In order to understand the definition of market share in marketing and in B2B marketing in particular, it is necessary to remember that supply results from the intervention of two main actors: the producers who produce the good or service offered and the distributors who will market the product.
Key concepts in supply analysis: market share and availability/distribution
Market share can be defined as a percentage accounted for by a given producer or brand in its own market.
Market share = Current market of producer or brand / Current market of product all brands
Two modes of calculating Market Share
There are two ways to calculate it:
- The market share by volume : this is the ratio between the sales volume of the producer or brand over the sales volume of all producers or brands combined;
- The market share by value : this is the ratio between the value of sales or turnover of the producer or brand over the value of sales or turnover of all producers or brands combined;
availability (or distribution) is an indicator whereby one assesses how a product or brand is present in the outlets.
A distinction must be made between:
- Digital availability : this is the ratio of the number of outlets of a given type selling a brand compared to the total number of outlets of the same type;
- Value availability : this is the ratio of the turnover achieved in the product category by outlets of a given type selling a brand compared to the turnover generated within the product category by all outlets of the same type.
A brand is said to have efficient demand when DA > VA, expensive demand when DV < DN and ideal demand when DV = DN.
The limits of theoretical approaches market share (PDM)
The limit of digital distribution (DN) is that it does not take into account store size and turnover in which the product is distributed.
Trends and Innovations in PDM
Volume market share can be expressed in terms of 3 different indicators according to the following formula :
Volume market share = occupancy ratio x exclusivity rate x intensity rate
Tools and methods
In addition to calculating the standard market share, one often calculates the relative market share which is the ratio of the producer’s or brand’s sales to the sales of the main competing product.
The analysis can be deepened by decomposing the market share into volume according to the following formula:
Volume market share = occupancy rate x exclusivity rate x intensity rate