As you can see, the total market share adds to 100%. This point is illustrated in this table which shows a market consisting of three firms only. Important note: Given the construction of the relative market share metric and where it is plotted on the BCG, there can only ever be ONE brand or firm in any market that would have a relative market share greater than one (that is, the market leader only) – with the vast majority of brands or firms in the marketplace having a relative market share of less than one. Remember that the vertical axis of the BCG intercepts the matrix with a relative market share of 1.0, with stars and cash cows being greater than 1, and question marks and dogs being less than 1. Relative Market Share = Firm’s Market Share/Largest Competitor’s Market Shareįor example, if a firm has a market share of 20% and their largest competitor has a 40% market share, then the firm’s relative market share would be 0.5 (that is, 20%/40%).Īs another example, if a firm was the market leader and had a market share of 30% and their largest competitor had a market share of 20%, then their relative market share would be 1.5 (30%/20%) – or 1.5 times the share of the next largest player.The formula for calculating relative market share is as follows: In this way, relative market share becomes a comparative measure of competitive strength. Relative market share is the firm’s (or brand’s or SBU’s) market share as an index of its largest competitor.
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