By definition, Market share is the measure of a company’s sales or market presence in relation to the wider or overall market. On the other hand, Market voice is a gauge of a company’s capacity to influence the market or shape industry trends. These metrics are widely used by several modern companies but they fail to consider the drawbacks associated with the analysis of these metrics.
Firstly, Market share and market voice data provide a false sense of security to businesses that show a high market share or voice. Businesses of this type fail to take innovation to higher levels, they may not be quick to respond to industry trends, and changing market conditions. Therefore, these companies would become complacent and would not grow and become sustainable in the long term.
It has been argued that these metrics have a short-term focus. Companies that depend heavily on Market share and voice tend to focus more on short-term goals rather than long-term growth.
Furthermore, market share and voice rarely take into consideration crucial factors such as customer satisfaction, profitability, and a company’s efficiency.
Moreover, these metrics are quite often difficult to compare across certain industries. It is obvious that different industries will have unique dynamics and market structures.
Blockbuster is a company that exemplifies the aforementioned challenges or drawbacks. It is widely known that Blockbuster had a large or high market share in the video rental industry but the growing popularity of streaming services like Netflix and others caused the high market share of Blockbuster to drastically decline. Blockbuster was not able to adapt and in 2010 filed for bankruptcy. Despite, Blockbuster’s high market share in the video rental industry, blockbuster’s market voice in the industry was not sufficient to maintain the sustainability of the company as the market changed.
Generally, Market share and Market voice provide valuable insights. However, these metrics have their drawbacks/challenges. Therefore, they should not be the only metrics used to determine or appraise a company’s performance.