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Encyclopedia > Market dominance

Market dominance is a measure of the strength of a brand, product, service, or firm, relative to competitive offerings. There is often a geographic element to the competitive landscape. In defining market dominance, you must see to what extent a product, brand, or firm controls a product category in a given geographic area. Wikibooks has more about this subject: Marketing A brand is a collection of images and ideas representing an economic producer; more specifically, it refers to the concrete symbols such as a name, logo, slogan, and design scheme. ... In economics and marketing, a service is the non-material equivalent of a good. ... It has been suggested that The Firm be merged into this article or section. ...


Calculating

There are several ways of calculating market dominance. The most direct is market share. This is the percentage of the total market serviced by a firm or brand. A declining scale of market shares is common in most industries: that is, if the industry leader has say 50% share, the next largest might have 25% share, the next 12% share, the next 6% share, and all remaining firms combined might have 6% share. Market share, in strategic management and marketing, is the percentage or proportion of the total available market or market segment that is being serviced by a company. ...


Market share is not a perfect proxy of market dominance. The influences of customers, suppliers, competitors in related industries, and government regulations must be taken into account. Although there are no hard and fast rules governing the relationship between market share and market dominance, the following are general criteria:

  • A company, brand, product, or service that has a combined market share exceeding 60% most probably has market power and market dominance.
  • A market share of over 35% but less than 60%, held by one brand, product or service, is an indicator of market strength but not necessarily dominance.
  • A market share of less than 35%, held by one brand, product or service, is not an indicator of strength or dominance and will not raise anti-combines concerns of government regulators.

Market shares within an industry might not exhibit a declining scale. There could be only two firms in a duopolistic market, each with 50% share; or there could be three firms in the industry each with 33% share; or 100 firms each with 1% share. The concentration ratio of an industry is used as an indicator of the relative size of leading firms in relation to the industry as a whole. One commonly used concentration ratio is the four-firm concentration ratio, which consists of the combined market share of the four largest firms, as a percentage, in the total industry. The higher the concentration ratio, the greater the market power of the leading firms. A true duopoly is a form of oligopoly where only two producers exist in a market. ... In economics, the concentration ratio of an industry is used as an indicator of the relative size of firms in relation to the industry as a whole. ...


Alternatively, there is the Herfindahl index. It is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them. It is defined as the sum of the squares of the market shares of each individual firm. As such, it can range from 0 to 10,000, moving from a very large amount of very small firms to a single monopolistic producer. Decreases in the Herfindahl index generally indicate a loss of pricing power and an increase in competition, whereas increases imply the opposite. In economics, the Herfindahl index is a measure of the size of firms in relationship to the industry and an indicator of the amount of competition among them. ... In economics, a monopoly (from the Latin word monopolium - Greek language monos, one + polein, to sell) is defined as a persistent market situation where there is only one provider of a product or service. ...


Market dominance strategies

Market dominance strategies are marketing strategies which classify businesses by reference to their market share or dominance of an industry. Strategy serves as the foundation of a marketing plan. ... Market share, in strategic management and marketing, is the percentage or proportion of the total available market or market segment that is being serviced by a company. ...


See also


  Results from FactBites:
 
Market dominance strategies - Wikipedia, the free encyclopedia (1143 words)
Market dominance strategies are marketing strategies which classify businesses by reference to their market share or dominance of an industry.
Market dominance is a measure of the strength of a brand, product, service, or firm, relative to competitive offerings.
It was claimed that if you cannot get enough market share to be a major player, you should get out of that business and concentrate your resources where you can take advantage of experience curve effects and economies of scale, and thereby gain dominant market share.
Microprocessor - Wikipedia, the free encyclopedia (3102 words)
From their humble beginnings as the drivers for calculators, the continued increase in power has led to the dominance of microprocessors over every other form of computer; every system from the largest mainframes to the smallest handheld computers now uses a microprocessor at its core.
Following up their 8086 and 8088, Intel released the 80186, 80286 and, in 1985, the 32-bit 80386, cementing their PC market dominance with the processor family's backwards compatibility.
Market forces have "weeded out" many of these designs, leaving the PowerPC as the main desktop RISC processor, with the SPARC being used in Sun designs only.
  More results at FactBites »

 
 

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