measurement of market share and market growth

3.1 The nature of marketing – Markets

Measurement of Market Share

Market share tells us how big a company’s slice of the pie is compared to all competitors. Think of it like a pizza party: if you eat 2 slices out of 10 total slices, you have 20 % of the pizza. In business terms, the formula is:

$ \text{Market Share (\%)} = \frac{\text{Company's sales}}{\text{Total market sales}} \times 100 $

Example: Company X sells 200 units in a market that sold 2 000 units. $ \frac{200}{2000} \times 100 = 10\% $ – Company X owns 10 % of the market. 🍕

Measurement of Market Growth

Market growth shows how fast the whole market is expanding or shrinking. It’s like watching a plant grow taller each year. The formula:

$ \text{Market Growth (\%)} = \frac{\text{Current period size} - \text{Previous period size}}{\text{Previous period size}} \times 100 $

Example: The market sold 1 800 units last year and 2 000 units this year. $ \frac{2000-1800}{1800} \times 100 \approx 11.1\% $ growth. 📈

Analogy: Sports League Standings

Imagine a football league where each team’s points are their sales.

• Market share = a team’s points ÷ total points of all teams.
• Market growth = the increase in total points from one season to the next.

Sample Data Table