As consumer tastes change, so does their demand for products. For example, today`s consumers are more concerned about healthy eating. As a result, the demand for organic food is increasing, so the market is finally experiencing rapid growth. Market growth is defined as the increase in demand for a product or service in the market. Usually, market growth takes place when a company is in its expansion phase. Companies try to increase the value of the product and promote features, sometimes offering attractive prices to generate more sales. After a while, the market reaches a saturation where many customers already have the product. As a result, the growth of the market continues to grow positively, but more slowly than in the previous phase. The growth of the market shows a different rate during the life cycle of the product.
In the introduction phase, the market is developing slowly, as many consumers are not familiar with the product. Therefore, the first company to enter the market (the first mover) must educate consumers and convince them to use the product. And as a rule, few people are willing to take the risk of doing so. Then, management also looks at growth before entering new markets. A high-growth market is preferable because the company has the potential to make a lot of money. The strong growth attracts many new companies to face the competition. However, the competition is still not intense, as many consumers have not used the product. Increasing market share can allow a company to reach a larger size with its operations and improve its profitability. A company may try to increase its market share by lowering prices, using advertising, or introducing new or different products.
In addition, it can also increase the size of its market share by targeting other audiences or demographics. The product that has a higher performance will have a higher selling price. The selling price would stimulate the growth of the market. There can be various reasons for high performance, but the fact is that it has a positive impact on the growth of the market. For example, in the case of mobile phones, different brands have different variants of the phone and the price of all changes depends on performance. In cyclical industries, competition for market share is brutal. Economic factors play a larger role in the variance of sales, profits and margins, more than other factors. Margins tend to be low and operations operate with maximum efficiency due to competition. Because revenue comes at the expense of other companies, they invest heavily in marketing efforts or even lose frames to drive sales. Changes in market share have a greater impact on the performance of companies in mature or cyclical industries where growth is low. In contrast, changes in market share have less impact on firms in growing industries. In these industries, the overall pie is growing, so companies can still increase their sales even if they lose market share.
For companies in this situation, equity performance is more affected by revenue and margin growth than by other factors. When the supply increases, the price of the product decreases, on the other hand, since the supply reduces the cost of the same product, increases considerably more. As the price of the product increases, the growth of the market increases as customers have to pay higher prices for the same product. The target market changes size for different products or services. Different age population groups will have different requirements for products. For example, a young population with massive demand for the latest products such as mobile phones, accessories, the latest fashion trends. Growing markets offer higher sales and profit potential. Thus, the company has more opportunities to make more money. Companies take market growth into account when setting goals and designing marketing strategies. It also becomes the basis for evaluating the performance of products in the market.
For example, it is a great success to successfully increase sales when the market is down. This shows that the company`s competitive strategy is effective. Gains or losses in market share can have a significant impact on a company`s stock market performance, depending on industry conditions. Innovation is a method by which a company can increase its market share. When a company launches a new technology that its competitors have not yet offered, consumers who want to own the technology will buy it from that company, even if they have already done business with a competitor. Many of these consumers become loyal customers, which increases the company`s market share and decreases the market share of the company from which they come. What it is: Market growth refers to the percentage change in market size over a period of time. It is characterized by the increase and decrease in the total turnover of all companies in the market. Therefore, growth is an important factor to consider when designing marketing plans and strategies. If the product is accepted in the market at a certain price, there is positive market growth. If customers take this price or if they accept the product, then the market demand increases and if they do not accept the product, then the market demand and therefore also the growth of the market decreases.
The growth of the market is directly proportional to the market demand. Thus, the demand is directly proportional to the growth of the market. However, if the demand for competing products increases relative to the competition, it will affect the demand for your product, and even though the market may grow, you won`t. Apple`s market share for smartphone market share in China fell by 16 percent between 2018 and 2019, largely due to declining iPhone sales. Existing trade tensions between the U.S. and China are likely to result in tariffs that can increase the cost of goods and impact gross margin. Apple`s sales in China declined again in 2020, further losing 8% of market share due to declining iPhone sales and a low exchange rate against the US dollar. There are several reasons for a market to grow: To gain a larger market share, a company can use one of many strategies. First, it can introduce new technologies to attract customers who would otherwise have bought from their competitor. Second, maintaining customer loyalty is a tactic that can lead to both a strong existing customer base and word-of-mouth expansion. Third, hiring talented employees avoids costly staff turnover costs, allowing the company to prioritize its core competencies.
After all, with an acquisition, a company can both reduce the number of competitors and attract its customers. Market share shows the size of a company, a useful measure to illustrate the dominance and competitiveness of a company in a particular field. The market share is calculated as a percentage of the company`s turnover in relation to the total share of sales in the respective industry over a certain period of time. A company`s market share can significantly affect its business activity, namely the performance of its shares, scalability and the prices it can offer for its products or services. Another factor is technological change. This makes the previous product irrelevant or is not necessary by the customer. For example, when the PC arrived on the market, it began to replace the typewriter. After all, growth goes into negative territory during the phase of decline.
Replacement products usually emerge and offer better offers to meet the needs and desires of consumers. Suppose a new entrant enters the market organically by establishing a new subsidiary or manufacturing plant. In this case, it increases the supply to the market. As a result, the profitability of the market is pushed down as the higher supply drives down prices. This usually provokes a competitive reaction from incumbents. They may try to deter new entrants by erecting strategic barriers to entry, for example by lowering selling prices. Investors and analysts carefully monitor increases and decreases in market share, as this can be a sign of the relative competitiveness of the company`s products or services. As the overall market for a product or service grows, a company that maintains its market share increases its sales at the same rate as the overall market. A company that increases its market share will increase its sales faster than its competitors. An enterprise`s market share is its share of total turnover in relation to the market or industry in which it operates. To calculate a company`s market share, first determine a time period you want to study. It can be a fiscal quarter, a year or several years.
Several factors influence the growth of the market, including: Several factors affect the growth of the market such as the demand and supply of the product, the type of market growth, competitors in the market. These factors have a direct impact on the growth of the market. They can have a positive or harmful effect. Consumer electronics brands reduce their costs with each subsequent product launch. This allows people to buy the products at a cheaper price. The larger the sales volume of the products, the greater the growth of the market. Inflation is one of the major factors influencing the growth of the market. A market that grows at a certain percentage says that 5% has not necessarily increased in terms of sales of the product.
This will have a direct impact on the growth of the market. A company can increase its market share by offering innovative technologies to its customers, building customer loyalty, hiring talented people, and acquiring competitors. On the other hand, such a trend reduces the growth potential of the junk food market. Later, many fast food restaurants modified their menus to include nutritional information and healthier food options. .