How to Calculate Change in Relative Market Share

by C. Taylor, studioD

Relative market share compares your company's sales against your largest competitor. The resulting figure offers the percentage of the competitor's sales that are represented in your company. As an example, a relative market share of 50 percent means your sales are half as plentiful as your competitor's. Relative market share may use total sales revenue or quantity of units sold. By tracking multiple markets, you gain knowledge of your company's overall relative position across markets and access the amount of competition. By tracking changes in your relative market share, you quantify the growth your company achieves in capturing the market.

Research your company's market and its competitors. Using trade magazines, financial publications and public balance sheets will give you insight into your competitors. As an example, if your company sells widgets, you might determine only two other companies sell such items. Of the two, company XYZ sold more units or gained more revenue, so you would use company XYZ as the basis for you relative market share.

Divide your company's total revenue by the largest competitor's total revenue. In the example, if your company brought in $50,000 in sales revenue, but company XYZ brought in $100,000, you would divide $50,000 by $100,000 to get a relative market share of 0.50, or 50 percent.

Calculate your relative market share at a later date to determine if it has changed.

Subtract your first calculation from the second to determine how much more relative market share you have gained. Continuing with the example, if your new relative market share was 75 percent, then you captured an additional 25 percent of the relative market share.

Divide this figure by your original relative market share to calculate the percent increase. In the example, 25 divided by 50 gives you an increase of 50 percent.

About the Author

C. Taylor embarked on a professional writing career in 2009 and frequently writes about technology, science, business, finance, martial arts and the great outdoors. He writes for both online and offline publications, including the Journal of Asian Martial Arts, Samsung, Radio Shack, Motley Fool, Chron, Synonym and more. He received a Master of Science degree in wildlife biology from Clemson University and a Bachelor of Arts in biological sciences at College of Charleston. He also holds minors in statistics, physics and visual arts.

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