Understanding Market Share and Size

• Market share is the proportion of sales revenue an organization has within a specific market or industry.
• It is calculated by expressing a company's sales revenue as a percentage of the total sales revenue in the industry.
• The formula to calculate market share % is (Firm's Sales / Total Sales in the Market) * 100.
• Market size must be known to calculate market share.
• Market size can be defined as the total number of customers, the total value of sales revenue, or the number of potential buyers in a market.

Measurement methods of market size

• Potential number of customers for a particular product or service.

• Sales volume, which is the quantity of products sold.

• Sales value (or sales revenue), which is the amount customers spend on the product.

• Number of competitors, indicating the intensity of competition.

• Market share is typically measured by sales revenue value, but it can also be expressed as a percentage of sales volume.

• Increasing market share is a common goal, indicating successful marketing and a competitive advantage.

• The company with the largest market share is known as the market leader.

• Marketing is about identifying and satisfying customer needs and wants in a profitable way.

• Needs are essential for survival (e.g., food, water, shelter).

• Wants are desires beyond necessities.

• Unlimited wants create marketing opportunities.

• Marketing aims to provide the right products at the right prices with effective promotion and convenient distribution.

Market Orientation

• Focuses on meeting the specific needs and desires of customers.
• Prioritizes making products aligned with customer needs over simply selling what the company can produce.
• Such data is gathered using market research.
• Companies use promotional strategies to inform and persuade customers.

Advantages of market orientation

• Increases the likelihood of successful new product launches due to market research.
• Reduces financial risks in product development by focusing on customer needs.
• Helps businesses anticipate market changes and handle new competition.
• Enables quicker responses to market changes through access to latest market information/

Disadvantages of market orientation

• Gathering market research data can be expensive.
• Market research data is often easily accessible to competitors, reducing potential competitive advantage.
• Market research findings may have limitations due to researcher bias.

Product Orientation

• Centers on making products a business knows how to make well.
• Prioritizes research and development (R&D) over market research, and are common with innovative, tech-savvy manufacturers.

Advantages of product orientation

• Can provide firms with a competitive advantage through innovation.
• Can help businesses gain a positive corporate image and strengthen customer loyalty.
• Makes it difficult for competitors to copy products due to a focus on R&D.

Disadvantages of product orientation

• Requires highly skilled and costly staff for innovation.

• It can be risky to ignore changing market demands.

• There is no guarantee that customers will like the final product despite R&D investments.

• The choice between product or market orientation depends on the product's nature.

• Market orientation suits mass-market products.

• Product orientation is better for innovative, high-end products.

• Many businesses use a combination of both approaches in reality.