Welcome to my “Why is market share important.”
Producers of goods and services strive to get sales and make the profit. High market share is a typical business objective. The company gives more stability, which goes to the benefit of shareholders, employees, customers, and suppliers. A high market share ensures the company's future if management takes advantage of their position in the market.
Prestige
High turnover is a product approval. No one buys a product unless it is well done, well-marketed and cheap. Companies holding high-branded brands can use their high market share to demonstrate the value of the product. This, in turn, creates more sales at the lower cost due to the perception of the public that the product is sought after.
Value of the brand
Brands can be valued and become an intangible asset on the company's balance sheet. Thus, high market share not only provides the highest income for the company but inflates its value. Gaining shareholder from this phenomenon and managers that high market share engineer gets career advancements and possibly performance bonuses.
costs
A high market share implies a high volume of sales. Companies that sell more than their rivals producing similar products gain a cost advantage over their competitors. High means sales, which the company has more than one unit on which it can allocate its fixed costs. If two identical factories produce identical products and pay the same rent of £ 5,000, a company with sales of 5,000 units per month only has to pay £ 1 for each sale to cover the rent, company B with a turnover of 2,500 per month would have to add £ 2 to the price of each product to cover the expenses. Superior turnover also allows companies to reduce variable costs. Raw material suppliers are more likely to grant discounts to customers who buy in greater quantities.
Strategies
A high market share does not offer a unique advantage to the company. The outcome of this business advantage depends on the strategy adopted by the company's management. The competitive advantage offers three ways: reducing the sale price, increasing investment, increasing profits and dividends. A lower selling price will console the market share of the brand. The increased investment enables the company to develop new products, thus diversifying its production and creating greater security. Increasing dividends to shareholders is the ultimate goal of any business strategy.
Risk
A steady increase in sales will have to be properly managed because once it reaches the company's capacity it will require large investments in facilities and premises to continue increasing output. This investment will initially reduce the company's profitability and increase the unit cost per unit. A steady rise, in the end, will have to cut fixed costs per unit. However, any investment in expansion capacity brings with it the risk of bankruptcy of the company or damaging sales through higher prices if sales volumes do not go up quickly enough to absorb extra capacity.
Prestige
High turnover is a product approval. No one buys a product unless it is well done, well-marketed and cheap. Companies holding high-branded brands can use their high market share to demonstrate the value of the product. This, in turn, creates more sales at the lower cost due to the perception of the public that the product is sought after.
Value of the brand
Brands can be valued and become an intangible asset on the company's balance sheet. Thus, high market share not only provides the highest income for the company but inflates its value. Gaining shareholder from this phenomenon and managers that high market share engineer gets career advancements and possibly performance bonuses.
costs
A high market share implies a high volume of sales. Companies that sell more than their rivals producing similar products gain a cost advantage over their competitors. High means sales, which the company has more than one unit on which it can allocate its fixed costs. If two identical factories produce identical products and pay the same rent of £ 5,000, a company with sales of 5,000 units per month only has to pay £ 1 for each sale to cover the rent, company B with a turnover of 2,500 per month would have to add £ 2 to the price of each product to cover the expenses. Superior turnover also allows companies to reduce variable costs. Raw material suppliers are more likely to grant discounts to customers who buy in greater quantities.
Strategies
A high market share does not offer a unique advantage to the company. The outcome of this business advantage depends on the strategy adopted by the company's management. The competitive advantage offers three ways: reducing the sale price, increasing investment, increasing profits and dividends. A lower selling price will console the market share of the brand. The increased investment enables the company to develop new products, thus diversifying its production and creating greater security. Increasing dividends to shareholders is the ultimate goal of any business strategy.
Risk
A steady increase in sales will have to be properly managed because once it reaches the company's capacity it will require large investments in facilities and premises to continue increasing output. This investment will initially reduce the company's profitability and increase the unit cost per unit. A steady rise, in the end, will have to cut fixed costs per unit. However, any investment in expansion capacity brings with it the risk of bankruptcy of the company or damaging sales through higher prices if sales volumes do not go up quickly enough to absorb extra capacity.
Market share can be measured either in volume or in value. This means that a company that is number one in volume may be lower in the ranking if it recovers goods that sell at a lower price than the products of its next rival. The concept of the market is difficult to define because it requires a focus that measures the goals of a company. A niche manufacturer, for example, will market a general market share for that class of goods. It can only deal with figures looking at the market specialist in the company. The best way to gather market share information is to rely on third-party data providers such as government offices or industry associations.
Instructions
• Establishing the scope of the market you want to find the market share. For example, if they are judging the Ice Cream Pie Market, the national position of each provider would not be relevant. Almost all poodle saloons are businesses run by the single owner grip and so you could only have significant percentages in your studio limiting the market for a specific user pool.
• Study of the sector. As national figures are irrelevant to market share collusion for small businesses, industry figures may not be relevant to a fragmented industry with many differentiated suppliers. It is significant only in a large market as automakers focus on the four or five major players. Mass producers will dominate the industry and niche manufacturers will have to be concentrated together as a "miscellaneous" category. The definition of focus and the boundaries of the market under review will affect the size of the market share allocated to each competitor.
• Consider the production of market share figures for both volume and value of sales. This would raise interesting comparisons between the two different market share measurement methods. If the market goes beyond international borders, volume actions would eliminate the distortion of altering the exchange rate.
• Collect the information from the point of sale rather than the creator of the product. If you look at your company's market share, opponents are unlikely to tell you sales, which can be considered as commercially sensitive data. A third researcher, such as a university or a market research institute, is more likely to get answers. Industry organizations can be a reliable source of data for the study. The relevant government department may also collect market data.
Instructions
• Establishing the scope of the market you want to find the market share. For example, if they are judging the Ice Cream Pie Market, the national position of each provider would not be relevant. Almost all poodle saloons are businesses run by the single owner grip and so you could only have significant percentages in your studio limiting the market for a specific user pool.
• Study of the sector. As national figures are irrelevant to market share collusion for small businesses, industry figures may not be relevant to a fragmented industry with many differentiated suppliers. It is significant only in a large market as automakers focus on the four or five major players. Mass producers will dominate the industry and niche manufacturers will have to be concentrated together as a "miscellaneous" category. The definition of focus and the boundaries of the market under review will affect the size of the market share allocated to each competitor.
• Consider the production of market share figures for both volume and value of sales. This would raise interesting comparisons between the two different market share measurement methods. If the market goes beyond international borders, volume actions would eliminate the distortion of altering the exchange rate.
• Collect the information from the point of sale rather than the creator of the product. If you look at your company's market share, opponents are unlikely to tell you sales, which can be considered as commercially sensitive data. A third researcher, such as a university or a market research institute, is more likely to get answers. Industry organizations can be a reliable source of data for the study. The relevant government department may also collect market data.
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