At a recent family gathering, my cousin Ann, known among those seated at the table as “dessert-maker extraordinaire,” cut her delicious-looking (and tasting) apple pie into equal-sized pieces and served it. Everyone smiled as wedges of the fragrant, just-warmed delicacy were passed out, but I think each of us around the table, we were hoping for a little larger piece of pie.
Same thing in business. Everyone wants a larger slice of the pie!
That’s what we call “Market Share.” The pie is the total size of our marketplace we sell to, and our share is usually expressed as the percentage our sales are compared to the total.
Market Share is one of the battlefields large companies fight over, but most small businesses brush it off as “only important to the big guys.” However, with a little digging for information, it can be just as important to you. Knowing your approximate market share will create insight into the potential for growth and can help define your marketing strategy.
No matter what you sell, you should be able to discover the approximate size of your market. Accurate market size figures are available from census reports and industry statistics. Even if little information is available, you can make reasonable estimates and extrapolations based on your knowledge and experience in your geographic or industry marketplace.
Answer these simple questions: How many widgets (whatever you sell) do you estimate will be sold in the marketplace you serve? How many widgets will you sell this year? Divide answer 2 by answer 1 and that percentage is your Share of the Market.
If you discover you dominate your marketplace, there might not be much room for growth, which means that, in order to grow, you’ll need to increase either your geographical reach or the number of products/services you sell, or you’ll need to discover another avenue to increase demand in order to boost potential sales. If you have a small share, there is real potential if you can get noticed, so strategize to build a larger customer base.
In order to keep peace in a family, you shouldn’t steal a couple forks of pie off your sister-in-law’s plate, but those family or social rules don’t apply to capturing business. A new website, a different method of packaging your product or service, an aggressive pricing strategy, and a changed sales presentation are all strategies to get you a larger slice of the market, but it starts by discovering your current share and creating the strategies to improve.