Does Market Share Drive Profits For An Organization? Not Always!

Janakiraman Moorthy; Monika Gupta

doi:10.59571/mpi.v2i2.5

Article

Does Market Share Drive Profits For An Organization? Not Always!

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Management Practice Insights

DOI: 10.59571/mpi.v2i2.5

Year: 2024, Volume: 2, Issue: 2, Pages: 59-64

Original Article

Does Market Share Drive Profits For An Organization? Not Always!

Janakiraman Moorthy ¹, Monika Gupta ²

¹ Professor & Chairperson in the Marketing department at SPJIMR.
² Assistant Professor in the Finance and Economics department at SPJIMR.

Correspondence
[email protected]
[email protected]

Received Date:08 April 2024, Accepted Date:20 September 2024, Published Date:15 October 2024

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

CXOs, business heads and general managers are often required to track, report and explain changes in market share. And yet, market share gain may not always result in an increase in profits. This presents twin dilemmas: When does market share matter and is there a right way to measure it? Recent research by Abhi Bhattacharya, Neil Morgan, and Lopo Rego provides valuable insights into these questions. ¹ Our essay illustrates these insights and gives managers a decision-centric approach to reveal under which contexts – business-to-business, business-to-consumer, products or services – market share matters for profits. We also highlight a critical insight about the metric: Share of revenues is a better predictor of profits than unit-based metrics related to market share, potentially impacting your decision-making process

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