How To Calculate Percentage Change In Market Share

How to Calculate Market Share (With Formulas and Examples)

Jonas Sickler SEO Manager

Key Points

Market share (as well chosen acquirement marketplace share or market share past revenue) is the portion of a given industry that is owned or controlled by a single brand or entity.
Learn how to calculate market share in different ways then yous know where y'all're winning, and where yous demand to establish a beachhead.
Utilise your marketplace share calculations to identify where you're weakest and devise a strategy to dominate every channel.

If you desire a perfect example of why you need to know how to calculate market place share, look no further than TESLA.

In 2020, TESLA owned an impressive eighteen percent of the global electric vehicle (EVs) market share. This is a huge success when you consider merely how many automobile retailers accept added EVs to their fleets.

TESLA couldn't have go the household proper noun they are today without the aid of a squad of vivid decision-makers. After they calculated TESLA's market share within the global EV market, they decided they could practise things differently and take on long-standing competitors in the auto industry.

They created a unique business model that allowed them to retain total control of the sales and all service aspects of TESLA vehicles. By doing this, they created a production that appealed to consumers in thrilling new ways.

Had they not done a deep market place share analysis, they might have missed the opportunity to do things differently and to truly own the market.

By learning how to calculate market share in different ways, you'll gain strategic advantages over your competitors. When you lot view market place share as more than a single number, you lot can take a more granular approach at measuring business concern growth (and risk) beyond multiple battlefields.

Market Share

Definition

Market share is the portion of a given industry that is owned or controlled by a single make or entity. Marketplace share refers to a calculation that shows, in percentages, the acquirement generated past a single company, as compared to the revenue earned past the entire industry.

This is the most standard definition of market share. But, this isn't the only way to await at it. In fact, if you only view it through that lens, you lot could miss valuable opportunities.

There are a few dissimilar means to summate marketplace share that can assist yous increment conversions, lower overhead, and maximize your ad spend.

If you lot own a business that sells products en-mass, yous'll need to know how to summate market share past the total number of units you sold in a given period of fourth dimension when compared to the entire market place size of units sold. This is the aforementioned calculation as marketplace share by revenue — you just swap out dollars for products! I'll explain how to figure out marketplace share of this blazon subsequently, and why it's a useful number to have.

If you generate leads or sales through your website, yous should too know how to make up one's mind marketplace share by organic search traffic. This is the ratio between the clicks yous get out of the full available clicks for a defined set of keywords. It'southward a swell figure to have on hand when deciding how much money y'all need to spend on paid advertizing and the SEO and content strategies for your business organisation.

This is oftentimes the most overlooked market share calculation, much to the detriment of businesses across near every industry. More than half of shoppers do thorough online research before they brand a buy. So, it's vital that you prove upward throughout the conversion funnel while they're narrowing down their options.

Market place share analysis Discover out how y'all stack up to the contest in Google organic search.Let's Talk

No matter what industry you're in, yous need to larn how to notice market share information to compare your business against competitors. Almost every type of marketplace that provides appurtenances or services to consumers is saturated with brands competing for a limited pool of customer dollars.

Calculating your market share adds a layer of transparency to your business model. It allows you to approach your successes and your failures with deep clarity and the confidence to build on what'southward working and reimagine what's not working.

Compare your company with competitor performance

In that location are several rulers you tin can use to compare your operation with competitors.

If y'all're a publicly traded company in the U.Due south., look at the United States Securities and Exchange Commission's tool, EDGAR. EDGAR allows anyone to search the Securities and Exchange Committee's database. This volition requite you deep insights into your competition.

How your competitors perform in Google is another indicator to monitor.

Who owns the largest market share of Google's organic search results in your industry? Practise your competitors rank well for highly valuable keywords? How practice you perform for production vs advisory queries? Are you lot nowadays throughout the funnel, including TOFU, MOFU, and BOFU searches?

Understand electric current market penetration/saturation

Market penetration is a measure of how successful a make is in its given manufacture. Pop brands will saturate the marketplace with their presence, making it hard for other brands to break in and compete for customer attention and, ultimately, revenue.

Yous can measure marketplace penetration with a unproblematic market place share formula. You'll need to compare your sales volume for the year against the full target sales for your industry in that year. Brands use this formula to determine pricing and marketing budgets, as well as how they volition promote their products to customers.

If yous empathise your current market penetration, then y'all can more finer assess new growth marketing opportunities. As a result, yous'll box out the contest and cement your position every bit the marketplace leader.

Discover new market opportunities

Y'all will ofttimes see "market penetration" as a quadrant on the Product-Market Growth Matrix, or the Ansoff Matrix. The Ansoff Matrix is a grid tool used in make strategic planning. It'southward a nifty asset to take when trying to assess what new market opportunities will work, and which opportunities tin can be passed on to better suit the overall strategic vision of your brand.

The Ansoff Matrix provides businesses with a step-by-step strategic growth process to follow. It doesn't eliminate the risk of taking on new ventures. Nonetheless, it helps mitigate take chances past thoroughly evaluating every proposed business pivot or opportunity. It can also lay the foundation to generate new business opportunities.

Here's a quick review of the quadrants:

Market penetration — boosting sales of your existing products in the market that you currently occupy
Product evolution — the ideation and creation of new products or services
Market development — Plans and strategies on how to enter new markets with the products or services you currently have
Diversification — breaking into new markets with new products or services

So, it'southward clear that while agreement marketplace penetration is 1 pace in growing a successful business, it's part of a larger puzzle. Brands that win arroyo this puzzle holistically and look for opportunities that competitors will miss or disregard. Knowing where you stand up in terms of market share is the first stride of the process.

It's actually quite simple to learn how to summate market share. Outlined below are the types of market share formulas nosotros touched on earlier.

You might demand some sales analytics on your total revenue for last yr (or any recent fiscal year or fiscal quarter) as well every bit metrics on sales for the unabridged marketplace to figure out your company's market share. Simply, it'south actually simple once you have the data you need. Just plug those numbers into Excel and you lot will have a treasure-trove of data to analyze.

Select your fiscal flow
Calculate your company's total sales
Summate the total marketplace sales for your industry
Divide your visitor'due south total sales by your manufacture'southward overall market sales

Select your fiscal period
Calculate your company's total unit of measurement sales
Calculate the full units sold for your industry
Separate your company'southward total units sold by your industry's total units sold

Select your fiscal period
Calculate the total bachelor clicks within a defined set of keywords based on total search volume and click-through rate
Calculate your share of those clicks based on the CTR of your ranking position and the search book for each term
Split up

What does an organic search market place share report look like? Here are 2 examples that Terakeet recently published on the beauty and cosmetics industry besides as the fiscal services manufacture. Download these reports below.

Now that you know how to look at your brand's share of the market place through a number of lenses and calculations, you can employ this information to increment your company's market share, and ultimately, your company'due south total acquirement.

Below are a few things you can practise to meliorate your brand'south overall competitiveness. By expanding what y'all offer, how you offer it, and where you offering information technology, you can begin to take the lion's share of your marketplace.

In terms of marketing ROI, organic search is the about powerful client conquering aqueduct you can leverage. According to Google, it drives 5x greater results compared to PPC.

Why is SEO so effective at driving organic growth and increasing marketplace share?

Because consumer shopping beliefs has changed. For years, customers have been warming upwardly to online or hybrid buying experiences. However, the pandemic accelerated the tendency, pushing consumers deeper into the digital shopping ecosystem.

Potential customers don't just buy online; they enquiry, compare, ask questions, and brand decisions based on what they find.

For example, the online publication Byrdie managed to capture a pregnant portion of organic search market place share from massive beauty brands past creating informational content. When Terakeet calculated their market share within 9 sectors of the dazzler industry, they were about the tiptop of the leaderboard.

How Byrdie Toppled Billion Dollar Beauty Brands (Without Ads)

Read the Article

As a marketing executive, you must recognize that shift in consumer behavior and increase your investments in comprehensive, engaging, authoritative, search-optimized content. Doing so will capture more customers throughout the funnel and aggrandize your organic market share.

If y'all're new to SEO, read our article: What is Search Engine Optimization (SEO) – The Executive's Guide.

Develop new products or services

If you really want to launch your business into the public consciousness, then develop new products or new services.

Expect at Coca Cola, for example, a legacy brand that decided to think differently about the soft drinks industry. Equally other competitors entered the marketplace, Coca Cola knew they could offer their flagship product in different flavors, then they did!

Developing new products always comes with a certain amount of risk. Especially when it comes to nutrient and beverages. Consumers are often creatures of habit. So, Coca Cola had to do a tremendous amount of market research and brand awareness campaigns to get people on board. The rest, of grade, is history.

At that place are nearly 57 billion drinks served each day, and nearly 2 billion are drinks owned or licensed by Coca Cola. At present that's market saturation!

Mergers and Acquisitions

kid grabbing donut to grow his market share

Another style Coca Cola discovered that they could increase market share was past diversifying their portfolio of products to include other types of drinks like Vitaminwater. Vitaminwater, as a sole entity, was initially doing 350 million in annual sales on its ain. When Coca Cola purchased the company, that annual acquirement grew to ane billion dollars in sales.

Acquiring other companies removes some of the grunt work of establishing a new business. You become a built-in client base of operations and many of the starting operational costs are already taken care of. That said, it can be a major investment to acquire other companies, specially when they are already assisting. Merely, in the case of Coca Cola and so many others (like Nestle and major media corporations)

Imagine new ways of doing business organization

Not only does Coca-Cola know how to increase market share through acquisitions, they've even washed so by transforming their company.

Coca-Cola was created by chemist Dr. John Stith Pemberton in Atlanta in 1886. It was originally created to be a tonic. Back then, it included wine and cocaine to "treat" a number of alignments.

Non long afterwards Pemberton created the beverage, prohibition passed in his country. And so, Coca-Cola was almost quashed before it fifty-fifty began. But, Pemberton was a true entrepreneur. He removed the vino and replaced information technology with syrup, making the earliest iterations of the Coca-Cola most of us are familiar with.

Imaging new ways of doing business has always been at the heart of Coca-Cola's story, and information technology has been an unbelievably successful story. That's what makes them the drink market leader.

And so, maybe your make needs its ain Coca-Cola story. You could create an incredible digital customer feel on your website. Or, perchance yous invest in a new digital transformation initiative that's been on the burner for several years.

Additional Resources

Amend customer retention

When you improve customer retention, you lower the costs of doing business. Acquiring a new client can cost five times more than keeping the ones you accept. That type of fiscal drain adds upward over time. When you reduce your acquisition costs, you increase profit margins and you lot complimentary up room in your upkeep to put into growing your business in other ways, like the ones outlined higher up.

And, information technology'due south as well easier and more successful to pitch to an existing customer. They are upwardly to lxx per centum more probable to buy-in to a new product or service you offer, versus selling to a new client which has a success rate of about 25 percent (Outbound Engine). Increasing client memory increases profitability past a significant margin, so it'due south essential that y'all prioritize client relationships.

Expand your customer base

When you expand your customer base to include new demographics, you unlock greater business potential.

In some cases, this may require zilch more than than a shift in marketing messaging. Or, you might demand to introduce a modified production or service with unlike features. In other cases, yous may need to expand your customer acquisition efforts across different channels, bridging the gap between online and offline brand interactions.

It's vital to know how to calculate marketplace share to get together insights such as your visitor's sales revenue compared to the industry's full sales, or whether a specific competitor has a large market share in Google search. You must take admission to these data points in order to build more effective strategies.

For instance, you could take the highest total revenue because your products are more expensive. On the other hand, you might sell the near products, merely at lower prices, shrinking your revenue numbers. Or, yous may have the highest revenue and the most product sales, but you overspend on paid ads and affiliate marketing which reduce your profit margins. Y'all may fifty-fifty have a loftier market place share in one specific market, only almost no penetration overall within the industry.

If you analyze any i of these metrics in a vacuum, you might conclude that you're the marketplace leader. Withal, at closer examination, you'd realize that yous're backside.

Ultimately, information technology'southward important to consider all the variables when calculating market place share so your business remains profitable and competitive.