There are some things that every long-term investor or stock trader needs to be aware of when investing. Market share is a term that is used across all business sectors, regardless of industry. Investors can use this indicator to gauge the company's strength.
Market share is a company's share of sales in a particular industry. It refers to a product category or individual product. This is the firm's performance relative to its competitors.
Market share is the sum of the firm's total sales and the industry's during a specific period. A company's market share is its driving force. It has a compounding effect. Market share is dependent on how well market segments perform.
Insurance, banks, and other financial services cannot have 100% market share because there is a risk of 100% in BFSI. These companies in the BFSI sector are profitable when they capture the right amount of market share, except for major disasters.
Analysts and investors closely track the changes in the market with data from their own independent sources when evaluating the market share. They evaluate the relative competitiveness and growth of the services or products.
Sometimes, a company can collect too much market share to become a monopoly. In such cases, a firm could be accused of violating antitrust laws. It may be required to sell assets or take other measures to increase competition.
Market share growth is a way for a firm to reach its goals and increase profits. Companies try to increase market share and achieve their goals. Simply put, word-of-mouth publicity increases revenue without increasing marketing expenses.
As an example, let's say that ABC Electronics sold INR 5 Million in Indian televisions during a period in which INR 100 Million in televisions was sold. ABC Electronics has a 5 percent market share. This number is used by companies to assess their strengths and weaknesses in the market, as well as their potential buyers.
Market share = Sales of a company over a specified period
The industry's total sales during the same period
Market conditions can have an impact on the stock performance of a company. Gains and losses in market share will affect the company's stock performance.
No company can compete in the industry with the same annual target if it is not set up.
Remember that a profitable business does not necessarily have a large marketshare in their industry. Profits are directly proportional to Market Share. Before investing in the stock of a company, investors must look at their market shares.