Sales are rising, new customers are coming in, and yet a company is gradually losing its competitive edge. Those who focus solely on internal metrics fail to recognize whether the market is simply growing faster than their own business. Market share fills this gap : it is the only metric that measures business success not absolutely, but relative to the entire competition, and therefore provides the most honest reflection of one's own market position.
For industrial and B2B companies, this figure has direct strategic consequences: it determines their negotiating power with customers, influences investor valuations, and decides whether an acquisition target is considered attractive. Those who don't know their market share are making investment and sales decisions blindly.
This article provides a clear definition of market share. You will also learn how to calculate absolute market share and the formula for calculating relative market share. Furthermore, this article outlines practical methods for data collection and specific strategies that companies can use to increase their market share and systematically strengthen their competitive position.
Market share definition: The share of a company in the total market volume realized in the market
Market share indicates the percentage of the total realized market volume that a company achieves – that is, the actual revenue generated or the quantity sold by all suppliers. A distinction is made between market share by value (based on revenue in euros) and market share by volume (based on units sold).
Difference between absolute market share and relative market share
It is important to distinguish between related terms: Market volume describes the total realized revenue of all suppliers, market potential the theoretically maximum achievable demand, and market penetration the degree to which this potential has already been exploited. Clearly separating these metrics avoids one of the most common errors in market analysis.
Two key figures are relevant in practice:
Absolute market share
Relative market share
definition
Own sales share of the total market
relationship to the strongest competitor
Result
Percentage
factor
Meaningfulness
Market size
competitive position
Typical use
Reporting, Benchmarking
Portfolio analysis (BCG matrix)
weakness
Ignores competitive strength
Requires competitive data
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For example: A company with a 20% absolute market share sounds strong. But if its main competitor has 40%, the reality is quite different. Anyone who only knows the absolute value overlooks this gap and makes positioning decisions based on flawed information.
Calculating market share: Formula for absolute and relative market share
Both key performance indicators follow a clear formula, but differ in application and strategic significance:
Absolute market share: Company revenue ÷ Market volume × 100. The result is a percentage. It is frequently used for reports and direct competitor comparisons. Example: A company generates €50 million in revenue, the market volume is €250 million → 50 ÷ 250 × 100 = 20% absolute market share .
Relative market share: Own revenue ÷ revenue of strongest competitor. The result is a factor, not a percentage. A value above 1 indicates market leadership. A value below 1 shows the gap to the market leader. Example: Own revenue €50 million, strongest competitor €100 million → 50 ÷ 100 = factor 0.5. In this case, the company is half the size of the market leader.
Relative market share is primarily used in portfolio analysis , for example in the BCG matrix, where it determines the strategic position of individual business units. Absolute market share is frequently used as a key performance indicator (KPI) for reports and for comparisons with competitors. Those who master both formulas can precisely measure market position and make strategic decisions based on reliable data.
Calculating relative market share in 4 steps – from data basis to competitive classification
Step 1 – Define the market precisely / Determine the product, region and time period
To obtain reliable statements about the relevant market share, a clear definition of the product or service under consideration is essential. This forms the basis for later using comparable data, for example, from competitor products, and avoiding comparing apples and oranges. Furthermore, the region of analysis and the relevant time period (e.g., the last calendar year) must be defined to determine comparable values for market volume and the revenue or sales figures of competitors.
Step 2 – Determine your own sales in the defined market
The company's own sales revenue for the relevant product or product group is probably the easiest key figure to determine – controlling or accounting are the right contacts in the company here.
Step 3 – Research or estimate the revenue of the strongest competitor
Determining your own revenue or sales figures is considerably more challenging than calculating those of your competitors. Ideally, your strongest competitors are specialists in the target product under consideration and have no other product lines. In this case, the competitor's total revenue can be included in the calculation. This can be obtained from company databases, annual reports, or press releases. If the market participants are more diversified, a look at the segment reporting in the annual report can be helpful. Sometimes, especially in the B2B sector, there is no alternative but to estimate the competitor's realistic revenue using verified assumptions.
Step 4 – Calculate and interpret relative market share using the formula
Using the formula above for calculating relative market share, you can then calculate your own market share. It's also interesting to consider this dynamically over time to track changes among competitors.
These errors distort the calculation of market share in the industrial and B2B sectors – and how to avoid them
The most common errors in determining relative or absolute market share in the B2B sector are:
An imprecise market definition leads to systematically distorted market share figures. For example, if a manufacturer of labeling machines wants to determine its market share, it must precisely define which sizes, performance ranges, and application areas of the labelers are relevant for analysis. Only then can the right competitors in the market be included in the comparison and the sales or revenue figures of comparable products be determined.
A major hurdle for any entrepreneur or analyst when determining market share is access to reliable revenue or sales figures for competitors. This is where the research expertise of specialized agencies can help. These agencies have access to databases and key sources for market and competitive analysis and possess the necessary knowledge for structured business analysis.
A static analysis of both relative and absolute market share can only provide a snapshot of a market segment or industry. Only a continuous analysis of the strongest competitors and new entrants to the industry ensures that market shifts are recognized in a timely manner and can be incorporated into product development and marketing strategy.
Increasing market share: The most important levers in the B2B and industrial environment
Especially in the B2B sector, our analyses repeatedly show that companies can increase their market share with manageable resources through proactive market development. For example, medium-sized machine manufacturers often lack an active sales presence and fail to fully utilize the potential of targeted acquisition of new customers in established segments. An initial market share assessment can serve as a starting point for identifying and approaching new customers, thereby improving their overall market position. Sales to existing customers can also be boosted through active cross-selling, provided their needs are systematically assessed.
Increased visibility, e.g. in search engines, at relevant industry trade fairs or events in the target industry, can also help to advance business development and improve its market position.
Ultimately, displacement through a better price/performance ratio, expansion of the technical position or targeted increase of market share through Buy & Build (acquisitions of companies) are further approaches to increasing one's own market share.
Conclusion: If you know your market share, you know where you stand and where you can grow.
A structured analysis of market share is the starting point for further measures to secure market position and foster growth. This analysis relies on reliable data, which can be collected through in-house analysis or with the help of experienced analysis partners like MEYER INDUSTRY RESEARCH. Based on the findings, objectives can then be set and concrete measures derived.
Especially in the industrial and B2B sectors, where data accessibility presents a particular challenge, collaboration with a specialist can be worthwhile. A partner can also be helpful when internal resources are limited and there is little in-house experience in analyzing market shares.
MEYER INDUSTRY RESEARCH therefore supports, for example, medium-sized and larger companies from these industries, among others:
We analyze market position and market share, ultimately determining market power. In addition, we regularly work with international companies that want to strategically develop the German or European market with their products and utilize our expertise in expanding their market position. Learn how to commission a market analysis .
A structured analysis of market share is the starting point for further measures to secure market position and foster growth. This analysis relies on reliable data, which can be collected through in-house analysis or with the help of experienced analysis partners like MEYER INDUSTRY RESEARCH. Based on the findings, objectives can then be set and concrete measures derived.
