Measuring Market Share
An accurate measure of market share is dependent on several factors:
- A satisfactory definition of the market. This would answering questions such as which products to include, which geographical areas, which means of distribution?
- The availability of reliable, up-to-date information
- Agreement on which measures of share are most relevant. For example, should market share be calculated on the basis of sales revenues, profits, units produced or some other measure that competitors in the market generally recognise as valid.
In reality, market shares are calculated in a myriad of ways. However, most tend to be based on one or both of the following:
- Sale revenues
- Sales volumes (units)
Worked Example of Market Shares based on Sales Volumes
In this example, we take figures for the global sale of personal digital assistants ("PDA@s") in 2001.
According to research by Dataquest, global sales of PDA's totaled 13.1 million units, a 18% increase from sales in 2000
The breakdown of these 13.1 million units by major PDA manufacturer is shown in the table below:
| Company (Operating System) | 2001 Sales | 2001 Market | 2000 Sales | 2000 Market | Sales Growth % |
| Palm (Palm) | 5,056 | 38.6 | 5,588 | 50.4 | -9.5 |
| Handspring (Palm) | 1,648 | 12.6 | 1,369 | 12.4 | 20.4 |
| Compaq (Microsoft) | 1,283 | 9.8 | 466 | 4.2 | 175.4 |
| Hewlett-Packard (Microsoft) | 711 | 5.4 | 442 | 4.0 | 60.9 |
| Casio (Microsoft) | 529 | 4.0 | 440 | 4.0 | 20.4 |
| Others | 3,884 | 29.6 | 2,777 | 25.1 | 39.9 |
| Total Market | 13,111 | 100.0 | 11,083 | 100.0 | 18.3 |
| Source: Gartner Dataquest February 2002 | |||||
As can be seen from the table, Palm continues to lead the PDA market with a market share of 38.6%. However, in just one year, its market share fell by 11.8 percentage points from 50.4% in 2000 reflecting the aggressive marketing of new and strong players in the market such as Compaq and Hewlett-Packard.
In 2000, Palm was four times the size of the next largest competitor (Handspring). By 2001, Palm was just three times the size of Handspring, implying a reduction in its relative market strength.
Worked example of Market Share Based on Sales Revenues
In this example, we look at the retail sales figures of the major
This analysis is based upon data collected by the leading market research company Taylor Nelson Sofres ("TNS"). The TNS data is sourced via a continuous interview of 15,000 households in the
The Till Roll measures by retailer the total amount spent by each household in the grocery store as captured by the total printed on the till receipt. This is then adjusted to exclude items such as petrol purchases, kiosk sales and amounts spent in the coffee shop or restaurant.
Based on the Till Roll measure, the monthly market shares of the leading grocery chains in August 2002 were as follows:
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