Difference between Market Share and Market Growth

Market share and market growth are different ways to analyze and evaluate a market’s performance and dynamics.


Market Share:

• It is the fraction of total sales in a market that a company or product has over a time period.
• It is calculated by dividing a company’s sales revenue (or units sold) by the total market sales and multiplying by 100 to get a percentage.
• It shows how strong a company’s presence and customer base are in the market. It is often used to compare the competitiveness and dominance of a company in an industry.

Market Growth:

• It is the percentage change in the market size over a time period. For eg in year 2020 you had 5000 customers but in year 2021 you have 8000 customers.So this change in market size is market growth .
• It is calculated by comparing the market size at the end of a period with the market size at the beginning of that period. The formula is [(Final Market Size - Initial Market Size) / Initial Market Size] * 100.
• It shows how the market is expanding or shrinking over time. It is important for companies that want to grow or enter a market, as it indicates the demand for products or services in that market.

In summary, market share measures a company’s share of the total market, indicating its competitive position, while market growth measures how the whole market is changing over time. A company can have a high market share in a slow-growing market or a low market share in a fast-growing market. Both metrics are essential for understanding the overall health and potential of a business within its industry.