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Market Share Calculation Is Important To Evaluate Current Competitiveness , May 2017

By : bookmyessay Posted May 30, 2017 Reading Time: 2 minutes
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Market share is an important indicator for understanding the strength of a product or service in an existing market. Every company tries to get updated knowledge on the market share of their products and services. For this, they depend on the financial department and on both primary and secondary data. Assignments on market share is a common task in financial management or higher courses in commerce and accounting. BookMyEssay.com offers top-grade professional assistance to the students who can’t handle the market share related assignments efficiently. The qualifies and experienced financial and accounting assignment writing professionals help each and every student as per their requirements making the assignments or other similar tasks on this subject easy and accurate.

Purpose of Calculating Market Share

Calculation and knowledge of market share are important for the top management as it is the key indicator of the market competitiveness of their products or services. That means just by observing the market share value a product’s reputation can be understood. It enables the analyzers to judge the position of the product in the current situation but also helps them to understand how they the product has been performing over a long period. It makes clear the changing demand of the market and personal choices of average customers. Experts opine that market share is one of the most desired assets among the competitors. However, most of the experts, advice not to depend on the market share value to develop amarket strategy as many other factors are inherent in any market that greatly influences the market competition.

The market share value can be taken into account measuring the performance of the competing companies and act accordingly with necessary changes for modifications in the marketing strategy for the short-term gains.

Calculation Procedures

There are two major market share calculations adopted by the companies today:
  • Unit market share
  • Revenue market share
Calculation procedure for unit market share:

Total units of a product sold by the company as a % of total units sold in the market determines the unit market share:

So, the unit market share in percentage (%) = 100 x Unit sales of the concerned product / Total Market Unit Sales combining all competitors and the company itself.

Again, the unit sales = Unit market share (%) as depicted above x Total Units Sold in the market combining all competitors and the company itself/ 100.

And, the market unit Sales = 100 x Unit sales/Unit market share in percentage

Calculation procedure for revenue market share:

The revenue market share is calculated on the basis of the prices of the goods sold at the market and unit prices of the product in concern.

The revenue market share in percentage (%) = 100 x Total Sales Revenue earned by the company in $ or any unit relevant to the market / Market Sales Revenue of all competitors in $ or pertinent monetary unit

There is no specific methodology to measure the market share which makes it hard for the companies to tally the records and analyze the values from a single perspective. This is a real problem for the MNCs whose business is spread in different countries.

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