What is a market leader? Definition and meaning
The market leader is a company or country that has the highest sales of a specific product in the market. The market might be a country, region, or the whole world.
The market leader is in first place, while a market leader is among the top four or five.
The market leader contrasts with the market challenger, which is a company that tries aggressively to expand its market and get higher up in the leadership league table.
Example of market leader by country: Saudi Arabia produces 11.73 million barrels of oil per day, making it a market leader in oil.
Example of market leader by company: Coca-Cola Co. has 48.6% of the global carbonated beverages market, followed by PepsiCo Inc. (20.5%). This means Coca-Cola is the market leader, while PepsiCo is a market leader.
“Innovation distinguishes between a leader and a follower.” (Steve Jobs)
There are several ways market leadership is measured. Some league tables list companies or countries according to total value of sales, while others calculate according to total units sold (volume).
According to the Macmillan Dictionary, a market leader is:
“A company that sells more of its products than any other company of its type.”
Market leaders have a dominant position
Market leaders can use their dominant position to shape the competitive landscape and influence the direction the market takes.
Co-founder of IT giant Apple Inc. Steve Jobs (1955-2011), says companies aiming to become market leaders should:
– Own and control the relevant technology in their specialized market. This should be done either by the use of patent or other proprietary protections.
– Immediately adopt and implement the best technologies, as soon as they become available, regardless of whether rivals and other organizations are using them.
This image contains the logos of some global market leaders in their field of business.
– Be a pioneer, i.e. the first to create a category for a product or use a technology. Then, make that the industry standard.
Some analysts say that a market leader can only be classed as one when it has shown its ability to sustain its profitability through changes within the market sector and shifts in the general economy. Market sector is part of an economy that covers a wider area than an industry.
A country may be classed as a market leader if it has several leading companies that focus on a market sector. Focus.com wrote in August 2015 that the UK has become the market leader in tidal energy solutions. This, the author wrote, has been the result of a joint effort from regulatory, technology, funding and infrastructure stakeholders turning the tide.
Video – Are you a market leader, challenger or follower?
In this video, Ian Johnson explains the importance of being a market expert and then deciding whether to lead, challenge or follow your market.