Calculating Market Share

Market share is the percentage of a market's total sales earned by a company or product.

Calculating market share allows a company to determine its position in a market.

Here are some basic steps to calculate market share.

Determine a period.

To calculate a company's market share, you must choose a period to examine, such as a quarter or a year.

For example, a company can compare its first and second quarter to see how quickly it is growing in the market.

Find out the company's total sales.

Next, calculate a company's total sales revenue within that period.

Multiply the total number of units sold by the average sales price per unit.

If a company only sells one product, its sales revenue is the total sales revenue of the company.

If a company sells multiple products, add up the sales revenue for each product.

Find out the total market sales.

Next, calculate the total sales for market that a company operates in.

Sales information from publicly traded companies is easy to obtain, since they are legally required to share it.

It can be found through company websites, shareholder reports, and trade associations.

Divide the company's revenue by the industry's total.

Finally, to divide a company's total sales by total market sales.

The result is the company's market share.

Comparing a company's market share with the growth of a market shows whether it has increased or decreased.

If a company's revenue has grown more slowly than the market, its market share has declined.

Questions

What represents a company's percentage of market?

>its market share

When calculating the total sales revenue of a company that sells several products,...

>add up the revenue for each product.

Company can assess how well they are performing in a market by analyzing their market share. 

To calculate total sales revenue, multiply its total number units sold and the average sales prices per unit.

Before calculating a company's market share, you must determine a specific period to examine.

The company compared its first and second quarter to see how quickly it is growing in the market.

The company has steadily lost market share over a period of three years.

After comparing both quarters, they have determined that their company's market share hasn't been growing quickly.

After calculating a company's total sales, you should...

>determine the total sales for the market.

To calculate a company's market share...

>divide its total revenue by the total market revenue.