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.
