How to Calculate Market Growth
Marketing is the creative and analytical core of all businesses. Marketing is often seen as artistic or creative, though it would be more accurate to say that marketing encompasses the creative and analytical territories of business. Additionally, marketing is a sort of fortune teller used in all business ventures. This act of predicting the future is where the term “market growth” comes in to action. In fact, “market growth rate” has the highest impact on company shareholders in every known industry to the world of business. The labor that goes into marketing is so much greater than what it appears to be. A flawless website or press release is taken for granted by the consumers or investors who read it. In essence, marketing is hard work. Market experts have to know what people will be willing to purchase and money is at stake. Learn how to project and calculate market growth for any business.
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Instructions
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Record changes in sales performance. Keep this information handy, as changes in market shares don't give you all the input you need. You have to consider sales to be the breadwinners of your business, because sales performance is virtually the market growth decider.
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Now factor in the target company’s projected growth. Search the company’s investor relations website for this information. You may find this information online (see Resources).
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Note the type industry, market and products that you are interested in doing research on market growth. Be specific about the market or product.
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Once you know your target market, determine the share in market growth by dividing the number of total sales in the target company by all other companies in the same market. You will then have a percentage of market value. To determine the future growth, simply note the value on the stocks and compare with current earnings. If both are high, then you can see the market growth over a period of time. Most sites for market watching provide line graphs or charts that pinpoint sales history and market growth.
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Use the compound annual growth rate for data running back 3+ years. The formula is: CAGR=((Last Year/first year)^(1/n-1))-1. N=number of years.
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