What is Market Share? Defining Market Share

209

Market Share can be defined as the percentage of ownership of a given firm owned by its investors or owners. This percentage is called a Market Value and it represents the value of the shareholder’s shares of stock.

To calculate Market Share, first you have to know how to calculate it. Basically, you need to know the industry or the particular industry that you are going to be calculation it in. There are several industries that you can choose from, such as the Financial Industry, the Automotive Industry, and the Industry to name a few. There are two ways to calculate the market share of the said two industries.

The first way is calculating Market Share Based on the Current Customers. The current customers is the set of consumers that the said companies can possibly provide you with. The reason behind doing this is because of the fact that the customers of the companies are basically the ones that buy the goods that the company provides. Thus, it will be the basis of your calculation of the market share based on the current customers.

The second method of calculating Market Share is calculating Market Share Based on the Increase of Customers. Basically, you are looking at the number of customers that your competitors are getting and compare it to the number of customers that you have. What is important is that you do not take this measurement means that your competitors are getting more customers than you. What is important is that there are certain numbers that your competitors have and that you have a certain number that you need to reach in order to increase market share. You have to consider such factors as the gross revenue per customer, cost of goods sold and customer base.

The third and last way of calculation is through the Time Period Viewed. This is actually the most complicated and the most accurate way of doing Market Share Calculation. In here, you will be looking at the total number of sales made during a certain period of time or a time period. The companies that have the higher per sale amount of sales are usually the ones who reach a larger number of customers during a certain time period. The calculation here will include the gross revenues, the expenses incurred during that time period and the net profits after deduction of taxes.

Now that you know how to calculate Market Share, let us look at how to improve profitability in MLM. The key to improving profitability is to build more down lines. Why? Because those individuals that are staying on the same level will eventually result to an increase in the profit that you will be able to get from your company. But, this can only be possible if you are on a greater scale compared to your competitors.

How can we determine whether we are on a greater scale compared to our competitors? It is all based on the Business Cycle Analysis. What this analysis basically does is that it analyzes the business cycles that each of the companies goes through. The result will then show you the gap between your own business cycle and your potential competitors’ cycle. Thus, once you are on the greater cycle, it would then be easy for you to gain market share from your existing cyclical industries and from your potential competitors.

However, one important tip that you should always remember is to never compare your own company’s income statement against that of your prospective competitors’ income statement. Comparing the two will only give you false information. What is really important is that you find out what the actual total sales and revenues for the particular company do. This will greatly help you analyze the nature of your competition and eventually find out what they are really up to.