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Basic Concepts in Market Dynamics
3. Your Market (Share)
While it is possible for a business to have its own market, as in the case of a total monopoly or an absolutely unique offering which is the sole means of satisfying a particular market, it is highly unusual. Most of us must share the markets we serve with other businesses who offer similar products as well as businesses who offer very dissimilar products which satisfy the same need. For example, the transportation market is not only shared by the automakers, but also by bicycle makers, taxicabs, common carriers and mass transit companies.
- Market share is a subset of a market formed by the supply/demand equilibrium, for the marketer's specific offering, and the level or incidence of market access created by the marketers distribution channels for that offering, and the level or incidence of market recognition (awareness) of a given marketer and/or that marketer's distribution channels as a source of supply for said offering.
- Market share may be expressed as a volume of equilibrium formed by a common zero and values or quantities representing the supply/demand (D'), access (A') and recognition (R') subsets of the total market.
Many confuse market share with penetrated share. They are not synonymous, even though today's market share will hopefully give you an idea of what tomorrow's penetrated share will be.
Penetrated share is an empirical value of exchange, which represents the percentage of your sales within a category of products or services against all competitors during a given interval of time. It is an important number to evaluate your past efforts, but it can be quite misleading as a planning tool.
Market share is a statistical value of your market conversion and represents your sales potential. As a planning tool, it will show you exactly where you need to focus your efforts to increase sales, strengthen your market position or further increase share. Remember, a market is unsatisfied need. Your market share represents your reservoir of future customers.
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