What's Your Market Share? Do you really know?

How much of the market for your particular product or service do you own?

Car dealers, real estate companies and other businesses whose transactions are tracked by the government have it made. They know exactly where they stand. Some businesses have an industry clearing-house that collects such information and shares it with members.

For other local retailers or service businesses, this can be a rather difficult number to calculate with any degree of accuracy.

So, how to keep score?

If you've been in the market for long, you actually know more than you think. I hope these steps help you.

1. Write down every one of your competitors by name
2. Order them from biggest to smallest
3. Estimate their annual billing by your BEST GUESS (you're probably close enough to at least make this a useful exercise)
4. Write this number next to their name
5. Show the list to your sales staff, spouse or managers and ask them to add the competitors that you forgot
6. Place your business and your sales number in its proper place in the list
7. ADD up all the numbers…this is your estimate of Market Potential
8. Divide YOUR number by the TOTAL…this is your MARKET SHARE

If the Market Potential seems like a much smaller number than you thought it would be, you've probably missed a few competitors.

What's the lesson from this exercise?

Now, you have a scoreboard!

All of the businesses listed ABOVE your name are targets! Your goal is to be stealing market share. Study them and learn how you can be better than they are.

All of the businesses BELOW you are either potential acquisitions or potential threats to YOU. They see a target on your back. Don't ignore them.

Comments

[Tamara]

Hi Dave! That's a simple enough exercise that even a 'spontaneous' could follow it! I saw you at BookPublishing 2.0 in Calgary this past weekend, and I just want to thank you for being such a great presenter and keeping it simple.

[Dave Young]

That's right. Deeper analysis would take trends into account. Is the market growing or shrinking? Has the number of competitors increased or decrease? The main point is not to nail down an exact number, rather to start being more aware of your place in the market, and who you will be stealing market share from in order to grow.

[Dape]

Thanks Dave your suggestion seems simple to do if the market remains stable, harder if the business is changing every month and new market conditions are being implemented on a regular basis. regards Dape

[Dave Young]

Paul...good for you! Action is the key. Head-scratching ultimately just wears a hole in your scalp. (did I just say that?)

[Dan Schawbel]

I think that's a good question you posed Paul. It's hard to know what your marketshare is, percentage wise, unless it's documented somewhere. Do you measure it every year? If you don't have as much marketshare as competitors, then what is your goal to change that? All important questions.

[Paul Stoltzfus]

Thanks Dave for keeping it simple. I know you guys use a few other angles to determine market share but this is simple enough to actually DO IT! ...starting my list now.