Examples for calculating market shares

 

Market share is a generally easy metric to calculate provided you have access to unit and revenue sales. This is relatively common in a retail setting where the sales information is captured by a point-of-sale terminal on an industry basis.

However, in some industries access to market share information can only be obtained by market research surveys. Obviously the market research survey approach will only provide an estimation of market share, as opposed the capture of real data from consumer purchases.

Unit market shares example

market share formulaAs suggested by the identical formula, both unit market share and revenue market share are constructed in the same manner. That is, the various sales of each brand listed in the first, and then are totaled. Each brand’s sales are then divided by the total to determine the percentage market share.

The following diagram highlights a very simple example for unit market share.

basic unit market shareAs you can see, there are only five brands in this market and their total unit sales add up to 10,000 units for the period (which could be any specified time period as required).

This table shows that Brand A has 40% market share of units sold (4,000/10,000), where as Brand E has only a 4% unit market share.

Unit and revenue market share example

market share example

In this example – which is a screenshot of the free Excel template – both unit and revenue market shares have been calculated. To make the example easy to follow – the average price per unit is $1 – so the total market unit sales is 20,000 units and the total market revenue is also $20,000.

Firstly, you can see how the market shares are calculated. For example, let’s look at Brand B – their unit sales were 5,000 (out of the 20,000 market total), which is a 25% unit market share – but their revenue market share was 30% ($6,000/$20,000).

Secondly, this example highlights why it is necessary to consider BOTH unit and revenue market share when there are reasonable price differentials in the market. In this example, Brand B prices its products above the market price average – as demonstrated by the price premium metric – whereas Brand C prices itself well below the market average.