What is it?
Market share is calculated by dividing a brand’s total sales by the total sales of the entire market, then multiplying by 100 to express it as a percentage. Market share is a key indicator of a company’s competitive position – it changes over time.
Why is it important?
Smaller companies don’t tend to monitor their market share change, but larger companies do. In large categories like chips or soda, one point of market share can be worth tens of millions of dollars. Companies that gain large percentages of market share are usually growing their topline sales and may have more leverage with suppliers, manufacturers, and retailers.
What are some examples?
In the example below, Brand A lost 10% of its market share, while Brand D gained 10 points. Since the other brands stayed the same, it’s fair to assume that Brand D executed some activities (promotions, advertising, awareness, etc.) that took away market share from the category leader. Market share is zero-sum – some brands will win, some will lose, and some will stay the same – but the total value will always equal 100% notwithstanding a net gain or loss in the category’s overall sales.
| Brands | Dollar Share | Dollar Share, YAGO |
| Brand A | 30% | 40% |
| Brand B | 20% | 20% |
| Brand C | 20% | 20% |
| Private Label | 15% | 15% |
| Brand D | 15% | 5% |