Relative Market Share Definition
Relative market share is a company’s market share compared to the total market size. The total market size is the sum of all the companies’ market shares in the industry. Relative market share can be expressed as a percentage or as a ratio.
A company with a relative market share of 50% has half the market share of the industry. A company with a relative market share of 2% has one-twentieth of the market share of the industry.
A company’s relative market share can change over time. If the company’s absolute market share increases, its relative market share will increase. If the total market size increases, the company’s relative market share will decrease.
A company’s relative market share is an important metric because it shows how successful the company is at competing against other companies in its industry. It is also a good predictor of future success. Companies with high relative market shares tend to be more profitable and grow faster than companies with low relativemarket shares
