Demand
Customer demand for a product or service. For example, unit demand for microwave ovens increased significantly in the early 1980s due to price declines, product improvements and customer awareness of the technology.Supply
Decreases in supply that result in a higher selling price. This can either result in market growth as customers are stuck paying higher prices or negative market growth as customers find alternatives. Increases in supply also impact market growth as prices will drop resulting in higher demand.Premiumization
Increases in average selling price due to premiumization. For example, increases in the sales of pet food driven by premium products that use high quality ingredients.Performance
Increases in product performance that result in a higher selling price. For example, the growth in mobile device sales that resulted from the introduction of smart phones.Commodization
Commodization is when customers begin to purchase based on price alone because they see few differences between products. For example, the price of VCRs dropped significantly in the early 1990s as customers lost interest in new features.Inflation
Price increases due to inflation. For example, a market that is growing at 2% in terms of revenue may not be growing in terms of unit sales.Demographics
The changing size of a target market for a product or service. For example, demand for medical supplies driven by an aging population.Calculation
Market growth is calculated with a standard growth formula.
Market Growth Rate= [(Current Market Size - Previous Market Size) / Previous Market Size] × 100
For example, if the market for sushi in Boston is $10 million a month and last year the same market was $5 million a month the market growth can be calculated as follows.
Market Growth Rate = (10-5)/5 × 100 [millions USD]
Market Growth Rate = 100%
| Overview: Market Growth | ||
Type | ||
Definition | The increase or decrease in the size of a market for a product or service over time. | |
Related Concepts | ||
