Why is market share important?
Market share is a way to benchmark your sales to determine your position among the competition. Benchmarking is important because it can help you find opportunities to create successful marketing campaigns or communicate better with customers, identify gaps, understand your competitors, and increase sales.
Market share fluctuates regularly. New businesses join the market all the time, while those who were the first to the market have become the most well-known brands. In any case, knowing your market share can benefit your business in several ways.
Most importantly, knowing if you have a high market share can help you determine whether you can scale and become more profitable, allowing you to increase sales. Higher market share also impacts customers since they're more likely to purchase products and services from well-known companies.
Being a leader in market share allows you to dominate your industry and take risks with bigger rewards. For instance, you can innovate in ways other brands can't because you have more market share and more profits to spend on innovation.
However, while you want as much market share as possible, you don't want too much market share. For instance, if you have 80 -100% market share and consumer behaviors change, it could affect your sales and profits.
Instead, decide how much market share you want. There are costs associated with building and maintaining market share; the more market share you have, the more expensive it will be to preserve because all your competitors will be trying to knock you out of first place.
How to maintain market share
Market share changes for many reasons, including those beyond your control, like economic conditions. However, you can maintain or increase your market share by following these tips:
Focus on innovation
Innovation is at the forefront of the most successful businesses today and can help you increase your market share. By using technology to create unique products and services, you can bring something new to the market your competitors can't. This allows you to solve customer pain points with new products they can only get from you.
Innovative companies have loyal customers and become the most trusted market leaders because they were the first to do something.
Research the competition
If you currently have a low market share or aren't the market leader, you can maintain your market share by researching your competition. What are they doing differently to attract customers? You might find they have lower prices, better quality products, or they invest more into certain initiatives than others.
Strengthen customer relationships
It's much more cost-effective to sell products to individuals that already know your brand. Maybe they've already purchased a product from you or engaged with your social media posts. Whatever the case, strengthening your customer relationships can help protect your existing market share regardless of economic factors.