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Market share, in strategic management and marketing, is the percentage or proportion of the total available market or market segment that is being serviced by a company. It can be expressed as a company's sales revenue (from that market) divided by the total sales revenue available in that market. It can also be expressed as a company's unit sales volume (in a market) divided by the total volume of units sold in that market.
Customers, Prospects and Penetration [http://futureobservatory.dyndns.org/9434.htm] Producers or service providers often see markets in terms of where they themselves are in these markets. This means that they often look at them specifically in terms of their own existing customers and potential customers: In practice, however, these are seen as broad categories, so the fine distinctions questioned above do not normally pose critical limitations. The important fact is that some of the individuals in the market buy the producer's brand and some do not. The measure of this difference is often given by brand 'penetration' . Penetration This is the proportion (percentage) of individuals in the ' market' who are users of the specific (brand) product or service, as determined by the numbers who claim in response to market research to be users. In the non-profit sector it can often be used just as effectively as, for example, a measure of the number of clients receiving help as a proportion of the total population who might need the service. The measure of `penetration', however, does not allow for the rate of usage or purchase by different individuals. The most commonly used measure, therefore, is market share or brand share. Brand (or market) share This is the share of overall 'market sales' taken by each brand. In the consumer field, this is usually measured by audit research on panels of retail outlets, such as that undertaken by A. C. Nielsen; and hence represents consumer purchases and not necessarily usage - although the distinction is usually not important. In the industrial field it is usually a `guesstimate' based on research of a limited number of customers; although in some fields government departments audit total output. Once more there are complications. The share can be quoted in terms of volume (the brand has a 10 per cent share of the total ' number' of units sold) or in terms of ' value' (at the same time the brand took 15 per cent of the total money being paid out for such products, since it was a higher priced brand). This difference can sometimes be dramatic. The results of Andrew Ehrenberg's research have complicated matters further. He shows that - unlike the traditional view that customers buy just one brand - they actually buy a 'portfolio' of brands. Their brand loyalty is, therefore, measued in terms of the share of overall purchases over time, within that portfolio, held by the brand in question! The measure of share, and the concept of prospects, are important because they delineate the extra business that a producer can reasonably look for, and where he or she might obtain it. On the other hand, the evidence in many markets is that most business comes from repeat purchasing by existing customers. Objective Increasing market share is one of the most common objectives used in business. The main advantage of using market share is that it abstracts from industry wide macroenvironmental variables such as the state of the economy, or changes in tax policy. Other objectives Other objectives include return on investment (ROI), return on assets (ROA), and target rate of profit. See also Lists of related topics | ||||||||
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