What is Market Dominance in E-commerce?
Market dominance strategy in e-commerce is a strategy that involves a company using its competitive advantages to gain a greater share of the market. This can include targeted marketing, pricing strategies, product or service innovation, or leveraging customer relationships, among other tactics.
This is done by taking the market share of the top four firms and dividing it by the total market size.
Significance of Market Dominance Strategy in E-commerce Platform
Market dominance is an important strategy for e-commerce platforms as it helps them gain a competitive advantage. The significance of market dominance strategy includes –
- It creates a unique value proposition that appeals to customers, builds strong relationships with key customers and partners, leverages data to gain insights into customer behavior, and develops a comprehensive marketing strategy.
- Market dominance provides e-commerce platforms the resources to remain competitive in the digital economy and stay ahead of their competitors.
Prerequisites to Calculate Market Dominance and How It Works
The prerequisites to calculate market dominance are –
1. Market share: It is the percentage of a market that a firm captures, and it is calculated by dividing a firm’s total sales by the total sales of all firms in the market.
2. Market size: This is the market’s total value for the product or service being sold. It can be determined by calculating the total sales of all firms in the market or by looking at the total value of purchases in the market.
3. Market concentration: This is calculated by taking the top four firms’ market shares and dividing it by the total market size.
Use Case With Market Dominance
Suppose a company ABC uses market dominance strategies to strengthen their product and services compared to their competitors. One of the common measures for market dominance is acquiring market shares. Companies can also obtain market dominance through innovative pricing models that appeal to different types of customers and offer them more value for their money.