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tareq
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How to Calculate the Relative Market Share in BCG Matrix?
In one of my company products' portfolio we are the market leader and have 92% of the market share (the second largest company has only 6%).
To calculate the relative market share based on the BCG matrix, we need the market share and the largest competitor market share.
Should I put our market share percentage (92%) as the largest competitor market share or shall I indicate the largest competitor's share (6%) as the largest, please help.
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Satish Bankal
Strategic Management Consultant, India
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Determining the Relative Market Share in BCG Matrix Hi Tareq, in order to compute your company’s relative market share (since your company has the leading market share) you need to divide your market share (92%) by the second largest market share company (6%). Here your relative market share would be 92% / 6% = 15.333. Also your largest competitors relative market share would be 6% / 92% = 0.06521.
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Jaap de Jonge
Editor, Netherlands
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Calculating the Relative Market Share Position in BCG Matrix With the BCG Matrix, a multidivisional organization is able to manage its portfolio of businesses by examining the relative market share position and the industry growth rate of each SBU (~division) relative to all other divisions in the organization.
In my opinion, rather than what @Satish Bankal said, "Relative Market Share" position is always defined as: the ratio of an SBU own market share in a particular industry to the market share held by the largest rival firm in that industry.
In other words, in a formula:
Relative Market Share = Own Market Share / Largest Competitor Market Share
Remarks:
- You can use both percentages or absolute revenues in the above formula, it will give the same results.
- As a result of this formula, you will always find relative market shares between 1 and 0, because:
- If an SBU is NOT the market leader in a market, you will find a relative market share between zero and 1.
- If an SBU is the market leader, its relative market share is always exactly 1.
Example Relative Market Shares in the ketchup market/industry:
Suppose our ketchup market looks like this:
| COMPANY | MARKET SHARE IN 2015 |
| Company A | 22% |
| Company B | 17% |
| Company C | 14% |
| Company D | 13% |
| Company E | 10% |
| Other companies | 24%
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The relative market share of Company C in the ketchup market is: 0.14 / 0.22 = 0.64.
The relative market share of Company A in the ketchup market is: 0.22 / 0.22 = 1.
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Siti Nur Asyikin
Student (University), Malaysia
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How to Calculate the Relative Market Share and Industry Growth Rate in BCG Matrix? How to calculate the relative market share and industry growth rate if the only information available is revenue and profit?
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