2. Market Size vs Share

Market Size

Define

Total number of potential buyers or revenue of a product type.

Describe

• It is a crucial factor in marketing strategy, influencing how businesses allocate resources, target customer, and position their offerings.

• A large market size suggests significant growth potential but often comes with strong competition.

• A smaller market may have fewer competitors but can be more niche, requiring specialised marketing efforts.

Explain

WHY understand the size of your market?

• Calculate potential earnings and growth

• Estimate number of employees (size of organisation needed to cope with demand and supply volumes)

• Helps define target markets and segments to address elements of the marketing mix to.

HOW is market size measured?

• Volume purchased - number

• Revenue from sales

Discuss

What can effects market size?

Globalisation:

• Multinational organisations entering all markets.

• Expanding market size as it becomes easier to operate across borders.

• Local or national businesses finding it harder to compete within markets, losing dominance to foreign businesses.

  • Income generated leaved the country (market)

Technology:

• Creating new markets, declining others.

Market Share

Define

Market share refers to the portion or percentage of a market captured (controlled, managed, held by) by one particular business or brand.

Describe

• The volume of sales - volume measures the number of goods sold by quantity, e.g. bottles of cola.

• The value of sales - measures the amount spent by customers on the volume of goods sold and will be expressed in a currency $ value.

• The number of customers.

EXPRESSED AS: Either a number, value, or percentage.

How is Market Share Calculated?

Market share is the percentage of total sales a business owns in its industry. It is measured by:

• Sales Volume - Number of units sold.

• Sales Value - Total revenue from sales.

• Number of Customers - Total customers, showing brand loyalty.

It is expressed as a number, value, or percentage.

Why Calculate Market Share?

Market share indicates businesses’ competitiveness.

• Investors - assist risk and profitability of the business

• Reputation - brand loyalty

• Bargaining power - suppliers and banks

How Can a Business Increase Its Market Share?

• Innovation: Distinct competitive advantage - intellectual property technology.

• Customer Loyalty: By strengthening customer relationships and ethical practices.

• Acquisitions: Buying out a competitor.

Summary