If you don’t measure your marketing performance, you can’t improve it.
Marketing metrics are measurements of trends, dynamics and characteristics that can help you focus on more rewarding market opportunities, allocate resources appropriately, and determine the effectiveness of your strategies and tactics.
Market share is the percentage of your company’s sales (in units or revenue) divided by the total sales within a specific market. Its value is apparent when viewed in the context of market dynamics such as market share growth (or decline), market growth (or decline), and relative market share.
Take a market share of 30%. Is this good or bad? It depends. If last year’s market share was 25%, it’s probably good. But if it was 35%, it’s probably bad.
What about next year’s sales forecast of 15% growth? Whether it's good or bad depends on market growth. At 20% market growth, 15% sales growth means you’re losing market share. That’s a problem. 15% growth means you're just holding your own. This may be acceptable in the short-term, but not in the long run. And while 15% sales growth in a market growing by 10% will increase your market share, it means that 33% of your growth depends on capturing competitive market share. This is usually more difficult to achieve than simply matching market growth.
Relative market share is a measure of your company’s market share as opposed to that of your largest competitor. Some studies suggest that companies with high relative market share tend to be more profitable than their competitors. So a 30% market share is good if your largest competitor’s is 15%, but not very good if it’s 50%.
Relative market share and market growth rate are key variables in determining competitive strength and in allocating resources within a company’s business units or product lines. The BCG Matrix developed by the Boston Consulting Group is one of the more popular analytical tools for this purpose.
