Edeling and Himme (2018) report that market can positively predict an organisation’s performance. With this in mind, measuring this metric is a key component to any business.
The first step to an accurate measurement of market share is defining the market. This should be made quite specific as to only reflect the immediate competition and not the larger market. This is so the measurement reflects their performance among relevant competition.
Another consideration is to look at revenue or the number of units sold. This should be chosen depending on the market and goals of the company.
Once these considerations have been made, Edeling and Himme (2018) explain two measures of market share:
- Revenue market share: sales revenue as a percentage of market sales revenue
- Unit market share: unit sales as a percentage of market unit sales
Edeling, Alexander and Alexander Himme (2018) “When does market share matter? New empirical generalizations from a metra-analysis of the market share-performance relationship” Journal of Marketing, 82(May), 1-24.