What is a market share? It is the percentage a company controls of the market as a whole for the products and services it offers. Companies have different strategies and techniques on the way they increase their market shares. Here are the most common and effective ones that companies use: innovation, hiring practices, customer relationships, and competitor acquisition.


How do we calculate market shares?

We can calculate the market shares by gauging how much percentage of sales or units a company has in the market as a whole. Is it confusing? Let us cite an example. Let us say that the total sales amount of Industry A is $100 million every year. Now, Company A generates $2 million annually. If we use the percentage of methods, Company A’s annual market share is 2%.


Let us cite another example. Let us say that Industry A sells 100,000 units annually while Company A sells 5,000 units per year. In this scenario, Company A’s market share is 5%.


How does market share impact a company?

It is beneficial for a company to have higher market shares. The higher the market share, the more chances it gets to be on top of the competition. Hence, if a company has a higher market share, suppliers will give it better prices. The bigger the order volume, the bigger the buying power. Hence, these two always come together. If there is more buying power, it will reduce the company’s expenses in producing a single unit, which is all because of economies of scale.


How can a company increase its market shares?

If market share is that important for a company, then what are the ways to increase it? If there is one thing that can always convince customers to buy, it is quality and innovation. Let us say that a company that makes gadgets consistently improves its products or creates new ones that spark customers’ interest. They would definitely buy. They would buy even if they have previously bought from another brand. If they are hands down with the quality of the product, there is a significant tendency that customers would be loyal to the current brand that they own. Hence, this increases the current company’s market share, decreasing that of the competitor’s.


We had already gone through a glimpse of this when we were starting the topic. We mentioned something about customer relationships. If one company treats its customers right or even beyond, word of mouth is more potent than you can imagine. If one customer speaks positively about one company, that individual can spread that word to two people, and those two can do the same. The cycle is endless. This will prevent customers from jumping ship to another company while other people jump ship to it. Hence, this massively increases the company’s market shares without exerting too much effort and money for marketing.


Keeping it up

The employees of a company dramatically impact the market share. It may not be too direct, but they sure do. If a company hires excellent employees, there will be lesser time for training and turnover. Hence, it can allocate the money they can save to core competencies. If employees get treated right and receive what they out to receive, they will do their best in their work.


Finally, some companies increase their market share if they acquire competitors. Not only will it decrease the acquiring company’s competitors, but it will also receive another customer base. Growing companies, regardless of their size, is always on the lookout for the best acquisition opportunities.