Hello. In an interview I have been asked whether a company with a market share of 0.4% in a very fragmented market can be considered to have a high market share or not. Especially in an industry where there are thousands of players, and the main player has only a 6% market share. It was a more brainstorming oriented part of the interview. Questions such as these arose from the conversation: What you observe in the example company (with only 0.4% market share), is it representative of the market? That is, if you observe that a product or service demand is growing a lot, can you consider that growth rate as a market rate? If not, from what market share could you make such approximations (approximate the market growth rate by the growth data you observe for the individual company)? What kinds of things at a long-term strategic level do you think you could extrapolate from your company to the market? And conversely, what kinds of things can you extrapolate from the market to your company? I actually thought that when a company has a certain size, what the company observes (demand for a product or service, etc) can be fairly closely approximated by what happens to the market, i.e., if you observe that the company decreases in demand for product A, it is because the market demands it less as well. But I am not sure about this approach and I would like to know how to reason this kind of questions. Thanks.

Hello! I think it´s pretty simple! Just compair their maket share with: The market share from the top 20 biggest players n the industry The # of players in the industry´s long tail And that´s it, simple comparaison! Hope it helps! Cheers, Clara

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Roberto

on Apr 11, 2021

Global

Company demand vs. market demand

Hello.

In an interview I have been asked whether a company with a market share of 0.4% in a very fragmented market can be considered to have a high market share or not. Especially in an industry where there are thousands of players, and the main player has only a 6% market share. It was a more brainstorming oriented part of the interview.

Questions such as these arose from the conversation:

What you observe in the example company (with only 0.4% market share), is it representative of the market? That is, if you observe that a product or service demand is growing a lot, can you consider that growth rate as a market rate?
If not, from what market share could you make such approximations (approximate the market growth rate by the growth data you observe for the individual company)?
What kinds of things at a long-term strategic level do you think you could extrapolate from your company to the market? And conversely, what kinds of things can you extrapolate from the market to your company?

I actually thought that when a company has a certain size, what the company observes (demand for a product or service, etc) can be fairly closely approximated by what happens to the market, i.e., if you observe that the company decreases in demand for product A, it is because the market demands it less as well. But I am not sure about this approach and I would like to know how to reason this kind of questions.

Thanks.

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