Which statement about market share is true?

• A. Market share is the total market sales.
• B. Market share measures the proportion of total market sales captured by a company.
• C. Market share is calculated as price divided by cost.
• D. Market share indicates brand loyalty.

Answer: (B)

Market share shows how big a company is in its market by representing the portion of total market sales it captures. It’s defined as the company’s sales divided by total market sales, usually shown as a percentage. This helps you see a company’s competitive position and how much of the market it controls. The statement that market share measures the proportion of total market sales captured by a company is the accurate description because it directly reflects the company’s relative size within the market. It isn’t the total market sales itself (that’s the market size), it isn’t a price-to-cost ratio (that would relate to profitability), and it doesn’t by itself indicate brand loyalty (loyalty is about customers’ repeat behavior, not share of sales). For example, if the market totals $200 million in sales and a company sells $40 million, its market share is 20%.