Market Share: Definition, Types and How to Calculate It

Market Share: Definition, Types and How to Calculate It – This Tech Team article will discuss the meaning of market share, types, examples, to how to calculate it for your business and company needs. Let’s look carefully!

Market Share

Market share is a very important factor for companies, especially in the era of the modern economic market where the digital market is starting to rely on advanced technology to make market acquisitions.
According to Law No. 5 of 1999, market share is the percentage of the selling or buying value of certain goods or services controlled by business actors in the relevant market in a given calendar year.
Market share is an important part of companies to know demand data. This data shows all market segments that are divided into certain groups, ranging from gender, economic class, and etc.

The main function of market share is to measure the scale of the company when compared to the market and competitors. The larger the market share, the more the company can become a leader in the industry.
Market share also serves as a benchmark for a company’s success. The company can be said to have successfully developed if it can increase the percentage of market share.

Market Share Example

Absolute Market Share

Absolute market share is a market share calculated from the total sales of a company divided by the total sales of the entire industry in a certain area and period.
For example, Fashion store A sells clothes on average 15 pieces a month, while fashion store B in the same city and period sells clothes, the total sales of its clothes reached 100 pieces. So it can be concluded that, the market share of the fashion store is 15%.

Market Share Relatif

Market share relatively does not look at total sales in the same industry as a reference, but rather looks at the total sales of its competitors.

How to Calculate Market Share

The calculation of market share is usually carried out within the scope of a certain area, for example, a country or city. In addition, you also need to determine the sales period, for example per quarter or year.

Then, calculate the company’s total sales over a predetermined period, divide by the total sales in the same industry. Sales data in an industry is usually obtained from the bodies and or groups that regulate trade.

For example, fashion company A managed to get revenue of Rp. 20,000,000.00 during the Q1 period in 2022. In the same period, the total income of the industry reached Rp. 500,000,000.00.

So, it can be concluded that the market share of fashion company A reached 4% in the quarter.

That’s enough discussion about market share. Hopefully it will be useful for Techteamers!!! Read other articles on, and don’t hesitate to free cosnulstasi your business needs with Tech Team Indonesia, through which serves for 24 hours and is directly handled by experts. Or you can dm directly to our instagram at @techteam_indonesia