STUDENTS' CORNER - 67
In the last session, we ended up saying that we shall try to know how production planning helps the company in achieving its projected market share.
We have to begin with what is market share. The market share of a company refers to the total sales of the company in relation to the total sales in the whole market in which it operates. Suppose a company sells 12,000 shirts a year and the total shirts sold in the market happen to be 120,000 shirts, then, the company’s market share is 10%.
Market analysts carefully watch the market share of the company as whether it goes up or it slides down. Market share of a company has a lot to say to the experts. First, it tells the experts the relative competitiveness of the company. Let us say, for example, another company ‘B’ has been able to sell 36,000 shirts a year thereby claiming 30% of market share, it tells the experts that the company ‘B’ has found it possible to withstand competition and grab about 30% of the total market share. To reach this level of effective competitiveness, the company must have adopted effective marketing strategies which were ably supported by adequate finance of the company. The management has been so efficient that it could keep its workforce focused on the market share of 30%. The company which could sell only 12,000 shirts could not compete with the other company possibly because of many reasons like lack of marketing plan and consequent marketing force and so on. Thus, a market share of the company indicates the very strength and the weakness of the company.
Logically, when a market share of a company increases means, it is fighting competition in a tougher way and successfully at that. It is able to get more customers to buy its products. It sells more shirts this year by about another 4000, thus selling about 16,000 shirts this year. Its revenue has increased. Investors know that the company is becoming more efficient in marketing and therefore achieving a higher target of sales volume. The value of the company grows and therefore its market standing grows and the value of its shares begins to ascend.
The efforts to improve market share must be cautiously backed by the production planning. They must correlate with each other lest either production exceeds the market share or market share suffers for want of supply to match it.
The company must take all steps to increase its market share. In a way, increasing market share must remain on the constant agenda of the company since its efforts involve the fundamentals of the market like customers’ choice, the effective pricing policy, efficient marketing personnel and vigilant finance.In our next session, we shall see how a company can try to enhance its market share.