Understanding Relative Market Share
Relative market share is a term used in business to describe a company’s position within a specific market in comparison to its competitors. It is an important metric for determining a company’s competitive advantage, as the higher its relative market share, the stronger the company’s competitive edge. In this article, we will discuss what relative market share is and provide examples of companies with a high relative market share.
What is Relative Market Share?
Relative market share is a measure of how much of the total market a company controls as compared to its competitors. It is calculated by dividing a company’s sales by the total sales of all the companies in the market. For example, if a company has sales of $1 million and the total sales in the market are $10 million, then the company’s relative market share is 10%.
Why is Relative Market Share Important?
Relative market share is an important metric for companies to understand as it gives them an indication of how well they are competing in the market. A company with a high relative market share has a competitive advantage over its competitors as it controls a larger share of the market and can therefore benefit from economies of scale and increased market power.
Examples of Companies with a High Relative Market Share
There are many companies that have a high relative market share in their respective markets. Here are a few examples:
- Apple – Apple has a high relative market share in the smartphone market, with around 40% of the total market.
- Walmart – Walmart has a high relative market share in the retail market, with around 25% of the total market.
- Amazon – Amazon has a high relative market share in the e-commerce market, with around 75% of the total market.
Relative market share is an important measure of a company’s competitiveness and can give valuable insight into how well a company is performing in a given market. Companies with a high relative market share can benefit from economies of scale and increased market power, giving them a competitive edge over their competitors.
Conclusion
Relative market share is an important metric for understanding a company’s position in a specific market. It is calculated by dividing a company’s sales by the total sales of all the companies in the market. Companies with a high relative market share can benefit from economies of scale and increased market power, giving them a competitive edge over their competitors.