# Size and Growth of a Market

The assessment of market size can then lead to many other critical analyses such as segmentation analysis or penetration analysis and the subsequent determination of market attractiveness.
• The size and growth of the market is a measure of “how much we sell” and “how fast that is changing”
• The size of the market can be measured either as unit sales or the turnover of a product or an industry realizes in a given period
• The growth of the market is the percentage change in the size of the market over a given period
• The assessment of market size can then lead to many other critical analyses such as segmentation analysis or penetration analysis and the subsequent determination of market attractiveness

• Size of the market should represent the “greater” or “overall” market” (Dietary supplements)
• The “overall” market should then be subdivided into the “relevant” or specific markets (vitamins, energy or “other” supplements)
• Multiple years should be displayed (always show past years, sometimes show future years)
• The growth of the market can be depicted

• Use the present year data from size of the overall market and reduce to the size of the company’s market
• Find percentage of the overall market by dividing the company’s specific market into the wholesale overall market (in the example above it would be: 150/1100 = 12%)

## Methodology

1. Obtain size of overall market. Find data for years deemed relevant. Market size is usually presented over a three to five year scope. It is useful to create subsets within the overall market to differentiate between the client’s actual market and its potential ones. Determine future growth rates both by extrapolation and by studying projections.
2. Calculate growth rate. Growth rate can be calculated using compound annual growth rate (CAGR) or average annual growth rate.
3. Calculate company’s specific market size. Beginning with the size of the overall market, reduce its size by segments not directly related to the client’s business. The “waterfall” graph above is useful to portray this information.
4. Calculate market as a percentage of the overall market. Divide size of the client’s specific market by the size of the overall market for that year. Perform this calculation for several years to illustrate trends in the sizes of the relative markets.

## Notes

• Size of the market should account for imports/exports when using overall sales of individual companies to calculate
• Markets should be properly subdivided when calculating size of the market and the percentage composition of sub-markets. (e.g. beverages into alcoholic vs. non-alcoholic)