Market Share is Malarkey

Students, teachers, managers and commentators all love market share.  Many think a reasonable business goal is to increase market share. My only question is: Why?

A reasonable business goal is to make a profit. This will eventually turn into cash which buys nice things. Greed may be a vice but we all get why people seek nice things, they are nice.

Market share is very different to profit. Later I’ll discuss the problems in assuming market share is a proxy for profit and discuss research that warns about chasing share. But for today I will simply ask: Market share, why do you care?

You may have a story you tell yourself. Maybe you assume market share leads to market power that you hope leads to profits. If however you are seeking profits why not discuss future profits while explaining your assumptions? My point isn’t that market share is never an indicator of success, my point is that market share isn’t an end in itself.

The next time someone targets market share press them on why. There may be a kernel of sense but my bet is that there isn’t.

To summarize let me quote from an 1989 Harvard Business Review article.

Chasing market share is almost as productive as chasing the pot of gold at the end of the rainbow. You can never get there. Even if you could, you would find nothing….. Market share is malarkey“. Maybe this is wrong in your specific firm, in your specific industry, in this specific year but at least be prepared to give a well thought out reason why you care about market share.

Read: Bruce D. Henderson, The Origin of Strategy, Harvard Business Review, pages 139-143, November 1, 1989

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  1. rainforest plants April 13, 2013