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Nowadays a lot of people are wondering what market share is and how it is connected to the success of the company or the industry overall. Some people look at market share as just a piece of a pie but do not dig any dipper then that, while others do not even understand the connection between market share and sales. To start off, market share is a measure of customer’s preference of one product over similar products within that same company if we look at it on a company level, but the meaning of market share can also be used on a market level as a whole. At that point the market share would represent the brand’s competitiveness or how much more likely the customer is to purchase that specific brand over others. For example: if we are analyzing the clothing market and we have 3 different companies: Ralph Lauren, Tommy Hilfiger, and Nike. While all these stores obviously make enough revenue to stay in business, some stores are more like by customers then others. With that being said, certain brands sell more products than others which means that they have a higher market share on the clothing market in the US as a whole. 

But what are the benefits of market sharefor companies and why should leaders keep a close eye on that number? 

First and foremost, market share shows how successful your specific company is compared to other companies with similar products. By simply looking at that number the leaders can determine which products are performing and which are not and by doing some external research they can also understand what the reason is why their company is not performing compared to others. Are their prices far above average? Are they selling the packs of products that the customers do not like? Or is that product simply not competitive with their type of customer? These are some of the questions that the leaders should ask themselves while analyzing their market share. 

Secondly, the market share is a good indicator of how competitive your company is on the market. This is the number that will tell you if the actions you are taking are working or if you need to adjust your strategy to stay on track with your competition. This is a good indicator for the beginners. If you are running a brand-new business and are unsure how you are performing market share would help you answer that question. 

Thirdly, market share will help us not only adjust to our customers, but also learn who they are, what they want, what we can do better to satisfy their needs and improve our market share and the performance of our business.

How can you increase your market share?

There are numerous ways to increase your revenue as well as your market share as a whole. The first step would be to advertise the brand, especially if you are new to the field. Coming up with the right advertising and marketing strategies is a key to being successful in a long run. You need to let people know about yourself; you need to offer them something unique to make them feel special and want to have business with you. Sending out a promo code for the new customers, following up with a “thank you” note after the transaction seem to be just some of the easy ways to build client base, increase revenue and market share. 

Let’s take Ralph Lauren as an example

As we all know Ralph Lauren is a multimillion-dollar company that has been around for over a few decades now. This brand is popular not only in the US, but also abroad. This company has seen ups and downs throughout its existence but still managed to stay in the list of the top performing companies of the world. Below is a chart that represents performance of Ralph Lauren and its competitors over the last two quarters.

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 As we can see, Ralph Lauren’s market share has gone down compared to the last quarter of last year, but its competitor Nike seem to manage to increase their market share. As a Ralph Lauren employee, I can tell that the company is not happy about loosing its revenue therefore they have added a few additional services: concierge (personal shopping appointments before and after business hours to give customers a chance to feel more special), phone orders (they created the virtual catalog where people can order items from the comfort of their home). They have also elevated the store standards (implemented paper folds in our best performing categories (knits, oxfords, fleece)). Also, overall, the company has become more generous to customers by having better promotions and offering better coupons to compensate for the recent price increases. So far, I can tell that it has been working since we have made our sales plan for the past 4 weeks consecutively. Since I have seen an improvement in our performance as a store, I cannot wait to receive the quarter 2 results of the whole company to see if our market share has gone up. 

Let’s wrap it up

As we can see, market share is a great indicator of the performance of our business or even certain products offered by our business. If we as leaders constantly monitor our market share and adjust our products and services as well as our prices to be similar to our competitors and offer an incentive to our customers to make them feel welcomed, we will build a strong foundation for our business and assure its longevity and success.

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