Trading CFDs involves a significant risk of loss that may not be suitable for all investors. Please ensure you fully understand the risks and take appropriate care to manage your exposure.

Trading CFDs involves a significant risk of loss that may not be suitable for all investors. Please ensure you fully understand the risks and take appropriate care to manage your exposure.

How Companies Can Increase Their Market Shares

Market shares represents the percentage which a company controls the total market for its products. It’s measured in two ways:
  • Through the percentage of sales of the company in relation to the total industry. For example, if the company has $2million in annual sales while the total industry sales is $100 million, then it’s market share is 2%.
  • Percentage of units. When a company sells 100,000 units annually and the industry’s total units sold were 10million annually, then the market share of the company is 1%.
Increasing their market shares puts a company at a vantage point and ultimately increases its competitive advantage. Having a higher market share also postures a company to better prices from suppliers and increases their buying power. This is because of their large volumes of orders. Another advantage of having a high market share is the economies of scale. When a company has a high marker share, it means that the client base is large. The number of units that have to be produced goes up. This results in large scale production which in the long run decreases the companies cost of producing a single unit. So what strategies could companies use to increase their market shares?

Innovation

This entails coming up with new technology and introducing it to the market. This technology should be top notch and unique. Consumers will notice the new technology and flock to you to buy it. They might even cease doing business with the competitor of the company just to benefit from their new technology. Such a company will have a large base of loyal customers who were previously customers of other companies. This has the effect of increasing their market share while decreasing the market share of other companies whose customers defected.

Fostering Customer Relationships

A customer who is satisfied is more likely to be loyal. He/she may also share their positive experience with friends and family, thus winning the company new customers. It pays for companies to foster good customer relations! The competition out there is sure real. With the frequent promotions and hot offers that are being placed every day, customers can be swayed to the competitor's side in a jiffy. Strengthening customer relations is essential as it serves to increase market share and also safeguarding against losing market share to competitors.

Market Segmentation

This is a strategy that enables a company to gain market share and also build its shares. Most companies tend to focus on mass markets as opposed to fringe markets. The neglect of such small and fringe markets leaves them open to competitors. They might leverage on the under satisfaction of these markets and gain considerable market share; which was supposed to be yours in the first place. Thus, companies ought to segment their markets and give attention to fringe markets as a means of increasing their market share.

Creative Distribution

The method through which a company distributes its products can have a bearing on the market share. The premise here is devising a way in which the company will cover more ground in an effective and efficient manner. There are examples of companies who employed door to door selling rather than renting out retail stores. Other companies used means such as unconventional retail outlets that were not related to their product. For example, selling a wristwatch in a drug store. All these had the effect of increasing market share of the respective companies since they expanded their outreach.

Acquiring a Competitor

At times, the inevitable has to happen. When the competition is too stiff, acquiring your competitor can be a smart move. This is because you get to acquire the competitor's customer base, and also you get to reduce the number of firms that are fighting for customers in the industry. This ends up increasing your market share. In conclusion, the above are proven ways in which companies have increased their market shares. They can be applied singly or together depending on the objectives and preferences of individual companies.

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