How to Increase Market Share with Surveys

Companies that want to achieve brand leadership must evaluate and work towards increasing their market share. Businesses with a large market share yield larger profits and brand equity, granting them instant recognition and household name status.  

While elevating market share may be the objective of many businesses, it is often difficult to come by, especially for startups and smaller companies. Small businesses are particularly at risk, as 20% of small businesses fail within their first year. 

A significant market share prevents business failure, while a shrinking market share can lead to bankruptcy in the worst cases. Thus, it is in the best interest of businesses to assess and attempt to grow their market share, as it will help them achieve recognition and increase profitability.   

This article explores the concept of market share, its importance, calculation and how market research, particularly surveys, help increase market share.

Understanding Market Share

Market share refers to the portion of a market that an individual company controls. Specifically, it is the percentage of total sales generated by a particular company in an industry. 

This metric is calculated by factoring in a company’s sales over a period of time along with the total sales over the same period. Market share is typically assessed over a year or quarter. (The formula and explanation are in a below section).

This calculation provides a general idea of the size of a company in relation to its market and its competitors. A company with the largest market share is considered a market leader in its industry. These companies tend to be well-established brands with a strong brand equity and consumer loyalty. 

Market share shows a business’s monetary standing and its portion of dominance within an industry. As such, it shows how it measures up against other businesses in its market. To increase market share and outperform competitors, a business would need to earn more sales, those that exceed the sales of competitors.

The Importance of Market Share

It is important to keep track of market share in order to understand how a business fares in its overall market and how it performs compared to its competitors. Additionally, growing market share begins with analyzing it.

Businesses of all sizes should aim at scaling their market share, as a higher market share gives companies a competitive advantage. This is because companies with higher shares yield higher buying power, allowing them to save money by receiving better prices from their vendors. 

This is made possible by making larger order volumes, something businesses with high market shares engage in, as larger market shares reveal a higher demand for their products or services. 

As such, an increased market share works in parallel with larger production, and greater production lessens a company’s cost of producing an individual product. This is due to the economies of sale.

Additionally, the market share metric is a measure of market competitiveness, allowing business owners and executives to forecast market growth and reduction. It indicates whether a business is poised for success or needs to strategize more on avoiding market declines. 

It allows businesses to gauge their market potential and focus on improving their standing. Moreover, it is a critical measurement to be used in tandem with studying customer behavior, as it places it in perspective with a business’s market performance.

When businesses increase their market share, they essentially wield a larger slice of the market; a high-performing business will see increases in its market share quicker than its competitors. It is critical to mark down changes to a market share — these include both changes in a business’s own market share and those of its competitors. 

This is because, in stable markets, changes in share distribution can distort the well-balanced market forces. In growth markets, however, changes are expected and are less consequential.  

Despite the dynamics of a market, increasing market share is crucial for businesses to grow their company. Thus, a larger percentage of the market yields higher sales and revenue.

How to Calculate Market Share

This metric follows a fairly simple calculation. Market share is calculated with only two variables: a company’s sales within a certain time period and the total sales within an industry during that same time period. 

To calculate market share, you need to divide a company’s total sales over a specific time period, such as a quarter, by the total sales of its industry within that period. The result is your market share for that time period. 

The Market Share Formula

The following displays the simple calculation of the formula:

Market share (MS) = Total sales (S) / Total industry revenue (R)  X 100

The following is an example of a business’s market share for one year:

S= 900,000

R= 100,000,000

MS= 900,000 / 100,000,000 = 0.009

MS= 0.009 x 100 = 0.9%

MS= 0.9%

However, businesses can also calculate their relative market share, the measure of a business’s share in comparison to a specific market competitor or market leader. In this case, you would need to have measured your market share already, as it is one of the variables.

Divide your market share by that of the relevant rival. The formula is as follows:

Relative Market share (RMS) = Individual market share (MS) / Largest industry market share (LMS) X 100

How to Grow Your Market Share

Growing a business’s market share relies on a multitude of factors and strategies. Business owners and marketers must apply all of these methods and more to successfully increase their market share. 

These methods also help businesses improve across various functions, making them useful contributors to overall business success. 

Marketing and branding

Marketing and branding campaigns help businesses improve on a wealth of KPIs. These functions drive demand, awareness and grow a digital following. Branding is one of the many branches of marketing and it is essential for long-term success. 

Reduced prices

Price reductions and their various offshoots (promotions, holiday specials, etc.) have long been trusted methods to draw more sales. This allows businesses to beat the prices their competitors offer, luring in new customers before using regular prices again. 

Nurturing and Retention

Nurturing customers leads to customer retention, as it allows businesses to be fresh on the minds of their target market. There are numerous ways to do this, such as via email marketing, newsletters, a content subscription, social media, ads and more, such as follow-up calls. This creates relationships with customers, the kinds that nurture them to continue patronizing the company — thus helping raise its market share.

New Features, Products and Services

Creating new offerings helps a brand stay relevant and opens the door for more revenue and sales pools. Many major companies profit off of their innovation, such as Apple, which annually offers new products and product upgrades. 

Acquisition

Acquiring the competition not only removes a competitor as a threat to a business, but also gives a business all of the acquired company’s sales, revenue and shares. Mergers and acquisitions grant businesses a major growth spurt and all the assets from its acquired company, directly increasing their market share.  

How Surveys Help Increase Market Share

Surveys are a prominent market research method, especially the online survey variety, which connects businesses with the masses, including with those in their target market.  

Surveys allow businesses to access the minds of their customers, showing them how to better serve and market to their target market. Surveys also allow companies to uncover the makeup of their target market via market segmentation and identifying customer personas. 

Studying the needs, desires, opinions, sentiments and aversions of your target market is an absolute necessity for businesses. In fact, 14% of businesses fail due to not paying attention to their customers’ needs. Those that do are more equipped to acquire new customers and retain existing ones. 

Surveys allow brands to be data-driven, providing a tried and true method for obtaining data for decision-making. 

Surveys also have the capability to influence customers’ purchasing decisions. This is especially true if a brand inserts its name and offerings into its survey. Or, it can pinpoint customer pain points and the lack of other companies’ means of correcting them. 

Surveys enable businesses to ask any questions they seek, thereby bringing them answers they wouldn’t otherwise find from conducting secondary research alone. They are superior to other primary research methods, as they are completely anonymous and lessen the pressure of respondents to answer in a particular way.

As such, survey research makes businesses well-attuned to their customers, allowing them to market to, nurture and communicate with them more effectively. In turn, their performance will improve, raising revenue and therefore their market share.

Netting a Larger Slice of the Market

Businesses of all sizes must assess and work towards increasing their market share, as it represents the portion of a market that an individual company controls in relation to the overall market. 

It helps businesses understand their market standing in comparison to their competitors and predict growth and declines. A larger market share lets businesses increase their capacity and efficiency.

In order to evaluate and grow market share, businesses ought to conduct survey research. However, they must use the correct online survey software. 

A strong online survey platform offers a plethora of capabilities and extracts only the most quality data. 

Such a platform should offer full customization of the screener and questionnaire, deploy the survey to targeted individuals in a massive publisher network, offer filtering data after the survey completes all of its quotas and use artificial intelligence to perform quality checks that remove poor quality data.

This kind of platform provides the most useful customer data, allowing a business to make headway to its market share.