How is relative market share calculated?

Relative market share is calculated by dividing the firm's absolute portfolio market share by the leading competitor's market share. This metric is essential in determining a company's competitive position within its industry. By comparing your market share to that of the top competitor, you gain insights into your performance relative to the most significant player in the market.

This method emphasizes the firm's position in relation to its most formidable competitor, offering a clearer perspective on its standing and potential strategic advantages or disadvantages in the marketplace. A higher relative market share indicates a more dominant position and often correlates with better market power and profitability.

Focusing on the leading competitor ensures that no matter the overall market size or dynamics, the analysis remains relevant to the actual competition faced by the firm, providing a more accurate reflection of the business's competitive strength.