Market Share
When analyzing a company, the market share is an important measure of performance, especially relative to its competitors. It represents a percentage of the market where the company distributes its products and services.
There are multiple ways of calculating the market share:
Market Share = 
Market Share = 
Increasing the market share is one of the main objectives of all profit-based organizations.
Attaining this objective comes with many advantages:
- Improved profitability. Increasing sales are reflected in growing revenues.
- Longer product life cycle.
- Greater scale operations result in cost advantages and eventually, economies of scale.
- Surpassing the competitors improves company's reputation and influence.
- Preservation or increasing of product quality without involving additional investments.
As tempting as this opportunity seems, there are also some disadvantages involved:
- For the companies that operate with fungible goods, an increased market share can be threat.
- Attracting more customers may involve high advertising costs or
- diminution of prices, that can both cause overall profit reduction.
- A higher market share may required new investments in equipment and work force that may result in higher costs that affect the profitability.
Ways of increasing market share:
- Product improvement, so that it is of higher quality than the competitors'.
- Price strategies. Decreasing the price may attract more customers, but it also involves the danger of a price war.
- Expansion of distribution by reaching to a larger target market or intensifying the current distribution channels.
- Advertising and promotions have a favorable effect on the market share. Discounts and sales usually broaden the customer base.
The market share in an industry determines the market concentration. If a large segment of the market is owned by the several leading companies, then the market is highly concentrated. On the other hand, if all the competitors own a relatively small market share and the market is divided between numerous competitors, the market is segmented.