Market share

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Market share for a corporation's product refers to its sales, measured either by price or unit volume, as a percentage of the total market sales for all such products within a certain geographic or economic sector. Investors consider market share growth a crucial indicator of a company's current and future economic performance relative to the rest of its industry.

It's relative

Market share can be measured either by the number or by the monetary value of units sold as a percentage of the total, which may give different results because of variations in pricing the same product between different companies.[1] However, for most companies the importance of market share is not to get an exact figure of their own performance but to gauge how well they are doing in a given market compared to their competitors.[2]

Investors in general are looking for companies that increase their product's market share in a region over time, and some companies employ a range of strategies from improving products and distribution to cutting prices and increasing advertising to meet these demands. Companies themselves use market share information to provide managerial objectives such as acheieving a certain percentage in a given time or to formulate an appropriate growth-rate target.

References

  1. What is Market Share?. Wisegeek.com.
  2. Market Share. Answers.com.