Have you ever wondered what portion of the market your product or business commands? Is knowing your market share really that significant? And how can you not only increase your product’s market share but also ensure its retention once you’ve gained a foothold? This article addresses these questions and offers a list of nine strategies for enhancing your business or product’s market share.
Defining Product Market Share
No need for excessive technical jargon here. Your market share simply represents the percentage of a market or sector that your sales account for. This can be calculated for a single digital product, a service you provide, or your entire business.
The Significance of Market Share
Market share serves as a practical and valuable metric, whether for a product or a business. First and foremost, it provides a basic measure of your success, offering a simple analogy – are you a big fish in a small pond or the reverse? You might even be navigating an ocean, but you could still be a substantial presence. The largest market share designates you as the market leader.
Market share enables you to compare your success to that of your competitors, revealing your competitive advantage. It offers insights into the effectiveness of your marketing, advertising, sales team, product development, and other activities that contribute to market share. Moreover, investors closely monitor market share, especially in a growing market. Maintaining your share suggests that your revenues are growing in line with the market, while an increasing share indicates that your revenue is outpacing that of your competitors. As a result, fluctuations in market share can impact stock performance.
Determining Your Market Share
Calculating your market share is quite straightforward. For your entire business, select a specific financial period (e.g., a month, a quarter, a year, or multiple years) and divide your total revenue or sales for that period by the total revenue or sales in your industry to find your share.
For a product, the calculation is the same, but you replace your product’s sales and the sales of comparable competing products in the market.
Typically, this calculation is done for a particular country or region, such as the US, North America, Poland, or Europe.
Top 10 Strategies for Expanding Market Share
While defining market share is simple, increasing it is a more complex endeavor. As one of Boldare’s product strategists aptly puts it, “Boosting market share can be a complex task that demands a strategic approach, and the specific methods may vary depending on your industry and business.” Nevertheless, here are nine general tactics to consider when formulating a market share strategy:
- Understand Your Target Market: Prior to boosting sales and revenues, gain a deep understanding of your potential customers. Conduct comprehensive market research to identify their needs, pain points, preferences, and behaviors. Use this insight to tailor your products and marketing strategies to better meet their demands.
- Set Your Offerings Apart: Identify your unique selling points from the customer’s perspective. Develop a value proposition for each product that resonates with its target market, emphasizing the exclusive benefits you offer.
- Elevate Product Quality: Ensure that your products deliver exceptional quality and user satisfaction. Continuously improve your offerings based on customer feedback and market trends. High-quality products generate word-of-mouth recommendations and attract new customers.
- Competitive Pricing: Thoroughly assess pricing by examining what competitors charge for similar products. Evaluate your costs, market conditions, and user expectations to create an optimal pricing structure that maximizes your market share. You don’t have to be the cheapest, but you must offer value for money.
- Effective Marketing and Promotion: Even the best product won’t succeed in the market if nobody knows about it. Develop a comprehensive marketing strategy to increase awareness and promote your product and brand. This includes utilizing various marketing channels such as social media, advertising, content marketing, and public relations to convey your unique value proposition to a broad segment of your target audience.
- Expand Distribution Channels: Reach new and existing customers by using different distribution channels. The easier it is for users to access your product, the more you’ll sell. This could involve partnerships, collaborations, e-commerce platforms, or even physical stores. Accessibility is key.
- Cultivate Customer Loyalty: Customers who value your offerings become advocates. Provide excellent customer service, consider loyalty programs, and seek customer feedback to continually enhance your product.
- Foster Innovation and Continuous Improvement: Products or businesses that remain stagnant lose market share. Market leaders tend to prioritize innovation. Invest in research and development to enhance your products, services, and processes. Products that evolve according to user needs and wants increase their market share.
- Monitor and Adapt: Complacency is dangerous, and markets can change suddenly in today’s volatile, uncertain, complex, and ambiguous (VUCA) world. Keep an eye on market trends, competitor activities, and customer feedback. Agile market leaders are ready to adjust their strategies as necessary.
Which of these strategies are critical to increasing your market share depends on your specific business, product, and market. One universal truth is that expanding market share is a long-term strategic effort that ultimately hinges on delivering value to your customers and users.
Safeguarding Market Share:
Building on the ninth strategy above, markets can change, and competitors may be expanding their market share through price reductions, innovative products, or new marketing campaigns. How can you prevent a decline in your market share for your business or product? Many of the strategies for building market share also apply to maintaining it.
- Product Innovation: No product is ever perfect or complete, especially as the market evolves. Stay updated on new technologies and innovations and incorporate them into your product in alignment with user feedback and needs.
- Fill Market Gaps: Sometimes, improving a product isn’t enough; a new product may be necessary. Keep an eye on the market for emerging needs or user pain points. These represent market gaps, and if you don’t offer a product to meet these expanded market needs, a competitor likely will. Consider developing new products or brands to address these emerging gaps.
- Confrontation: While not an ideal or recommended approach, sometimes confronting competitors through price reductions, aggressive marketing, or undermining their products becomes necessary. This approach might belong to a previous age of business, but it’s undeniable that it still happens.
Increasing and Safeguarding Your Market Share
Whether it’s business or product-related, your market share is a critical metric reflecting your organization’s success. Understanding how market share functions and the impact it has on your business reputation and product desirability is essential, especially for businesses looking to scale up and enhance profitability.