Market Growth Rate is the projected rate of sales growth for the market that is served by a particular business. Usually measured as the percentage increase in a market’s sales or unit volume over the two most recent years, this rate serves as an indicator of the relative attractiveness of the markets served by each business in the firm’s portfolio of business.
The market growth refers to the increased demand and the stretched customer pool. And the rate signifies the growth going up or down. The difference between the current and the original market size is divided by the original market size. The formula to calculate the market growth rate would be -
Market growth rate = Market growth / Base market size
= {(Changed market size - Base market size) / Base market size} x 100
For example, if the base market size is 10 million and it has suddenly increased 30 million making the changed market size 40 million, the market growth would be 40-10=30 million. That would make the market growth rate (30/10)x100=3x100=300%
Use of the Term in Sentences
- A business is doing really well when its sales growth is greater than the market growth rate, growing at an equal rate with the market growth is not very bad either.