How to Calculate Market Share Growth Rate
Market share growth rate is a metric that measures the change in a company’s market share over time. It’s an important metric for businesses to track because it can indicate whether they are gaining or losing market share in their industry. In this article, we’ll show you how to calculate market share growth rate using these writing patterns and formulas.
Determine the Time Period
The first step in calculating market share growth rate is to determine the time period for which you want to calculate it. This can be a month, quarter, or year, depending on your needs. Once you’ve determined the time period, you’ll need to gather the data for that time period.
Gather the Data
To calculate market share growth rate, you’ll need to know the total market size and your company’s sales for the time period. You can find this information by looking at your sales reports and industry reports.
Calculate Your Company’s Market Share
Once you have the data, you can calculate your company’s market share for the time period. To do this, divide your company’s sales by the total market size and multiply by 100.
Repeat for a Previous Time Period
To calculate the change in market share, you’ll need to repeat steps 2 and 3 for a previous time period. This will allow you to compare your company’s market share between the two time periods.
Subtract Previous Market Share
Subtract the previous market share from the current market share. This will give you the change in market share.
Divide by Previous Market Share
Divide the change in market share by the previous market share and multiply by 100. This will give you the market share growth rate.
For example, let’s say your company had sales of $10 million in the current time period and the total market size was $50 million. Your market share would be 20%. In the previous time period, your sales were $8 million and the total market size was $40 million. Your market share was 20% in the previous time period as well, so your change in market share is 0%. Your market share growth rate would be 0%.
You can also calculate market share growth rate using the formula (current market share - previous market share) / previous market share x 100. This is the same formula used in step 6. Another way to calculate market share growth rate is to use the formula (current sales - previous sales) / (current sales + previous sales) / 2 x 100. This formula is useful if you don’t have the total market size for each time period.
Other Factors to Consider
It’s important to remember that market share growth rate is just one metric for measuring the success of your business. It’s also important to consider other factors such as customer satisfaction, employee satisfaction, and profitability.
Identifying Trends and Opportunities
Market share growth rate can be used to identify trends and opportunities in your industry. If your market share is growing, it may indicate that your business is gaining market share from your competitors. If your market share is shrinking, it may indicate that your competitors are gaining market share from you.
Setting Goals and Tracking Progress
Market share growth rate can also be used to set goals and track progress. If you want to increase your market share by a certain percentage, you can use market share growth rate to track your progress towards that goal.
Using Accurate Data
When calculating market share growth rate, it’s important to use accurate and reliable data. If your data is incomplete or inaccurate, your market share growth rate may be misleading.
Combining with Other Metrics
Market share growth rate can be used in conjunction with other metrics such as customer retention rate, customer acquisition cost, and lifetime customer value to gain a more complete understanding of your business’s performance.
In conclusion, calculating market share growth rate is a useful tool for measuring the success of your business and identifying trends and opportunities in your industry. By following these writing patterns and formulas, you can easily calculate your company’s market share growth rate and use it to set goals and track progress.