Market share is a really matter in your business. It's one of many sources of your biggest profit.

WHAT IS MARKET SHARE?

Definition: Out of total purchases of a customer of a product or service, what percentage goes to a company defines its market share. In other words, if consumers as a whole buy 100 soaps, and 40 of which are from one company, that company holds 40% market share.

Description: There are various types of market share. Market shares can be value or volume. Value market share is based on the total share of a company out of total segment sales. Volumes refer to the actual numbers of units that a company sells out of total units sold in the market. The value-volume market share equation is not usually linear: a unit may have high value and low numbers, which means that value market share may be high, but volumes share may be low. In industries like FMCG, where the products are low value, high volume and there are lots of freebies, comparing value market share is the norm.

The significance of market share: Market share is a measure of the consumers' preference for a product over other similar products. A higher market share usually means greater sales, lesser effort to sell more and a strong barrier to entry for other competitors. A higher market share also means that if the market expands, the leader gains more than the others. By the same token, a market leader - as defined by its market share - also has to expand the market, for its own growth.

How much market share is enough? Usually, gaining 100% market share is not a good idea, as the risk associated with market actions, like fashion changes, product / use changes will impact the company heavily. Also, the cost and effort to maintain 100% market share against nimble, local or more aggressive smaller competitors can be very high and killing. Most companies decide on a target market share beyond which the cost of acquiring marketshare is more than the profit from that incremental gain.

Market Share—a Key to Profitability

You can read it further here --> https://hbr.org/1975/01/market-share-a-key-to-profitability .

Market share is the most important metric companies can use to judge the effectiveness of any possible revenue generating effort, such as marketing campaigns, branding initiatives, or CRM programs.

The reason for this is simple – market share shows you how you are doing compared to your competition, allows you to quantify the impact your strategies and tactical execution have had on business results, and ask questions of your performance that were previously unapparent to ask.

Yet, despite its importance, many companies ignore market share and instead focus on internal metrics such as satisfaction, awareness, loyalty, leads, revenue growth, etc.

The problem with these internally focused metrics is that they can be deceiving in that while the internally focused company may be happy with its results, this satisfaction could be misleading if the company’s performing below par relative to the competition.

But, it’s not just internally focused companies that don’t calculate market share.

Most companies don’t have the competitive data necessary to measure market share, which is why it has been mainly restricted to academia, as theory taught in classrooms.

The attempts that have been made to calculate market share have been at best a complex guessing game relying on partial and inaccurate data derived from publicly reported figures or from the participating members of industry consortiums.

But, even then, the information was never comprehensive and never available at the levels of granularity needed to make actionable business decisions.

In fact, because most companies don’t engage in comprehensive competitor monitoring or are excessively optimistic, they overestimate their market shares by a factor of two.

The companies without the will or interest to accurately calculate their true market share need to understand the importance of this metric and the peril they place on themselves when they operate without this guide post.

Why is a true, unbiased calculation of your market share so important?

Because market share is a key indicator of market competitiveness, it enables executives to judge total market growth or decline, identify key trends in consumer behavior and see their market potential and market opportunity.

Furthermore, by understanding market share, companies can objectively measure pricing strategies, consumer perception of new products/services, promotions, management personnel, real estate decisions and other key business initiatives.

You may be thinking, this is all well and good, but now what? There is no standard way to measure it.

Well, that’s where you’re mistaken.

Now, for the first time, there’s a way to accurately and objectively calculate your market share – Buxton’s Market Share Solution.

Through a relationship with a credit card provider, Buxton is able to access both you and your aggregated competitors’ de-identified credit and debit card transactions, which enables us to accurately and objectively quantify your market share at all levels of your organization – from the very top down to individual locations.

This market share report supports your ability to understand the impact your business strategies and their execution have had on your revenue and allows you to evaluate both your short and long-term trends in market share and competitive presence.

It gives you the ability to differentiate and quantify the revenue growth and loss you have impacted and to understand the growth and loss which has resulted from changes in the market that were beyond your control.

By understanding your true market share, you can filter out market noise with a metric that is not impacted by macro-environmental variables and measure your impact to revenue across your organization using a consistent, unbiased metric for each location, market and in summary for your entire business.

Market share is the total share a particular enterprise hold in particular market it help to know yours products/service positioning in the market.

Market share presents which part of the market your enterprise holds. It is essential as Madhusudan K.S. said that you know your products and their features, and that you work on their further development so that you position your products on the market in a most efficient manner. It is also essential to say that a good research of the market itself is necessary prior to placement of your products, and your advertising campaigns must be divergent towards various groups of targeted customers.

Even more market share allow you to dive into different segments and in that way Marketing forecast can be done to estimated the revenues that will be collected from the sales of goods and services.

Your company's "market share" is the representation of the aggregate sales of the particular product or service that your company offers in comparison with that of your competitors. Comparatively, it will serve as your company's basis in reviewing and analyzing further your products/services and how you will be able to sustain its quality and saleability and perhaps its CQI or continual quality improvement. It clearly serves as the company's guide in pursuing or not its particular product/service.

Excellent comments in above answers. In addition, your market share is a very important tool in deciding your overall strategy.

Your products and their price points determine your market size. How much of it do you have today, and what is your capibility to take a greater share? This will directly determine your growth rate.