Market share
Category: Marketing
If we assume that the «Market» consists of customers who know of the product, who have tried the product and who are satisfied with the product (quality/performance and so on), we can calculate the market share in the three examples by multiplying the YES ratios with each other:
Let us make an example:
If the company from example A wants to increase the market share from 7% to 9% they have many options:
— Knowledge: Increase knowledge to 51% instead of 40%
— Buy/Try: Increase from 70% to 90%
— Satisfied: Increase from 25% to 32%
All 3 options will ensure an increase in market share from 7% to 9%.
There are endless numbers of combinations that will lead to the wanted goal. For instance an increase in knowledge of 5% combined with an increase in satisfaction to 29% will result in a 9% market share.
The company can now start the discussion of which strategy is the fastest/cheapest or most appropriate:
| Increase knowledge: | Promotion campaign, advertising, PR etc. |
| Increase number of potential customers who buy/try: | Increase the distribution, test buy, samples etc. |
| Improve the customers satisfaction: | Improve the product/service in quality etc. |
The market chart gives the company a picture of which elements in the marketing mix to be used in order to achieve the goal.
A company has to realize that this model is mechanical and does not consider changes in market conditions and competition. Another limitation is that the model can only be used in markets where the company has a very good knowledge of the elements contained in the Market Chart. The advantages of the model are:
It is easy to understand;
It is easy to operate;
It gives a quick overview;
It is valuable for discussions on the market strategy.