Market Growth | A-Level, IB & BTEC Business

Summary

This video explains how to calculate market growth, a key concept in market analysis. It focuses on calculating the percentage change in market size over time, using examples like smartphones and PCs. The method involves comparing current and past market sizes, either by dividing the current market size by the previous size or using index numbers. The video also highlights that markets can grow or decline, with practical examples to illustrate both. Understanding market growth is crucial for businesses to identify opportunities and challenges in a changing market landscape.

Takeaways

• 😀 Market growth is a percentage change in the size of a market over a period of time.
• 😀 Understanding market growth is crucial for analyzing the attractiveness of markets and identifying opportunities.
• 😀 Market size can be measured in different ways, including product volume, total sales value, or profits.
• 😀 Growth can be positive (expanding markets) or negative (declining markets), impacting businesses differently.
• 😀 The basic formula for calculating market growth is: (Market size at Period 2 / Market size at Period 1 - 1) * 100.
• 😀 Example: The smartphone market grew by 10.06% from 2014 to 2015, showing positive growth.
• 😀 Example: The PC market shrank by 15.46% from 2014 to 2015, indicating negative growth.
• 😀 An alternative method to calculate growth involves comparing the change between two periods and expressing it as a percentage of the previous period.
• 😀 Index numbers can simplify calculations, using a base year (e.g., 2015) as a reference point with an index number of 100.
• 😀 The index method helps to easily calculate growth or decline, with any year after the base year being expressed relative to that base.
• 😀 Market growth calculations are key to identifying business strategies, especially in rapidly changing or declining markets.

Q & A

What is market growth, and why is it important in market analysis?

Market growth refers to the percentage change in the size of a market over a specific period, which can help assess how attractive a market is and which businesses hold market share. It's crucial for identifying trends, opportunities, and market conditions.

What are the different ways to measure market size?

Market size can be measured in various ways, including the total value of sales, the total value of profits, or the volume of products sold in a market. These measurements provide insights into the market's overall performance and health.

What factors can influence a market's growth rate?

A market's growth rate can be influenced by factors like consumer demand, technological advancements, competition, economic conditions, and product innovation. Positive growth indicates increasing demand, while negative growth signals a market's decline.

How is the market growth rate calculated?

The market growth rate is calculated by comparing the market size in two different periods. The formula is: (Market Size This Period / Market Size Last Period) - 1, then multiply the result by 100 to get the percentage change.

What is the significance of calculating a negative growth rate?

A negative growth rate indicates a decline in market size, showing that the market is shrinking rather than expanding. This could suggest that demand is falling, or the market is becoming obsolete or less competitive.

Can you explain the smartphone market's growth from the example in the video?

The global smartphone market grew significantly between 2009 and 2015, from 173 million units sold in 2009 to nearly 1.5 billion in 2015. This represents a positive growth rate of approximately 10.06% from 2014 to 2015.

What was the market trend for PCs, and how was it different from smartphones?

The PC market showed a decline, with shipments dropping from 157 million in 2010 to 113 million in 2015. This negative growth indicates a reduction in demand for PCs, contrasting with the rapid growth seen in the smartphone market.

What does calculating percentage change involve when you have a table of data?

To calculate percentage change from a table, subtract the previous period's value from the current period's value, then divide the result by the previous period's value. Multiply the result by 100 to express it as a percentage.

How do index numbers simplify the process of calculating market growth?

Index numbers express market data relative to a base year, making it easier to see changes over time. By using the base year as 100, other years can be compared directly to assess market growth or decline.

What is the formula for calculating percentage change using index numbers?

To calculate percentage change with index numbers, subtract the base year index from the current period's index, then divide by the base year index. Multiply the result by 100 to get the percentage change.