How To Increase Market Share
December 15, 2021
Market share is a key indicator of a company's competitiveness
, and when that company improves its market share, then it can improve its profitability. This is especially true in mature or cyclical industries
where the competition for market share is hardcore. Still, even if your company is in a growth industry
benefiting from a higher-than-average growth rate due to its pioneering nature, you need to know how to increase market share for when your industry is no longer in such a vertiginous growth rate. First, let's start with what market share is and how to calculate it, its impact, and then we will move on to learning strategies to increase it.
What Is Market Share?
Your company's market share is a slice of the pie of your industry's sales. Therefore, you can calculate your market share by dividing the total sales your company had over a set period of time by the total sales your whole industry had over that same period. For example, let's say you own a smartphone company in the U.S., and you made $100 million from smartphone sales in a quarter, now let's imagine that the smartphone industry in the U.S. made $200 million in sales over the last quarter. This means your company's market share would be 50%.
Now, we mentioned before that the competition to increase market share in mature or cyclical industries is tougher than it is in growth industries, and this has to do with market share impact.
The Impact Market Share Can Have on Your Company
Suppose your company is in a mature or cyclical industry, then your company's sales, earnings, and margins are probably largely affected by economic factors. In these industries, an increase in sales comes at the expense of other companies' sales or their market share. And, your company's stock performance will be affected more by market share than anything else.
When it comes to companies in growth industries, the landscape looks a lot different. In these pioneering industries experiencing a higher-than-average growth rate, your company could increase sales without increasing market share because the industry as a whole is growing.
Therefore, the stock performance of companies in growth industries will be more affected by sales growth and margins than other factors.
Still, as we said before, if your company is in a growth industry, that industry will eventually mature, and you will have to know how to get through to the other side with a big piece of the pie. And, for business owners with companies in mature or cyclical industries, we know you can't wait for this next part, so, without further ado, let's go over some strategies to increase market share.
How To Increase Market Share?
There are many ways a company like yours, regardless of the type of industry you are in, can increase its market share. Here we will go over four strategies (not mutually exclusive) that you can implement to help you increase your company's market share. These are through knowledge of your competitors, innovation, customer loyalty, and acquisitions.
- How To Increase Market Share Through Knowledge of Your Competitors?
Competitive intelligence services, specifically competitive profiling service engagements, can provide you with information about your competitors and how you compare to them. Having deep insights into your competitors' strengths, weaknesses, opportunities, and threats with reliable first-hand information will help you identify unmet needs their customers may have. Then, by addressing these needs, you will be able to increase your company's market share.
- How To Increase Market Share Through Innovation?
This strategy is closely related to the last one. Once you have identified unmet needs, you can address them by developing innovative products or services.
Furthermore, developing methods and skills for sustained innovation will keep your company one step ahead of your competitors. Plus, being a company that's always innovating products and services and providing your customers with new features and technologies will have them flock to you instead of your competitors, decreasing their market share in favor of yours.
Although, not many companies know how to develop methods and skills for sustained innovation to come up with a good portfolio of new concepts or develop existing ideas. For those companies, product and service innovation services might be the solution. After all, a company that does not innovate is a company that won't be able to keep up with its competitors and will inevitably lose market share.
- How To Increase Market Share Through Customer Loyalty?
Satisfying unmet needs and coming up with new products or services (our last two strategies) will undoubtedly feed this one. Still, this strategy requires a lot more than just the sum of the previous two to be successful. Increasing market share through customer loyalty is all about interacting with them, asking them what they want, so your products and services reflect the voice of your customers. Plus, when customers are listened to and provided with great customer service, they will become loyal to your company. Securing loyal customers will help you maintain your market share, and their recommendations to their family and friends will increase your market share with little cost to you.
- How To Increase Market Share Through Acquisitions?
Any successful acquisition needs to align with your company's current goals, products, and services. Therefore, patent and intellectual property search and analysis services like the ones provided by Peak Innovation will go a long way in helping you identify products or services that align with your company. Once you identify the companies specializing in these products or services, you can buy them to add their market share to yours. The great thing about this strategy is that by acquiring one of your competitors, you reduce the number of companies fighting for slices of the pie by one. You could say it's like killing two birds with one stone.
Like we mentioned before, these four strategies are not mutually exclusive. Carrying them out in a coordinated manner could make each strategy boost the performance of the others. This will make increasing your market share far easier than it's been so far, and it will help your company gain a more stable position in your industry.
Another great way of strengthening your company's position in your industry is with Peak Innovation service engagements.
Our company specializes in providing competitive intelligence service engagements
(some of which are listed in the strategies above), marketing data analytics
, product and service innovation
, and M&A pipeline development
All of our service engagements are led by one of our highly experienced principals. We operate with a flexible, scalable staffing model leveraging subject matter experts as needed. We enable clients to generate profitable growth through the practical use of research, innovation, and technology. Whether your firm is a start-up or a Fortune 500, Peak Innovation is here to answer your toughest marketplace questions. All you need to ensure you make the right decisions to help your business succeed, increase market share, and stay abreast of your competitors is one phone call away. Contact us at (844) 300-7325
or fill out the form on this website for questions about our services or to schedule a time to speak.