market-research the-purposes-of-market-research

The main features of a market

Market size

• Market size is the value or volume of sales of all businesses within a market

  • It can be measured by sales volume or sales value

    • E.g. in 2024, the UK vinyl record market was worth £159m, with 5.9m units sold, the highest annual level since 1990

• The total size of a market will be a key factor in determining whether it is worth a business entering and competing within it

  • A larger market size suggests more potential customers, which means greater opportunities to sell products and earn revenue

  • Knowing the size of the market helps businesses judge whether there is room to grow or if the market is already saturated

  • Investors are more likely to support a business operating in a large or growing market, as it promises better returns

Market growth

• The speed of growth of a market is another key factor to consider when weighing up whether to enter and compete within it

  • More customers are entering the market, which makes it easier for new or smaller businesses to gain sales without taking customers from rivals

  • When demand is rising, competition tends to be less aggressive because most firms can grow at the same time

    • This reduces the pressure to lower prices or fight over market share

  • A growing market is a sign that it has long-term potential

    • Businesses can plan for future expansion, build customer loyalty early and benefit from rising demand

• Market growth is expressed as a percentage and calculated using the formula