The market share

Now the share of the market or market segments must be determined. A general division into three categories can be made:

- market share less than 10%: the product category is called marginal
- market share between 10% - 25%: category is average
- market share above 25%: the category is leader

The relative market share
This is the relative proportion between your turnover (in volume and/or currency) and the turnover of the largest competitor. For example: you have sold 50,000 units and the competitor 100,000 units, your relative market share is 0.5.

Market share development
The development of market share (increase, stable, decrease) is also important for the assessment of the competitive position.

The market share is one of the most important factors on determination of profit. On average 10% more market share increases the net profit before tax with 5%.

The market potential

This is the number of user units in a designated area who are capable and willing to fulfill a certain need by purchasing a certain product. The size of the market potential is primarily determined by:

- the number of needs a product fulfills
- the number of organizations/families/inhabitants in a designated area
- the attitudes of the decision makers
- the financial position of the real and the potential users in the designated area

Market penetration = the number of user units from the market potential who already have or use the designated product.

Real demand = the number of units of a certain product that is sold (or will be) sold in a certain timespan.
Potential demand = the number of products that could be sold in the market when using an optimal marketing mix. This amount is determined by the size of the market potential.