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Measurement of market share and market growth

Business Studies Notes and

Related Essays


 A Level/AS Level/O Level

Your Burning Questions Answered!

Discuss the various types of markets and their key characteristics.

Explain the different methods for measuring market share and their strengths and weaknesses.

Analyze the factors that influence market growth and their implications for business strategies.

Evaluate the role of market research in understanding market share and market growth.

Discuss the ethical considerations related to measuring and using market share data.

Markets, Market Share & Market Growth: The Big Picture

Imagine the world as a giant marketplace, filled with buyers and sellers. This giant marketplace is what we call a market. It's where businesses compete to sell their products and services, and customers choose what they want to buy.

Let's break it down:

1. What are markets?

-Markets are not just physical places like supermarkets or shopping malls. They're broader than that. A market is any place where buyers and sellers interact to exchange goods or services.

-Markets can be local, national, or even global, depending on the scope of the products or services being sold.

-Examples: The market for smartphones, the market for electric cars, the market for online gaming.

2. Measuring Market Share:

-Market share is a company's portion of the total sales in a specific market. Think of it as a slice of a pizza, with each slice representing a different company's share of the market.

-Formula: (Company Sales / Total Market Sales) 100

-Example: If a company sells $10 million worth of smartphones in a market where total sales are $100 million, its market share is 10%.

-Why is market share important? It tells businesses how competitive they are, how strong their brand is, and if they need to adjust their strategies.

3. Measuring Market Growth:

-Market growth measures how much a market is expanding over time. It can be calculated by measuring the change in total sales volume between two periods.

-Formula: (Change in Total Sales / Original Total Sales) 100

-Example: If the total market sales of smartphones grew from $100 million to $120 million in a year, the market growth is 20%.

-Why is market growth important? It shows businesses the potential for growth, whether they should invest in a market, and how much competition they can expect.

4. Real-World Examples:

-Smartphones: The smartphone market is highly competitive with several major players like Apple, Samsung, and Google. Each company tries to increase its market share by introducing new features, improving design, and offering competitive pricing.

-Streaming Services: The streaming market is experiencing rapid growth as people shift away from traditional TV. Netflix, Disney+, and Hulu are all battling for market share and trying to attract new subscribers. This growth is attracting new players, leading to even more competition.

-Electric Vehicles: The electric car market is booming as more consumers look for environmentally friendly options. Tesla has a large market share, but other manufacturers like Ford, Volkswagen, and General Motors are entering the market aggressively. This rapid market growth is driving innovation and pushing the boundaries of technology.

5. Takeaways:

Understanding markets, market share, and market growth is crucial for business success.

A company needs to know its position in the market to compete effectively.

Tracking market growth helps businesses identify opportunities and potential challenges.

By understanding these concepts, you can better grasp how businesses operate, make informed decisions, and even analyze future trends in the ever-changing world of business!

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