Market Share

Market Share is a measure of the amount of a business's market or product category compared to the rest of the industry or market.

Market share is a measure of how much of the total market or segment is owned by a particular business or product. It tracks how well a business and its products are doing relative to their competition. It helps entrepreneurs, investors, and marketers understand the size of the opportunity they have when entering a market or launching a new product. A company’s market share can be calculated by taking the total industry sales within a certain period (usually quarterly or annually) and dividing it by its own sales during the same period. This gives you a percentage representing the size of the company’s market share.

For instance, if a company has sold $500 million worth of product in a quarter, and the total industry sales within that quarter is $5 billion, then the company’s market share is $500 million divided by $5 billion, which is 10%. In other words, the company possesses 10% of the total market.

In some cases, a company may have significant market share within a particular subcategory or segment. For instance, in the automobile market, a particular company may have a 25% market share in luxury sedans. Even more, the company may have a 50% market share in a certain geographic region. All of these market shares can be helpful for understanding how well a business is doing against its competitors.

Google is the quintessential example of a company with a massive market share. For instance, in the online search engine market, Google possesses over 80% market share. This shows to what degree Google dominates the market for online search engines. Google has been able to use this market share to continue to secure the highest advertising rates, constantly grow its user base, and launch new products. As of 2020, Google has managed to maintain and grow their market share across many of their core products. In other words, Google has a monopoly on many online services. In any market, a company’s market share is a key metric to evaluate its success.