What Is Market Share & How Do You Calculate It?

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Growing up, I used to play “grocery store” with my sister. We’d go into our pantry, take out all the food, and set up a grocery store in our living room. I would typically “buy” goldfish.

You might be thinking, “What does this have to do with market share?”

Well, let’s say that I bought 10 bags of goldfish from various “companies” that my sister, mom, and dad owned. If three of those bags were my sister’s goldfish, that would mean that she had a 30% market share of my goldfish.

Put simply, that is market share. But how does that impact marketers?

As marketers, it’s important to understand market share so you know how your company ranks against competitors and can develop new marketing strategies to reach more potential customers. In this post, we’ll outline what market share is, how to calculate it, give real life examples, and explain how you can increase yours.

What is market share?

Market share is the percentage of an industry’s sales that a particular company owns. Essentially, it is the share of total industry revenue that your business has generated from selling your products and services. Businesses with larger market shares are industry leaders and competition for smaller companies.

You can think of it like this: if consumers buy 100 t-shirts and 70 of them are from company A, 25 from company B, and 5 are from company C, Company A owns a market share of 70% and is the leading industry competitor.

Market share is typically calculated for a specific time period, like yearly or quarterly sales, and is sometimes separated by region.

Market Share Formula

Calculating your market share will give you an overall understanding of your position in the industry, but it’s also helpful to understand how you measure up to your direct competitors.

Relative Market Share

Relative market share is a way to compare your performance to industry leaders.

Rather than using total industry revenue, you’re dividing your market share by your top industry competitors market share, and multiplying the result by 100. The result will show you the portion of the market you own in relation to your largest competitor. The image below shows the relative market share formula.