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How to identify which market to grow?

growth growth strategy
New answer on Jul 19, 2021
2 Answers
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Anonymous A asked on Jul 19, 2021

There are some criteria I have in mind - 

1. the larger the market size

2. the faster the growth rate

3. the more fragmented the market is

And how does it relates the 

1. growth rate of the company

2. the market share of the company

i.e. If the market grows at 3%, while the client company grows at 5%, what does it indicate? it indicates growing in this market is not enough, and we should into growing in other faster-growing market?

i.e. which situation does the company has more potential to grow in? a 2% market share or 20% of market share? 

Thanks.  

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Ian
Expert
Content Creator
replied on Jul 19, 2021
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

#1 and #2 are correct, but #3 is wrong. Remember, a fragmented market is neither inherently good nor bad (just look at the consolidated Taxi, news, and automotive markets that have been disrupted)...a consolidated market can be old/lazy and ripe for disruption! Rather, think about strength of competition.

Here are the main considerations:

  1. Big market
  2. Growing market
  3. Weak competition
  4. Our license to operate (we can product a good product in this market and know how to reach the customer)
    1. Will our product be better than the competitors' products, in the areas that our customers care about
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Adi
Expert
Content Creator
replied on Jul 19, 2021
Accenture, Deloitte | Precision Case Prep | Experienced Interviewer & Career Coach | 15 years professional experience

Hey,

Make sure you understand the definitions:

  • Market size ($ value)
  • Market size (volume)
  • Market share 
  • Market growth

Some important things to know:

  • Smaller brands can grow market share (sales) faster than growth of the market as long as the market size is big enough
  • Dont assume by default that a small growth in market share is bad. In real $ (sales or revenue) even a 1% growth in share can be a big number. So, this will depend on the company, industry and market dynamics.

Your criteria are correct. So in summary, the best markets to grow will have following criteria:

  • Big enough market size
  • Low barriers to entry
  • Strong internal capabilites, product value, USP etc
  • Capital available
  • Stable political, economic, social conditions
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Ian gave the best answer

Ian

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