Business success is often at the mercy of market trends, especially when it comes to meeting customer demand. This makes it challenging for companies to prepare their operations to maintain profits.
However, by increasing market share, organizations can gain a better foothold in their industry. Therefore, businesses should determine how they can drive sales to improve their market share.
What it Means to Increase Market Share
Market share is the percentage a company controls of the total market for their goods and services. It is calculated by measuring the percentage of sales a business has within its overall industry.
For example, if a business makes $2 million in yearly sales compared to the industry's annual $100 million, they hold a 2% market share.
The higher a business's market share, the better their competitive advantage as they are able to impact market trends. These companies also tend to receive better prices from vendors as they typically place larger orders.
By increasing and monitoring market share, businesses can see how they compare to their competitors and the industry's standards. They can also secure their client base while actively acquiring new customers, protecting their market impact.
5 Ways to Increase Market Share
Increasing market share requires organizations to put more effort into promoting sales. There are many methods businesses can use to improve sales, including-
1. Finding a Niche
Every company should possess benefits that customers can't find elsewhere, whether it's a unique customer experience or the perception that comes with a brand. For example, many people purchase from brands, such as Gucci or Prada, for high-quality goods and the perception of luxury.
Once a business discovers their differentiating characteristic, they can better understand where they fit in the market. This enables companies to effectively market their brand or product lines over similar items to boost revenue.
Marketing teams will need to determine which sales channels and customer approaches yield the best results. Some businesses may have a younger demographic and therefore find more success running social media ads. On the other hand, more established brands may utilize email marketing or commercials.
2. Adapting to the Market
Even the biggest enterprises that have a high market share need to adapt to the market.
For example, PlayStation holds 68% of the home console market share because they have continuously evolved their technology. Ever since 1994, they have been updating their consoles to create sleeker, faster, and more relevant machines. What was once a bulky, connected remote is now a portable, wireless controller.
While PlayStation remains a top competitor in their market, they still have to stay alert to emerging trends and businesses. Companies that fail to recognize upcoming competition could risk falling behind.
3. Engaging Customers
Most customers interact with a company already knowing what they want. Therefore, businesses that take the time to engage customers and ask about their wants and expectations can stay ahead of the curve.
Management can send out surveys to loyal customers to determine their preferences on-
- Customer Service
- Product Lines
- Sales Channels
Customer responses can inform companies of ways to improve their services, products, and market share.
In addition to surveys, businesses can interact with shoppers on social media to gain insights
into reviews, areas of interest, and dislikes. Organizations can even respond directly to consumers to ask questions and address concerns.
4. Considering Acquisition
Businesses can instantly increase their market share by acquiring another company that holds similar views, products, and services. While this requires extensive research and funds, an acquisition provides an immediate boost in market share.
Most companies acquire other businesses to not only gain a larger market share but to expand their customer reach as well. For example, Microsoft now owns LinkedIn and GitHub, opening up revenue lines in social media and cloud operating systems.
However, an acquisition is only effective if the right organization is chosen, or else the business may see little difference in their competitive edge.
5. Prioritizing Customer Satisfaction
While many businesses focus their efforts on acquiring new customers, much work is needed to keep existing clientele satisfied.
For example, Netflix is among the most successful streaming services and yet they are constantly adding new shows, updating their algorithms, and providing new features to keep customers happy. By 2019, Netflix had an impressive 90% market share in the streaming service market.
These innovations have kept Netflix a leader in its industry, even as new services entered the market. By keeping users happy, Netflix was able to convince customers to not switch to competitors.
Therefore, businesses need to proactively improve their customer experience rather than waiting to adapt to trends. By initiating innovations, companies can mobilize market trends instead of reacting to them.