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Where does your business stand in its industry? It’s difficult to grow any business without a thorough understanding of your market, including both customers and competitors. Market share offers a measurement tool to help you determine where to focus your efforts and rise above the competition. We’ll discuss the market share meaning below, as well as look at how to increase market share in business.
What is market share?
The market share meaning refers to the percent of total sales that a business generates in its industry. To calculate market share, you divide the company sales by the industry sales for the period in question.
Companies with a high percentage have a large market share, indicating that they draw business from a correspondingly high percentage of customers in relation to their competitors. The business with the largest market share is called the market leader.
How does market share in business work?
You can apply the market share formula to any accounting period for comparison purposes, whether it’s over a multi-year span, a fiscal quarter, month, or year. The market share meaning is a useful metric to follow because it lets you see well a business is doing over time. If its market share grows higher every year, this indicates the business is doing well. On the other hand, if a company’s market share is in decline, it needs to work harder to attract and retain customers.
These market share fluctuations are closely monitored by investors, who use them to determine how competitive a business is with its products and services.
Understanding your market with research
Market share in business is not only useful for investors, however. It’s also an important measurement for business owners. To apply the market share and analyse its meaning more effectively, you’ll need to conduct comprehensive market research.
Desktop research uses existing information to analyse the market
Field research contacts your customers directly with surveys and questionnaires
Agency research hires professionals to gather information on your behalf
Whichever method you use to conduct market research, you should look not only at your customers and competitors but also at your products, services, suppliers, and location. What are the current industry trends? How is the Australian economy performing? Performing this market research can yield useful insight into your current market share.
With adequate research, you’ll be able to fine-tune your market efforts and make more informed decisions to improve your market share.
How to increase market share in business
When looking at how to increase market share for small businesses, thorough market research is a great start. You’ll have a better understanding of what your customers want, and why they may be seeking it from your competitors. Here are some additional ideas to grow market share.
Offer a new technology or product that your competitors don’t have.
Strengthen customer relationships with special offers and loyalty cards.
Focus on retaining and engaging the most talented employees with competitive benefits.
Acquire your competitor with a merger or acquisition deal to cut out the competition.
Collect and apply client feedback to improve retention rates.
Create specific marketing plans tailored to each major client or referrer.
Use content marketing for greater visibility and brand building purposes.
With a combination of market research, data-driven development, and customer retention efforts, you can find ways to stand out from the competition. On a final note, it’s vital to keep assessing your market share over time. If your new efforts aren’t yielding fruit, you’ll need to conduct more research to spark growth.
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