Market Share | A-Level, IB & BTEC Business

Summary

In this video, the concept of market share is explored, focusing on how it's calculated rather than its business implications. Market share, typically expressed as a percentage, is calculated by comparing the sales or volume of a brand/product to the total market size. Examples include Lenovo’s dominance in personal computers and Coca-Cola's share in the carbonated drinks market. The process is demonstrated using a hypothetical market with five businesses, illustrating how to calculate each company’s market share. Market share is a crucial metric for understanding market position and competitive strength.

Takeaways

• 😀 Market share is the percentage of the overall market held by a product, brand, or business.
• 😀 Market share can be calculated based on either total sales/revenues or the volume of products sold.
• 😀 Lenovo is currently the largest global player in the personal computer market with 20% market share.
• 😀 In the carbonated drinks market, Coca-Cola holds a dominant market share of 49%, far outpacing Pepsi's 20%.
• 😀 Market share data allows businesses to assess their competitive position in the market.
• 😀 To calculate market share, you need the total market size and the individual sales figures of the businesses involved.
• 😀 The basic formula for calculating market share is: (Business Sales / Total Market Sales) * 100.
• 😀 If the total market size is 2 million and Company A has sales of 250,000, its market share is 12.5%.
• 😀 In the given example, Company C, with sales of 900,000, has the highest market share of 45%.
• 😀 Market share is a key indicator of a business's competitive strength and can guide strategic decisions.
• 😀 Understanding and calculating market share is crucial for comparing the performance of different businesses or products.

Q & A

What is market share?

Market share refers to the percentage of the overall market or market segment that is held by a product, brand, or business. It is typically expressed as a percentage.

What are the two primary ways to calculate market share?

Market share can be calculated either by sales or revenues, or by the volume of products produced or sold within a specific market.

What does market share help businesses understand?

Market share helps businesses understand their competitive position in the market. It is an important measure when comparing the performance of different brands or products.

Who was the largest player in the global PC market in 2015?

Lenovo was the largest player in the global PC market in 2015, holding a 20% market share.

How much market share did Coca-Cola hold in the global carbonated drinks market in 2015?

In 2015, Coca-Cola held just under 49% of the global market for carbonated drinks.

What market share did Pepsi hold in the global carbonated drinks market in 2015?

Pepsi held a market share of 20% in the global carbonated drinks market in 2015.

What is the first step when calculating market share?

The first step is to calculate the total size of the market, which includes the combined sales or production figures of all the businesses in the market.

How do you calculate market share once the total market size is known?

Once the total market size is known, you calculate market share by dividing the sales of the individual business by the total market size and then expressing it as a percentage.

What market share did Company A have if its sales were 250,000 in a market with a total size of 2 million?

Company A had a market share of 12.5%, which is calculated by dividing 250,000 by 2 million and multiplying by 100.

Why is market share an important concept in market analysis?

Market share is crucial because it serves as an indicator of a business’s competitive strength and can provide insights into its position within the market relative to other competitors.