Question

Why might it be difficult to measure success using market share?

Answer 1

Measuring success using market share can be difficult for several reasons:

Market growth: Even if a company's market share remains the same or increases, it does not necessarily mean the company is successful. This is because the overall market might be growing, and other companies may be gaining market share at a faster rate. So, even though a company's market share might increase, its actual sales and revenue might be decreasing.

Market saturation: In mature markets, it may be challenging for a company to increase its market share significantly. This is because the market is already saturated, and there is limited room for growth. In this case, measuring success based solely on market share may not be an accurate representation of a company's success.

Fragmented markets: In fragmented markets with many small competitors, market share might not be an accurate measure of success. This is because a company's market share might be small, but it could still be profitable and successful.

Different market segments: A company might have a large market share in one segment of the market but be relatively insignificant in another segment. In this case, measuring success based on overall market share might not provide an accurate picture of the company's success in specific segments.

Price competition: A company might increase its market share by lowering prices, but this strategy might not be sustainable in the long term. In this case, measuring success based on market share might not be an accurate reflection of the company's profitability or overall success.

Therefore, while market share is an essential metric for companies, it should not be the sole measure of success. Other factors such as profitability, customer satisfaction, and brand reputation should also be taken into account when measuring success.

Answer 2

Answer: Certified answer

Explanation: Measuring success using market share may be difficult for several reasons. One reason is that market share does not take into account the profitability of a business. A company may have a high market share but still have low profitability due to high costs or low margins. On the other hand, a company with a low market share may be highly profitable due to low costs and high margins.

Another reason why market share may not be a reliable measure of success is that it does not consider the size of the market itself. A company may have a high market share in a small market but still have lower revenues and profits than a company with a smaller market share in a larger market.

Moreover, market share may not account for other important factors such as customer satisfaction, brand reputation, and innovation. A company with a high market share may be losing customers due to poor customer service or a negative brand reputation, which could lead to a decline in future sales.

Finally, market share can be affected by external factors such as changes in the market or economic conditions, which can make it difficult to maintain or increase market share even if a company is performing well in other areas.

Therefore, while market share can be a useful indicator of a company's competitive position, it should not be the only measure used to assess success.