Northwestern Ontario Innovation Centre

What is your Market Potential?

What is your market share?

Market share is your percentage of total sales to a given market. Market share can be measured in unit sales (for example, 225,000 units out of a total market of 1,000,000 units), or in purchasing units (225,000 people out of the total market of 1,000,000 buy your product).

Remember, that the market share presupposes knowledge of the total size of the market, which depends in turn on how you define your target market. Market share information helps you decide whether to enter, abandon, invade, or protect a market niche. As a rule of thumb, a 25 percent market share is dominant and makes you a major player in that market. If you can identify a market niche large enough for profitability, yet small enough to be unattractive to big businesses - and grab 25 percent of that market, you have a winner.

Is the market itself growing, shrinking, or stable?

A declining market may be a good one to bail out of, or may present a terrific niche possibility. A growing market may be an opportunity for you to develop a growing niche. It could also present an enticing market to a large company which could swamp the market.Think ofwhat happened when IBM spotted the success of the microcomputer industry.

Market-share information is one of many factors involved in these kinds of strategic choices. You have to use your judgment. Judgment based on facts beats guesswork.

Knowledge Bank

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