Market share
Also: market share, revenue share, unit share, share of market, SOM, part de marché
The percentage of total industry sales your company captures in a given period. It measures competitive position relative to rivals in a defined market.
What it is
Market share is the portion of total sales in a defined market that a single company captures over a given period. It is expressed as a percentage:
- Revenue market share = your revenue / total market revenue
- Unit market share = your units sold / total units sold
The two can differ sharply. A premium brand may hold a high revenue share but a low unit share, while a discounter shows the reverse.
Market share is always relative to a defined market. Change the boundary (geography, product category, customer segment) and the number changes. A firm might hold 40% of a national niche but 3% of the global category.
Why it matters
- Competitive position: it shows whether you are gaining or losing ground against rivals, independent of whether the overall market is growing.
- Scale advantages: higher share often brings lower unit costs, more pricing power, and stronger negotiating leverage.
- Growth diagnosis: rising revenue can hide a falling share if the market is growing faster than you. Share separates real competitive wins from a rising tide.
How it is used in practice
- Tracking: reported monthly or quarterly against a fixed market definition and comparable competitors.
- Targets: teams set share goals alongside revenue goals to force a competitive view.
- Segmentation: share is computed by region, channel, or segment to find pockets of strength and weakness.
- Data quality: reliable share requires a credible estimate of total market size, often from third party panels, industry bodies, or modeled data. Weak denominators produce misleading numbers.
Worked example
Assume a regional market:
- Your company revenue: $40M
- Total market revenue: $500M
Market share = 40 / 500 = 8%.
Next year your revenue grows to $46M (up 15%), but the market grows to $600M.
New share = 46 / 600 = 7.7%.
Despite strong revenue growth, your share fell. Competitors grew faster. This is the core insight market share delivers: growth alone can mask competitive decline.
Common pitfalls
- Comparing shares across inconsistent market definitions.
- Confusing unit and revenue share.
- Ignoring the accuracy of the denominator (total market size).
See also
Frequently asked questions
How do you calculate market share?
Divide your sales by the total sales of the market you compete in, over the same period. Revenue market share uses your revenue over total market revenue; unit market share uses units sold over total units sold. A company with $40M of revenue in a $500M market holds an 8% share.
What is the difference between revenue market share and unit market share?
Revenue share measures your slice of the money spent in a market, unit share your slice of the items sold. The two diverge with price positioning: a premium brand often shows a high revenue share and a low unit share, a discounter the opposite. Reporting one while thinking about the other is a frequent source of wrong conclusions.
Why track market share if revenue is already growing?
Because revenue growth can hide competitive decline. A company going from $40M to $46M (+15%) in a market growing from $500M to $600M sees its share drop from 8% to 7.7%: competitors grew faster. Market share separates a real competitive win from a rising tide.
Why does the same company report very different market shares?
Because market share only exists relative to a market definition. Change the geography, the product category or the customer segment and the number moves: a firm can hold 40% of a national niche and 3% of the global category. Both figures are correct, which is why the boundary has to be stated and kept fixed over time.
What makes a market share figure unreliable?
The denominator. A credible share requires a defensible estimate of total market size, usually from third party panels, industry bodies or modeled data, and a weak estimate produces a misleading percentage. The other two classic pitfalls are comparing shares built on inconsistent market definitions and mixing unit share with revenue share.