Market Analysis

The size of a market is based upon:
- profits made
- market shares of each business
- value of sales
- number of employees
- volume of sales

Key points: A large market means lots of potential customers
                     A small market means potential profits could be limited

Market share & market growth
The market share of a firm is the % of what it has of the market sales

Sales of the product    x    100  =    %
total market size

e.g.  5000       x      100     =     50% (1 in every 2 products)
        10 000

Market growth  - increase in size of market for a particular type of product

Growing market > more customers, higher demand, more sales, less risk, greater chance of success, competition isn't as fierce, less chance of failiure, benefit from economies of scale, room for expansion

Shrinking market > more competition from existing businesses in market, less customers, prices increase, liquidation, less profit, liquidation, little room for new ventures in market