Market Dominance
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
7% share. 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.
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.
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