Market Share

Maximizing market share has historically been a clear business objective. The main benefit of superior market share is related to cost-market share affects cost in terms of scale and experience. Market leaders are presumed to have lower costs than their competitors as a result of their experience and the scale of their operations. The role of market share in the relationships between service or product quality, customer and employee satisfaction, retention and financial performance is complex. For example, higher market share can mean lower customer satisfaction, which presumably leads to deflated financial performance. The reasoning is mass producers are less able to satisfy customers the way niche players can. This may be true in some cases, but it stands to reason sophisticated corporations that practice market segmentation differentiate their product offerings and have effective marketing communications will be able to satisfy customers despite companies’ dominant market share.