantee of success, use of market analysis data can help a company avoid the costly mistake of expanding its operations beyond what the market will accommodate.
Market segments are determined by separating information by specific consumer traits or product requirements. Consumer traits, also called demographics, which help determine consumers' placement in specific market segments include income, age, race, product price requirements, and location. Companies use these traits to predict the buying behavior of a market segment. If a middle-aged man in New York City only buys his favorite brand of breakfast cereal when it is on sale, that consumer might be categorized by the breakfast cereal company based on his age, location, gender, and the price point at which he will buy the cereal. Buying behavior is usually predicted using surveys and marketing test panels geared toward the intended consumer.
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