In this article, you will learn 4 examples to calculate market share in Excel.
There are many business scenarios that involve calculating market shares. Developing new marketing strategies to reach more potential customers is crucial for marketers to understand market share. In order to determine a company’s strength in the market, it is necessary to assess its market share. It can be seen as a sign of competitiveness when a market share increases or is even maintained. This can be due to strong demographic appeal, innovative products, or simply advertising. At times, however, a company may become a monopoly or oligopoly due to its large market share.
A company or brand’s share of the market in a particular industry is referred to as its market share. A market share is a calculation that shows, in percentages, how much revenue one company generates compared to how much revenue the industry generates.
Market share describes how much a company contributes to the total sales of an industry over time.
Considering market sales as a big pie, a company’s market share represents the proportion of the pie that it takes. It is very simple to calculate market share by dividing the total sales of a company by the total sales of its entire market, multiplied by 100%.
Consider a scenario in which you sell shoes and you made $100,000 in sales for a quarter. There were $1.0 million in total industry sales during that same time period. You would have a 10% market share.
This is how the formula would look:
$100,000 / $1,000,000 = 0.10 x 100 = 10% market share.
Market share can be calculated in a few different ways:
- In the classical market share formula, market share is determined by the total sales of a particular industry
- Customers are the basis of the customer market share formula, so you must know how many customers are in your market
- A relative market share formula is calculated by taking the market shares of the most important companies in your industry into account
- Market share growth formulas include all three of the above, giving you an overview of your market share over time.
Although sales and customers might seem easier to understand in the offline world, they aren’t so in the online world, as traffic is often a better measurement of what’s happening.
4 real-life examples of calculating market share in Excel are outlined below.
As an example, take the recent launch of a new non-alcoholic beer by beverage company X. Its total sales last year were $60 million. If the non-alcoholic beverage industry has a market size of $550 million, calculate the company’s market share. To do so, just follow the steps below.
📌 Steps:
- First, we need to prepare a dataset based on the above information.
- Now, by applying the following market share formula to cell C7, we can easily get the market share of company X which is 10.91%.
=(C5/C6)*100
Read More: How to Calculate Pro Rata Share in Excel
Take the global sales of mobile phones as an example. A total of 68 million Apple and 76 million Samsung units were sold in Q4 2019. The global mobile phone market sold 430 million units during the same period, according to sources. Based on the number of units sold, determine Apple and Samsung’s market share. For this, we need to follow the steps below.
📌 Steps:
- In the beginning, we have to make a dataset containing the above information in an Excel sheet.
- Now, by applying the following market share formula to cell C9, first, we will calculate the market share of Apple which is 15.81%.
=(C5/C7)*100
- In a similar manner, we get 17.67% of the market share Samsung.
Read More: How to Calculate Percentage Share in Excel
As an example, let’s consider companies A, B, C, and D that make up the whole industry. The total sales of companies A, B, C, and D during FY19 were $60 million, $80 million, $40 million, and $50 million, respectively. Based on the information available, calculate company B’s market share.
In order to do this, just follow the steps below.
📌 Steps:
- First, make the data table based on the above information.
- Now, we need to calculate the total sales in the market. For this, we need to apply the following formula in cell C9, then press ENTER.
=SUM(C5:C8)
- Finally, by applying the following market share formula to cell C11, we will get the market share of company B which is 34.78%.
=(C6/C9)*100
Read More: How to Calculate Dividend Per Share in Excel
In a top-down research study, a street analyst wants to select a company with at least 20% market share in its industry. You can determine which stocks can be shortlisted.
In order to do this, follow the steps below.
📌 Steps:
- First, we need to prepare the following data table based on the above information.
- Now, apply the following market share formula to cell E5. Press Enter.
=(C5/D5)*100
- After that, drag the Fill Handle to the remaining cells.
Finally, we will get the results from which we can shortlist the best market share stocks.
Read More: How to Calculate Share Price Volatility in Excel
💬 Final Notes
You can increase market share in the following ways:
- By lowering prices, you can attract more customers quickly and easily.
- You can also grow your market share by introducing new products and features or by expanding your eCommerce options.
- Building loyalty with customers will prevent them from opting for a competitor if they come up with a discount or an offer. The growth of your company’s revenue can be achieved through referrals and customer satisfaction without increasing your marketing expenses.
- Building new products and features goes hand in hand with appealing to new demographics. Seek out market gaps that your competitors aren’t serving, and take advantage of these opportunities.
- Acquiring companies allows you to tap into their existing customer base and reduce competition.
- You have a better chance of capturing customers if you let them know who you are. You can increase your market share by building brand awareness in your industry.
Download Practice Workbook
You can download the following practice workbook that we have used to prepare this article
Conclusion
In this tutorial, I have discussed 4 examples to calculate market share in Excel. I hope you found this article helpful. Please, drop comments, suggestions, or queries if you have any in the comment section below.
