How is market share defined?

Market share is defined as the percentage of total sales in an industry earned by a particular company. This concept quantifies a company's sales relative to the overall sales of its industry, providing valuable context for understanding its competitive position. By knowing a company's market share, stakeholders can gauge its market dominance, competitive strength, and performance relative to its peers in the same market.

For example, if a company generates $100 million in sales within an industry where total sales are $1 billion, its market share would be 10%. This metric helps businesses and analysts understand how effectively a company is performing compared to its competitors, indicating its ability to capture and hold on to a segment of the market.

In contrast, other choices do not accurately define market share. The total number of customers a company has does not reflect its sales performance compared to the industry; revenue generation does not consider the relative sales volume within the market; and the growth rate of a company's sales provides insights into performance trends but does not measure market share directly. Each of these aspects can influence a company's overall health, but they do not specifically denote market share itself.