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The Marketer's Handbook: Reassessing Marketing Techniques for Modern Business by Laurie Young

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cmp10uf001MARKET SHARE

Application: Marketing Strategy, NPD Direction, Sales Strategy, Communications Strategy

The Concept

This is one of the most straightforward and simple of concepts. The idea is that marketers measure the percentage of sales in any one market that their product or service takes. By understanding the share that their company has, compared to other competitors, they can adjust their strategy and marketing programmes. For instance, the company with the dominant share, the market leader, has significant advantage. It is thought that large market shares allow economies of scale, cash generation powers, re-investment opportunities, and the chance to dominate a market.

History, Context, Criticism, and Development

Whilst it is possible to find references to “increasing your share of consumption” in early marketing text books (see Butler, R.S., 1917), the emphasis on market share dominance seemed to come to the fore in the mid 20th century. Bruce Henderson, for instance, was a very influential strategy advisor (see the entry under Boston Matrix) and reoriented his thinking to argue that share was an important determinate of profit. He suggested that high share gave large economies of scale which allowed companies to reinvest and grow.

A particularly influential support to the argument in favour of market share dominance was the PIMS (Profit Impact on Market Share) research project. ...

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