Reputation - market leaders have clout that they can use to their advantage. Increased bargaining power - a larger player has an advantage in negotiations with suppliers and channel members. Share of voice - the firm's proportion of total promotional expenditures in the market. Thus, share of voice can be increased by increasing advertising expenditures.
From these drivers we see that market share can be increased by changing the variables of the marketing mix. Product - the product attributes can be changed to provide more value to the customer, for example, by improving product quality. This tactic may not succeed if competitors are willing and able to meet any price cuts. Distribution - add new distribution channels or increase the intensity of distribution in each channel.
Promotion - increasing advertising expenditures can increase market share, unless competitors respond with similar increases. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.
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Business Business Essentials. Table of Contents Expand. What Is Market Share? Understanding Market Share. How to Increase Market Share. Real-World Example. Key Takeaways Market share represents the percentage of an industry, or a market's total sales, that is earned by a particular company over a specified time period.
Why Is Market Share Important? Article Sources. Investopedia requires writers to use primary sources to support their work.
These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts.
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. The term "gorilla", in business, refers to a company that has managed to dominate an industry or sector without necessarily achieving a monopoly.
Market Leader A company with the largest market share in an industry that can often use its dominance to affect the competitive landscape and direction the market takes.
How Market Penetration is Used by Companies to Gain Market Share Market penetration is a measure of how much a product is being used by customers compared to the total estimated market for that product. Narrow Economic Moat Definition A narrow economic moat is a competitive advantage that one company enjoys over competing firms operating in the same or similar type of industry. The market share is calculated by dividing the volume of goods sold by a particular firm by the total number of units in the market.
Market leadership as a concept holds much relevance in the internet age because over a period of time we have seen large number of companies becoming market leaders. Market leader often enjoys the first -mover advantage in new markets. Microsoft was the first company to launch operating system Windows and web browser Internet Explorer in the market.
Apple as a company was the first one to introduce the concept of portable media device in which music can be stored on a drive, ipod.
Market leadership is not about sales and dominance but it is more about how relevant the product is for the audience. Apple generates more revenue by selling iPods compared to other manufacturers who are selling MP3 players. It is all about innovative ideas which will help the company to connect with the relevant audience. The company tries to introduce those products in the market which can add value to the customer.
Market leaders often unveil products which can redefine the customer experience in terms of product quality, longevity, ease of operating that product etc. Marketing Intelligence Definition: Marketing intelligence is the external data collected by a company about a specific market which it wishes to enter, to make decisions.
It is the first set of data which the company analyses before making any investment decision. Description: Marketing intelligence is usually the first data set analysed by a company about a specific market.
It could be related to population age in that area, infrastructure facilities, spending habits of consumers, state or government regulations etc. Marketing intelligence is all about gathering information on various data sets, analysing the information, breaking down the data into small subsets and the distribution of information to the relevant department of the company. A purchase department in a company would need a different data set under marketing intelligence, while a sales department would need something different.
There are four main corner stones of marketing intelligence. The first one is competitor intelligence, the others are product intelligence, market understanding and customer understanding. It is about analyzing strengths and weaknesses of the competitor. The basic goal of competitive intelligence is to make better business decisions.
Product Intelligence is related to gathering information about your own product. The focus around product intelligence is on gathering information about the quality and performance of the product. This is usually an automated process. With the help of this knowledge, the company tries and makes the user experience better or makes changes in the product itself to make it safer or add new features. Market Understanding is a concept wherein the company tries to understand the performance of the product in which it is already operating as well as looks at other markets where it wants to launch its product thoroughly.
Finally, understanding the customer is the utmost important aspect in the life of any product. And because market share provides a vital indication of market competitiveness, it also enables business executives to identify key trends in consumer behavior, to review total market growth or decline and realize both their market opportunity and market potential. By understanding market share, companies can furthermore measure consumer perception of new products or services, promotions, pricing strategies and other key business initiatives which puts them in good stead for a growth in profits.
The best route seems to be for companies to decide on a target market share, where the cost of obtaining market dominance is less than the profit gained. Below we have listed some strategies for how to best work on improving and expanding your market share to reach your desired target. So, you want to know how you can capture a greater market share for your business?
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