Respond to market change and calculate market share
Interpret changing spending and competition, then calculate a business's percentage of a market.
Section 3 · Marketing
Cambridge IGCSE (9–1) Business 0774, 2027–2029 Version 2, Topic 3. Apply each marketing choice to the stated customers, product and business constraints. Written practice is self-checked and does not certify exam readiness
Before you begin
- No previous marketing study is assumed. Identify the customer group, the business objective and the evidence in each situation before choosing a response.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
How do you calculate revenue market share?
What you will learn
- Explain reasons spending patterns change
- Describe responses to competition
- Calculate market share using compatible data
Markets change for several reasons
Consumer spending patterns may change with income, preferences, prices, availability, technology or confidence. Some markets become more competitive when new businesses enter, products become easier to compare or alternatives improve.
A business may respond by adapting its product, service, price, promotion or distribution. The response should match the cause of change and the business's resources.
Calculate market share carefully
Market share = a business's sales ÷ total sales in the whole market × 100%. Use the same period and the same measure in numerator and denominator, such as revenue with revenue or units with units.
Market share is a proportion, not the number of customers or the business's profit. An increase in share does not guarantee higher profit if price reductions or costs have changed.
Pause and explain
A firm gains market share after cutting its price. What can you conclude?
Worked example
A business sells $240,000 of sports shoes in a market with total sales of $1,200,000 over the same year. Calculate revenue market share.
Show the worked solution
- Use business revenue divided by total market revenue.
- 240,000 ÷ 1,200,000 = 0.2.
- Multiply by 100 to express a percentage.
Answer Market share = 240,000 ÷ 1,200,000 × 100 = 20%.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A bakery has sales revenue of $84,000. Total bakery sales in the area are $420,000. Calculate its market share and show the method.
Give me a hint
Divide the bakery's revenue by total area revenue, then multiply by 100.
Compare my reasoning
- 84,000 ÷ 420,000 = 0.2.
- 0.2 × 100 = 20.
- State the percentage and market measure.
The bakery's revenue market share is 20%: 84,000 ÷ 420,000 × 100.
Look for these in your work
- Correct numerator and denominator
- Percentage conversion
- Measure stated
A market's unit sales rise from 50,000 to 60,000, while one retailer's unit sales rise from 10,000 to 12,000. Calculate both market shares and interpret the change.
Give me a hint
Use unit data in both ratios for each period.
Compare my reasoning
- Earlier share: 10,000 ÷ 50,000 × 100.
- Later share: 12,000 ÷ 60,000 × 100.
- Compare the proportions rather than only the unit totals.
The retailer's market share is 20% in both periods. Its unit sales grew, but at the same rate as the market, so its share did not change.
Look for these in your work
- Earlier share correct
- Later share correct
- Growth distinguished from share change
A firm's market share rises from 12% to 16% after a discount campaign. Explain one positive result and two pieces of evidence needed before calling the campaign successful.
Give me a hint
Share alone does not reveal margins, costs or customer retention.
Compare my reasoning
- The business now accounts for a larger share of market sales.
- Check campaign cost and contribution or profit.
- Check whether customers repeat purchases after the discount.
The firm increased its proportion of market sales by four percentage points. To assess success, compare campaign costs and profit contribution, and check whether customers continue buying after the discount ends.
Look for these in your work
- Change described in percentage points
- Profit evidence requested
- Longer-term customer response checked
Common mistakes
- Mixing unit sales with revenue totals
- Using different time periods
- Assuming more market share necessarily means more profit
What can you explain now?
How do you calculate revenue market share?
Compare with the explanation
Business sales revenue ÷ total market sales revenue × 100%
The numerator and denominator are both revenue.
After trying it yourself, choose your next review. This is your self-assessment.
Your review choice appears on Today. Sign in to sync it across devices.
Make it stick
What must be consistent between the two figures used in a market-share calculation?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.