What Is a Market Share Analysis?

Market share is also called "market share". Refers to the proportion of sales (or sales) of a certain product (or category) of an enterprise in the market for similar products (or categories). Reflects the company's position in the market. Generally, the higher the market share, the stronger the competitiveness. There are three basic measurement methods: (1) Overall market share, which refers to the proportion of a company's sales (amount) in the entire industry. (2) Target market share refers to the proportion of a company's sales (amount) in its target market, that is, the market it serves. (3) Relative market share refers to the ratio of a company's sales volume to the sales volume of the largest competitor in the market. If it is higher than 1, it indicates that it is the leader of this market. ^[1]

market share

Market share is also called market share. It largely reflects the competitive position and profitability of an enterprise. It is an indicator that enterprises attach great importance to.

Market share has two characteristics: quantity and quality.

When it comes to market share, the first thing most people think of is market share. But in fact, the size of the market share is only a quantitative characteristic of the market share, and it is a manifestation of the breadth of the market share. There is another quality characteristic of market share. This is the quality of market share. It is a reflection of the strength of market share. The number of market shares is also the size of the market share. Generally, there are two types of representation methods: one is to use enterprise sales to account for the total market sales.

There are four types of market share according to different market ranges

High market share does not mean high profit. In the process of increasing market share, many companies have increased their sales costs due to the decline in production costs, but the cost of expanding market share has grown much faster than the decline in production costs. In addition, competition reduces prices, unit product profits rapidly decline, and finally the profitability of corporate products decreases. The reason for the rapid increase in the cost of expanding market share is, on the one hand, that during the process of market expansion, the increase in marketing management personnel due to lack of experience or lack of training or low quality led to out of control costs; on the other hand, strong reactions from competitors Increased costs. Enterprises' actions to expand market share will inevitably make competitors take corresponding actions. The most common is that companies increase advertising investment, competitors will increase advertising investment, enterprises reduce prices, competitors will reduce prices, or even lower than enterprises. Even worse. As a result, companies have paid a large price, sales have not increased significantly or sales volume has increased and market share has expanded, but profits have declined. De facto business

As mentioned earlier, an increase in the number of market shares does not necessarily increase the profitability of the company. Similarly, a decrease in the number of market shares does not necessarily reduce the profitability of the company. In the face of the decline in market share, companies must carefully analyze and study and come up with targeted solutions.

1. Enterprise sales growth is lower than industry sales growth caused by market share decline

The rapid growth of the industry means that the total market demand is increasing sharply, there are many development opportunities, and the market is attractive. In this case, the analysis of the decline in the company's market share must be carried out in conjunction with the situation of competitors. The analysis should focus on changes in the number of competitors and changes in their market share. If there are more and more competitors, and the market share of each competitor is smaller and smaller, at this time, the decline in the market share of the enterprise is acceptable, and the company does not need to take special action; if the number of competitors is Increased, but the market share of some competitors is rising. At this time, companies must conduct key analysis and research on those competitors who increase their market share, understand the reasons for their faster growth than the industry, compare and analyze their own shortcomings, and Make improvements to avoid being opened up by competitors; if the number of competitors is decreasing, the number of market shares of most major competitors is increasing.

Industry products lack competitiveness, companies must increase product investment, improve product performance, strengthen promotion and sales outlets, and strive to change the adverse situation they face; if the number of competitors is decreasing, the market share of a few competitors is increasing, This means that the market is concentrating on a few large competitors, while small and medium competitors are struggling. Companies face important choices: either keep the status quo or change the status quo. Maintaining the status quo is that companies are facing a decline in market share and are not trying to reverse it. They only choose this way when they believe that they cannot compete with large companies at all and are ready to fade out of the market. Changing the status quo means that enterprises increase investment and reverse the decline in market share. When enterprises are confident and supported by corresponding resources, they should make this choice.

2. Enterprise sales decrease faster than the decrease in market share caused by the decrease in industry sales. The decrease in industry sales means that the total market demand is declining, the industry is in recession, and the market has no development value. The rapid decrease in sales of enterprises indicates that the market crisis has affected the enterprise in a particularly significant and serious manner, and that their products lack competitiveness in the market. In response to this situation, companies have the following options:

(1) Strategies for maintaining the status quo

Try to maintain the number of market shares or slow down the rate of market share decline. Enterprises can stimulate demand by increasing promotional efforts or reducing prices at the appropriate time. This strategy can be selected when the company finds that the product returns are still good after analysis and research.

(2) Homeopathy

The company's market share has declined, no more efforts have been made, and the original

The purpose of increasing market share is to greatly increase and continue to increase the

Speaking of high market share, generally speaking, in the following two cases, high market share means high profits.

The company provides high-quality and high-priced products, and the price increase must exceed the additional cost of high quality. Improving product quality does not increase the company's costs, as the company also reduces waste and after-sales service consumption. And if their features are well-suited to consumers' needs, they would rather spend more than that for the price.

Increasing the intangible assets of a company / commodity is also a way to increase product market share.