The measurement of the value of a firm's sales revenues as a percentage of the industry total is called

• A. Market size
• B. Market share
• C. Market penetration
• D. Market growth rate

Answer: (B)

Think of market share as the firm's slice of the industry pie. The measurement described is market share, since it compares the firm's sales to the total industry sales and expresses it as a percentage. It is calculated by dividing the firm's sales by the total industry sales and multiplying by 100. This shows how dominant or competitive a firm is within the market and is useful for tracking performance over time or against rivals. For example, if the industry sells 200 million and the firm sells 40 million, the market share is 20%. Other terms have different meanings: market size is the total market value, market penetration refers to how much of the market's potential has been captured, and market growth rate is how fast the market is growing.