What is market share?

• A. The total sales of a market
• B. The profit margin of a product within its market
• C. The number of customers a business serves in a market
• D. The proportion of sales in a total market that a business or product enjoys

Answer: (D)

Market share is the portion of the total market sales that a business or product earns. It shows how much of the market’s sales a company captures and is usually expressed as a percentage. You work it out by dividing the firm’s sales (revenue or units) by the total market sales and multiplying by 100. For example, if the whole market sells £1,000,000 in a period and your company sells £250,000, your market share is 25%.

This concept helps you see a company’s competitive position and track performance over time, and it can be measured by value or by volume. It’s not the overall size of the market (that would be market size), nor is it the profit margin of a product, and it isn’t simply the number of customers served—those could be high or low independent of how much the market as a whole buys from the business.