Market share Market share is the percentage of the total revenue or sales in a Market (economics), market that a company's business makes up. For example, if there are 50,000 units sold per year in a given industry, a company whose sales were 5,000 of those ...

analysis is a part of

market analysis A market analysis studies the attractiveness and the dynamics of a special market within a special industry. It is part of the industry analysis and thus in turn of the global environmental analysis. Through all of these analyses the strengths, ...

and indicates how well a firm is doing in the marketplace compared to its competitors. Givon, Mahajan, and Muller have researched

spreadsheet A spreadsheet is a computer application for computation, organization, analysis and storage of data in tabular form. Spreadsheets were developed as computerized analogs of paper accounting worksheets. The program operates on data entered in c ...

and

word processing A word processor (WP) is a device or computer program that provides for input, editing, formatting, and output of text, often with some additional features. Word processor (electronic device), Early word processors were stand-alone devices dedicate ...

software firms to give a clearer image of how to determine market share in the

software industry The software industry includes businesses for development, maintenance and publication of software that are using different business models, mainly either "license/maintenance based" (on-premises) or " Cloud based" (such as SaaS, PaaS, IaaS, ...

. They propose six factors to help estimate the value of market share (1997): * unit or dollar sales, * user base (since piracy and brand switching effect), * market definition (scope of definitions), * scope of denominator (which other brands included), * time frame length, * product definition (brand, product line, or

strategic business unit A strategic business unit (SBU) in business strategic management, is a profit center which focuses on product offering and market segment. SBUs typically have a discrete marketing plan, analysis of competition, and marketing campaign, even though ...

Detail

A market share analysis needs to take into account the following: Total Market Size refers to the annual business volume in currency or in number of transactions; Market Growth Rate refers to the Compound Annual Growth Rate, Compounded Annualized Growth Rate (CAGR) taken over a period of 3 to 5 years; Market Share is the breakup of market size in percentage terms, to help identify the top players, the middle and the "minnows" of the marketplace, based on the volume of business conducted; Market Segmentation Some of the factors that determine the market are price, quality, speed of service, ease of maintenance, and points of distribution. By mapping on quality and price parameters, it is possible to identify graphically the spaces which are crowded by service providers and which are the relatively empty spots; Key Players i.e.the top players in each segment of the market. The extent to which they provide premium quality, or premium service or price advantage, can help identify future target segments; Swot Analysis. The strengths of players as well as weaknesses/areas of improvement are needed to combat the onslaught in a marketing warfare. Strength and weakness include

brand equity Brand equity, in marketing, is the worth of a brand in and of itself – i.e., the social value of a well-known brand name. The owner of a well-known brand name can generate more revenue simply from brand recognition, as consumers perceive the pro ...

, geographic presence, strong management/leadership, technological edge, and patent/copyrights. Emerging Opportunities should be identified which could make the market grow faster/larger or acquire business more easily. Similarly, are there threat factors that could reduce the total market size. These could be due to regulatory guidelines, changes in fashion trends, consumer preference, macro economic events like currency crisis, import/export, war, natural calamity, or demographic shift; Business Continuity Plan: While planning for market share analysis, the worse must be planned for to ensure continuity of the concern in the event of a calamity. Companies which have a continuity plan usually sustain shocks better and ensure achievement of targeted market share. Target Market Share: Based on the above analysis, it is possible to arrive at the overall market size for the assessment period, and thereby decide on the volume of business the firm targets to achieve during the period. This helps determine the firm's targeted market share. This also helps budget for activities like budgeting for R&D,

sales promotion Sales promotion is one of the elements of the promotional mix. The primary elements in the promotional mix are advertising, personal selling, direct marketing and publicity/public relations. Sales promotion uses both media and non-media marketing ...

, marketing, and training.

References

Bibliography

{{cite journal , author=Givon, M. Mahajan, V. and Muller, E. , title=Assessing the Relationship between the User-Based Market Share and Unit Sales-Based Market Share for Pirated Software Brands in Competitive Markets , journal=Technological Forecasting and Social Change , volume=55 , issue=2 , year=1997 , pages=131–144 , doi=10.1016/S0040-1625(96)00181-3

External links

* http://tutor2u.net/business/marketing/market_analysis_marketshare_intro.asp Market structure Marketing analytics