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How to use market growth and market share to develop strategy

How market growth and market share impact on companies – market data classification


Typical market growth % per year Market growth classification

Company impact on…

        …cash flow                        …profits
+20% to +200% Embryonic Negative Loss
+5% to +20% Growing Negative Possible profit
+1% to +5% Mature Positive Good
-10% to +1% Ageing Should be positive Should be in profit
Grow, decline, grow, decline, etc. Cyclical Varies but should be positive in growth phase Varies but should be in profit in growth phase
Typical market share %
1% to 4% Weak Possibly positive in short term Possible profit in short term
5% to 10% Viable Probably positive Probably profitable
10% to 30% Strong Positive Positive
31% and above Dominant Positive Attractive


Note the importance of market definition in the above: for example, defining a market narrowly will automatically inflate the market share of all companies in that market.

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