# Market dominance

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.

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 7% share.

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.

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.

Examples

Here are some examples of a market dominant products:
* Adobe Flash [98%: NPD [http://www.macromedia.com/software/player_census/npd/ study] ] 99.3%: Millward Brown survey, conducted June 2007. cite web |url=http://www.adobe.com/products/player_census/flashplayer/ |title=Flash Player Statistics |accessdate=2007-06-18 |author= |authorlink= |date= |year= |month= |work= |publisher=Adobe Systems |pages= |archiveurl= |archivedate= |quote= ]
* Microsoft Windows [ [http://www.linuxworld.com.au/index.php/id;940707233;fp;2;fpid;1 LinuxWorld ] ] [ [http://www.w3counter.com/globalstats.php W3Counter - Global Web Stats ] ] [ [http://marketshare.hitslink.com/report.aspx?qprid=8 Market share for browsers, operating systems and search engines ] ] , Microsoft OfficeFact|date=April 2008
* Intel personal computer processors [ [http://uk.reuters.com/article/technologyNews/idUKL1730607220080718?pageNumber=2&virtualBrandChannel=0 EU files new competition charges against Intel | Technology | Reuters ] ]
* Cisco Ethernet switching [ [http://www.forbes.com/2004/11/17/1117automarketscan06_print.html Forbes.com: Cisco Gains Market Share In Ethernet Switching ] ]
* Dolby audio technologies
* ARM mobile phone chips [ [http://techon.nikkeibp.co.jp/NEA/archive/200204/177680/ [Cover Story ARM CPU Core Dominates Mobile Market - Nikkei Electronics Asia - Tech-On! ] ]

ee also

* Dominance (economics)
* Market power

References

Wikimedia Foundation. 2010.

### Look at other dictionaries:

• market dominance — Under UK and EU law, businesses who are in a dominant position in a particular market must be careful to avoid accusations that they are abusing that dominant position. Dominant under EU law (Article 86 of the Treaty of Rome) means being able to… …   Law dictionary

• Dominance (economics) — For other uses, see Dominance. For the game theory, see Strategic dominance. Marketing Key concepts …   Wikipedia

• Dominance — may refer to: Dominance (C++), an aspect of virtual inheritance in the C++ programming language Dominance (economics), in economics, the degree of inequality in market share distribution Strategic dominance, in game theory, when one strategy is… …   Wikipedia

• dominance — UK US /ˈdɒmɪnəns/ noun [U] ► the situation in which one company, product, etc. has more power, influence, or success than others: »The ability of a firm to set or control market prices is a sign of dominance …   Financial and business terms

• Market power — Competition law Basic concepts History of competition law Monopoly Coercive monopoly Natural monopoly …   Wikipedia

• Market concentration — In economics, market concentration is a function of the number of firms and their respective shares of the total production (alternatively, total capacity or total reserves) in a market. Alternative terms are Industry concentration and Seller… …   Wikipedia

• dominance — noun ADJECTIVE ▪ absolute, clear, complete, overwhelming, total ▪ growing, increasing ▪ cultural, economic …   Collocations dictionary

• Market research — Marketing Key concepts Product marketing · Pricing …   Wikipedia

• Market segmentation — Marketing Key concepts Product marketing · Pricing …   Wikipedia

• dominance — noun (U) the fact of being more powerful, more important, or more noticeable than other people or things: military dominance (+of): Japan s dominance of the market …   Longman dictionary of contemporary English