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).