Definition: Share of Market (SOM) represents a company's portion of total sales in a particular market or industry over a specific time frame. It is a key performance metric used to gauge a company's competitiveness and market standing against its competitors.
Calculation: SOM is calculated by dividing a company's sales volume or revenue by the total sales volume or revenue of the market. It is usually expressed as a percentage. The formula is: SOM = (Company’s Sales / Total Market Sales) × 100.
Importance: Understanding SOM helps businesses assess their market position, strategize growth opportunities, and allocate resources effectively. A higher SOM indicates stronger market dominance, brand recognition, and consumer preference, while a lower SOM may suggest the need for strategic adjustments.
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