Are You Getting Your Fair Share of the Market?
Are your internal marketing metrics trending upward, and yet you're not seeing a difference in terms of revenue? If so, that's an indicator that you're not getting your fair share of the market. Make your marketing work harder for you by understanding your place in the market and how to unlock your company’s fullest potential. Here’s how:
Why Do You Need to Know What Your Fair Share of the Market Is?
The Marketing Science Institute states that market share is one of the most important drivers of profitability for any business. Without a thorough understanding of what your market share is and what it could be, it’s impossible for you to accurately assess your company’s performance. If you don’t have accurate market share data, you’re simply guessing. Knowing your market share helps in four key ways:
- Setting accurate goals. Understanding your market share will help you know what to expect when launching new products or marketing initiatives. You’ll also better understand the industry as a whole, which allows you to set goals and meet them more efficiently.
- Assessing brand performance. Knowing your fair share of the market will show you if your company is underperforming. You also could be over-performing, which may be a sign that your current rate of growth is unsustainable. In either case, understanding your performance will help you to allocate resources as needed.
- Comparing against outside competitors. Internal KPIs are great, but they only tell you how you’re doing internally. Market share data shows you how customers view your brand and how it compares against the other companies in the marketplace.
- Benchmarking. Your fair market share, when compared with your actual performance and the performance of other companies, gives you an idea of where you currently stand. Competitive benchmarking will show how your business is growing in comparison to your competitors. Benchmarking against companies big and small will give you an idea of where your company resides in the marketplace.
How Do You Calculate Market Share?
Before you know if you’re getting your fair share, you have to know what your share is. Basic market share is your company's total revenue within a specific time period divided by the revenue of the entire industry over that same time period. For example, if you operate in an industry that had $100 million in revenue in 2020 and your company's share of that revenue was $5 million, your market share would be 5%.
Keep in mind that your ability to use market share as a means for evaluating your business's performance and potential is only as good as your data. Pull your own revenue data to start, and then take a look at the industry as a whole. PrivCo is a website that lists revenue information for companies with more than $1 million annually.
Also, consult annual reports of publicly traded companies and trade publications to obtain additional revenue information. Industry reports from aggregators like Nielsen can help fill in the blanks or provide any missing information.
So, Are you Getting Your Fair Share?
Calculating fair market share isn’t quite as simple as traditional market share. That’s because there isn’t a universal standard for determining what’s “fair.” However, you can still use the numbers you’ve just found to hone in on what your fair share should be.
- Performance index: Add up the number of competitors in your industry and divide 1 by that number. That resulting percentage is your fair share. Then, divide your market share by that number to identify your performance index. If the result is greater than 1, you’re doing well, but you may be over-performing. If it’s less than 1, you’re falling short in terms of what’s possible for your brand.
- Identifying opportunities for growth. Compare the percentage of the revenue you derive from all categories to your market share in those categories. For instance, if 10% of your sales come from lawn care, but your market share in the lawn care industry is only 5%, that’s a sign you aren’t getting your fair share in the market.
The lack of a standard formula may lead businesses to dismiss the results of these fair market share calculations if they’re not favorable. Don’t fall into this trap! These calculations absolutely help you identify weak points and areas for growth.
And remember—over-performing isn’t winning. Having more than your fair share may sound great, but it could also mean overextending yourself in those areas, causing you to neglect aspects of your business that need more attention.
How do you get your fair share or increase your share?
When you know what’s possible for your brand or business, you may realize you need to increase your share. Use these tips to start gaining more market share in the coming year.
- Promote your differentiators. Understand what makes your business stand out to customers—that thing that keeps them coming back—and use that knowledge to inform all your marketing activity. Launch products and consolidate branding in the image of your unique selling proposition, and keep it consistent across all platforms.
- Don’t stop innovating. Put creativity at the forefront, and encourage consumers to become early adopters of new products. Use changes in technology and society as launching points for new marketing approaches.
- Sell more. Increase sales activity by lowering prices, offering aggressive promotions, and targeting new demographics that tie into your niche. Consider acquiring other organizations that can be aligned with your brand and open up cross-selling between organizations and brands.
- Impress your customers. Build goodwill between consumers and your brand by putting the customer at the center of every decision your company makes. Engage and encourage customers to be brand advocates that can bring new shoppers on board.
- Keep tracking. Continue measuring and benchmarking. Maintain awareness of your market share, how it’s trended over time, and whether you’ve gotten your fair share.
- Make steady gains. Going beyond your fair share of the market may overextend your employees and resources, and could lead to poor experiences for your customers. Focus on sustainable growth that invigorates your staff and generates brand loyalty.
Written by Jason Bender
With 20 years of brand building and digital innovation for clients like Mars, P&G, Ford, and more, Jason brings deep CPG, automotive, healthcare, and tech marketing experience to Icon as Chief Experience Officer. He blends the skillsets of creative and strategist to guide the execution of Icon’s customer-facing work across teams. His honors include Cannes, CLIO, and Webbys. He has been published in iMedia Connection and Inc, and has presented at events like NewCo and HOW Design Conference.