4.1.3—Market growth

Market growth is the percentage change in total market size over time. It describes the market, not one firm’s sales.

Growth can come from more customers, higher frequency, higher prices or a changing market definition. A firm can lose share in a growing market and still increase sales.

Separate market growth from business growth, specify the period and explain the driver.

A market rises from $50m to$60m, so growth is 20%. If a firm’s sales rise from $5m to$5.5m, its sales grew 10% and its share fell from 10% to 9.2%.

Market growth is not the same as market attractiveness; assess competition, margins and sustainability.

Calculate $\text{market growth}=\frac{\text{current market size}-\text{previous market size}}{\text{previous market size}}\times100$. Use the same market definition, measure, currency and period in both values. A positive percentage means expansion and a negative percentage contraction; it does not by itself reveal whether the change came from volume, prices or a redefined market.