Know-How Exchange : Strategy

Well, the basics are that you divide how much you sell by how much in total is sold to that market segment. The how much is sold in total is the challenging number to find, and is usually an estimate. When I have done this in the past, usually this number was provided by some sort of research group (like Gartner is for some tech industries).

Now, this all said, be very careful about what you calculate and write down. Market share is used internally by a company to determine how well you have penetrated a market, but is also used by government organizations during merger reviews to determine if you are going dominate the market.

There is also a lot of leeway in how you define the total market - for example, is the market for fuel oil only compared with other fuel oil sellers, or also compare to other energy forms (electric, gas, etc.)? The share you get will be vastly different depending on which definition of total market you use. If you at all think you will be involved with acquisitions, you may want to always define your market as pretty broad.

Case in point - I was involved with an acquisition of a company in Korea about 5 years ago. We were very concerned about this, as if the government decided our market was just our product's technology, we would have too high a share and the acquisition wouldn't be allowed. Thankfully, they agreed with our argument that our market included other means of achieving the same end goal and we completed the purchase.

"Fair share" is a fuzzy concept. Your "fair share" is what you have been able to earn with good product and good marketing. Often there's a rough correlation between share of market and share of [advertising] voice, or spending ... but it's only a rough measure.

There is no rule of thumb. Every industry is different, and even within an industry, every product and market segment is different. I'd suggest you not focus on "fair share" and develop strategies for building your business profitably. If you do that, you'll make more money regardless of whether you have a "fair share" or not.