What is Market Share?

Have you ever wondered where your business stands in the race for customers and how that affects the company’s total sales, as well as the company’s competitiveness? And how new technology can enhance your position. And how does strengthening customer relationships and your company’s market share play a role in that?

A company’s market share holds the answer, especially when compared to total industry sales, which reflects the industry’s total sales. It’s the percentage of a market that your business controls, and it speaks volumes about your competitive position.

When Apple captured 20% of all smartphone sales last quarter, that number wasn’t just a statistic; it reflected the overall industry revenue and market trends, indicating customer satisfaction. It was a story about dominance, customer loyalty, and product demand all wrapped into one clean percentage.

But here’s what most business owners miss: a company’s market share isn’t just about knowing your position—it’s about predicting your future financial health. Companies with growing market share often see their profits increase at an even faster rate, leading to improved business profitability. Those with shrinking shares typically face profit declines that outpace their market loss.

Market share gives you the full picture when raw numbers can’t capture your company’s total performance. It transforms isolated data into meaningful business intelligence.

In this post, I’ll show you step-by-step how to calculate market share using straightforward methods that don’t require an economics degree. You’ll learn why tracking this metric matters more than most businesses realize, especially about total market growth and capturing market share. I’ll provide practical steps to not just measure your market share but to increase your market share effectively.

Ready to see where you truly stand in your market—and how to climb higher?

What is Market Share and Why Is It Important For a Company’s Total Sales?

• The percentage of industry sales a company controls in a specific market

• A key metric that reveals competitive position relative to industry peers

• Calculated simply as: (Company Sales ÷ Total Market Sales) × 100

Market share represents the portion of an industry or market that a specific company controls, measured by the percentage of total sales that belong to that company. This fundamental business metric helps companies understand their competitive position in the marketplace and where the company ranks. Relative to industry revenue. When a business holds a 30% market share, it means that out of every $100 spent in that market, $30 goes to that company.

Examples of Market Share

Market share examples help make this concept concrete, especially when evaluating industry leaders. In the technology sector, where units sold significantly impact market dominance, we can see clear examples of competition and how companies target customers. According to Statcounter Global Stats, Apple holds 25.39% of the mobile vendor market share worldwide as of June 2025, followed closely by Samsung at 22.52% and Xiaomi at 12.09%. This distribution shows how the smartphone market is divided among key players.

Another striking example comes from the search engine market, where Google maintains a commanding 89.54% market share, with competitors like Bing (3.95%), Yandex (2.45%), and Yahoo (1.37%) trailing far. This example shows how a single company can dominate an entire industry sector through effective national marketing.

In retail, market share can be regional or local. A grocery chain might hold 15% of a city’s food retail market based on its quarterly sales, meaning it captures $15 of every $100 spent on groceries in that area. These percentages help businesses benchmark their performance against competitors and track changes over time.

Types of Market Share

Market share isn’t a one-size-fits-all concept. Different approaches to measuring market dominance exist, considering the industry’s total revenue, each providing unique insights into how companies protect their competitiveness in a particular business. These measurement types fall into two main categories: quantitative and qualitative market share. Each type serves different purposes in strategic planning and competitive analysis.

Understanding these different types helps businesses get a complete picture of their market position. While quantitative measures provide hard data for financial reporting and investor relations, qualitative measures help shape marketing strategies and brand development. Most companies track both types to gain comprehensive market intelligence.

Quantitative Market Share

Quantitative market share focuses on measurable sales data, expressed as a percentage of the total market. It takes two primary forms: revenue market share and unit market share. Revenue market share measures the percentage of total market revenue a company captures, while unit market share tracks the percentage of total units sold.

For instance, in the global smartphone market for Q1 2025, Samsung shipped 60.5 million units to lead the market, while Apple shipped 55.0 million units, representing 19% of the market in unit terms, which shows a strategy to increase market share. Xiaomi followed with 41.8 million units shipped, capturing 14% of the market.

This quantitative approach provides clear, objective data about market position. A company with a high unit market share but a low revenue market share might be selling many low-priced products. Conversely, a company with high revenue share but lower unit share likely sells premium-priced products. These metrics help businesses understand their market position from different angles and identify opportunities for higher profit margins.

Qualitative Market Share

Qualitative market share looks beyond raw numbers to measure a company’s standing in terms of customer perception, brand strength, and mindshare. This includes factors like brand recognition, customer loyalty, perceived value, and brand reputation. While harder to quantify than sales figures, these measures provide valuable insights into a company’s competitive position.

For example, a luxury brand might have a small quantitative market share but a strong qualitative position based on prestige and customer loyalty. Tools to measure qualitative market share include brand awareness surveys, Net Promoter Scores, sentiment analysis, and social media listening for a particular company.

Qualitative market share often predicts future quantitative performance. When customers hold a brand in high regard as their preferred brand, they’re more likely to choose it over competitors, leading to increased sales and market share growth over time. Companies with strong qualitative market share, often due to loyal customers, can often command premium prices and weather competitive challenges more effectively than those with weak brand positions.

Importance of Market Share Analysis

• Market share analysis reveals direct business performance against competitors.

• Insights guide strategic decisions that drive growth and protect market position.

• Data-driven approach helps identify trends before they become industry shifts.

Business Performance Insight

Market share analysis provides a clear picture of where your business stands compared to competitors, including insights into your company’s total sales. When you know your exact position in the market, you can assess if your business strategies are working effectively. A consistent rise in market share typically indicates successful business practices, while a decline might signal problems that need attention.

For example, when Netflix’s market share in the streaming industry grew from 7% to 13% between 2019 and 2021, according to Parrot Analytics, it confirmed their original content strategy was resonating with viewers. This concrete performance data helped justify their continued multi-billion-dollar investment in creating exclusive shows and movies.

Market share also acts as an early warning system. Businesses that track this metric regularly can spot negative trends before they become serious problems. Kodak’s failure to respond to its declining market share in the transition from film to digital photography serves as a cautionary tale about the industry’s total sales dynamics. By the time they fully acknowledged the shift towards new technology, they had to consider whether to raise prices. Their market share had plummeted from 85% to less than 10%, leading to their eventual bankruptcy in 2012.

Understanding Market Position

Your market position isn’t just about size—it’s about understanding the specific segments where you excel or struggle and knowing the market share formula. A thorough market share analysis breaks down performance by:

• Geographic regions (revealing where you’re strongest and weakest)

• Product categories (showing which offerings drive your market presence)

• Customer demographics (identifying which audience segments you’re capturing or missing)

• Distribution channels (highlighting which sales paths deliver the best results)

Competitor Comparison

Market share analysis provides the most objective way to compare yourself with competitors. Unlike other metrics that can be internally focused, market share forces businesses to look outward and assess their performance against others and understand market competitiveness.

This comparison helps identify:

1. Direct competitors taking business from you

2. Emerging competitors are gaining ground quickly

3. Segments where competitors are stronger

4. Your competitive advantages in specific areas

Professor Rita McGrath of Columbia Business School, in her book “The End of Competitive Advantage,” emphasizes that companies need to constantly monitor shifts in competitive positioning through market share analysis to adapt quickly in fast-changing markets.

When Apple tracked its smartphone market share declining in China from 13.6% to 9.8% in 2018-2019, they responded by adjusting pricing strategies and introducing features specifically designed for Chinese consumers. This competitor-aware approach that targeted new customers helped them regain ground in subsequent years.

Strategic Decision Making To Boost Market Share

Market share analysis transforms from a passive measurement into an active business tool when it informs strategic decisions. The data collected becomes the foundation for both defensive strategies (protecting existing market share) and offensive strategies (gaining new ground).

High-performing companies use market share analysis to identify which competitors to target, which segments to prioritize, and where to allocate marketing budgets. For instance, when Toyota noticed its market share slipping in the SUV segment in North America, it responded by expanding its SUV lineup with new models like the RAV4 Prime and Venza. This strategic pivot helped Toyota boost market share, regain its position, and contribute to its 14.3% overall market share in the U.S. by 2023.

Market share analysis also reveals when a market is becoming saturated, signaling that companies should explore new growth opportunities. When Starbucks saw its domestic market share growth slowing, it accelerated international expansion, particularly in China and other Asian markets where coffee consumption was rapidly growing.

Identifying New Market Opportunities That Direct Competitors Have Missed

Market share analysis can reveal untapped opportunities that competitors have missed. By examining areas where no company has a dominant market share, businesses can identify potential “blue oceans”—uncontested market spaces where competition is minimal.

According to research from Bain & Company, companies that use market share data to identify and enter emerging segments grow 3-5 times faster than those focusing solely on defending existing positions. The process involves a few strategies to effectively implement market share data.

1. Analyzing market share patterns across different segments

2. Identifying segments with fragmented market share (indicating no dominant player)

3. Assessing whether your capabilities match these opportunity areas

4. Evaluating the growth potential of these segments

Adjusting Marketing and Sales Strategies

Market share analysis provides critical feedback on which marketing and sales strategies are working. When broken down by channel, product, or region, this data shows exactly where adjustments are needed for generating revenue.

For example, when Procter & Gamble noticed declining market share in the cleaning products category, they conducted a detailed analysis that revealed consumers were shifting toward environmentally friendly options. This led to the development of their “Tide purclean” plant-based detergent line, which helped them regain market share in the premium segment.

Effective market share analysis for marketing adjustments includes:

• Evaluating share of voice compared to share of market

• Assessing price positioning relative to market share gains or losses

• Measuring the impact of promotional activities on market share movements

• Tracking how product innovations affect competitive positioning

Forecasting and Risk Management

Market share trends provide valuable signals for business forecasting and risk management, serving as a key indicator. Historical patterns in market share movement help predict future business conditions and identify potential threats before they materialize.

When analyzing market share data over time, patterns emerge that can inform revenue projections, resource planning, and investment decisions. Companies with growing market share can generally expect continued revenue growth, while those with declining share may need to prepare for potential revenue challenges.

The risk management value becomes clear when market share shows unexpected shifts. For instance, when video conferencing platform Zoom saw its market share surge from 30% to over 70% during the early pandemic period in 2020, competitors like Cisco’s Webex quickly identified this as an existential threat and rapidly overhauled their products to remain competitive.

Early Warning System

Market share functions as an early warning system for businesses, often revealing problems before they appear in financial statements. This happens because market share changes frequently precede revenue and profit changes.

According to research in the Strategic Management Journal, a 1% decline in market share typically precedes a 1.8% decline in profitability within 12-18 months. This lead time allows management to address problems before they significantly impact financial performance.

Warning signs that market share analysis can reveal include:

1. Gradual erosion in specific customer segments

2. Declining share in emerging product categories

3. Loss of position in high-growth geographic markets

4. Decreasing share among younger customer demographics

Professor Clayton Christensen’s work on disruptive innovation emphasizes that incumbent companies often miss market threats because they focus on short-term profitability rather than market share shifts. His book “The Innovator’s Dilemma” provides numerous examples of companies that maintained strong profits even as their market share eroded—until the decline eventually reached a tipping point.

Investor Relations and Stakeholder Communication

Market share data serves as a powerful communication tool with investors, board members, and other stakeholders. Unlike some internal metrics that might be difficult to verify, market share provides an externally validated measure of the company’s total business performance.

When communicating with investors, growing market share demonstrates business momentum and competitive strength, positively impacting stock prices. Research by INSEAD shows that companies that consistently communicate market share gains to investors typically receive higher price-to-earnings ratios than competitors with similar financial results but flat or declining market share.

Market share data is particularly valuable during challenging economic periods. When overall market conditions deteriorate, maintaining or growing market share shows resilience and effective management, even if absolute sales numbers decline. During the 2008-2009 financial crisis, companies that grew market share outperformed market averages by 17% in subsequent years, according to Boston Consulting Group research.

For board presentations and strategic discussions, market share trends provide context for other performance metrics and help focus attention on competitive positioning rather than just internal targets. This external perspective helps prevent organizational complacency and keeps the focus on outperforming the market.

Operational and Resource Allocation

Market share analysis directly impacts operational decisions and resource allocation. Companies use market share insights to determine where to invest capital, how to prioritize R&D efforts, and how to structure their organizations.

When market share analysis reveals strong performance in a particular segment, it often justifies increased investment in manufacturing capacity, supply chain infrastructure, or specialized talent. Conversely, declining market share might signal the need to reduce investment or consider exiting certain areas.

For example, Samsung’s analysis of its declining market share in the low-end smartphone segment led it to reduce manufacturing capacity for these devices while simultaneously increasing investment in premium models where its market share was growing. This reallocation of resources improved overall profitability despite flat total unit sales.

The connection between market share and operations extends to economies of scale. Higher market share typically enables businesses to lower prices while maintaining profitability.

1. Greater purchasing power with suppliers

2. More efficient manufacturing through longer production runs

3. Lower per-unit distribution costs

4. More effective amortization of fixed costs like R&D

How to Measure Market Share the Easy Way

• Market share calculation requires just two key figures and simple math

• Industry data is available through multiple reliable, free sources

• Tracking changes over time reveals more insights than single measurements

Step #1: Gather Relevant Sales Data

Calculating market share starts with collecting the right numbers. You need two specific pieces of information: your company’s yearly or quarterly sales data and the total sales data for your market.

For your company’s sales figures, check your financial records for a specific period. This could be monthly, quarterly, or annual sales. Make sure to define what you’re measuring – either revenue (in dollars) or units sold. Both approaches are valid, but be consistent in your choice.

For total market sales, you have several options. Industry reports from organizations like Statista, IBISWorld, or Gartner provide market size data for many industries. Government statistics offices often publish sector-wide sales figures. Trade associations frequently track industry performance data for their members. Financial reports from public companies can also help piece together the market size when combined.

Finding the Right Data Sources

When looking for market size information, start with free resources:

• Government databases (U.S. Census Bureau, Bureau of Economic Analysis)

• Public company financial statements

• Industry association websites

• Business journals and financial news publications

If free sources don’t provide enough detail, consider investing in paid market research reports. Companies like IBISWorld, Forrester, and Gartner offer comprehensive industry analyses with precise market size figures.

Step #2: Perform Market Share Calculation

Once you have both sales figures, the calculation is straightforward. The basic formula for market share is:

Market Share (%) = (Company Sales ÷ Total Market Sales) × 100

Let’s walk through an example: If your company generated $2 million in revenue last year, and the total market size was $20 million, your calculation would be:

($2,000,000 ÷ $20,000,000) × 100 = 10%

This means your company holds 10% of the market. This percentage reveals your competitive position within your industry.