U1.12 — Differences between Market Size and Market Share

Overview

Dotpoint 12: Differences between Market Size and Market Share

Market size and market share sound similar, but they measure different things.

In simple terms, market size tells you how big the whole market is, while market share tells you how much of that market one business controls.

Pizza roll representing a slice of a market

📏What is Market Size?

Market size is the total amount of sales (or customers) in a whole market, over a set time period.

Market size can be measured in:

Dollar value (e.g., total $ spent on sports shoes in Australia each year)
Units (e.g., total number of smartphones sold)
Customers (e.g., number of people who buy gym memberships)

Examples of big global markets

Some markets are considered “large” because they have huge total spending and lots of customers worldwide. For example:

Global smartphone market
Global car market (new + used vehicle sales)
Global fast food market
Global streaming subscriptions market
Global cosmetics and skincare market

Smartphones representing a large global market — *Over a billion smartphones are sold world wide each year.*

🥧What is Market Share?

Market share is the percentage of the total market that one business has.

Market Share (%) = (Business Sales ÷ Total Market Sales) × 100

Simple example

If a smoothie shop sells $200,000 worth of smoothies in a year, and the total smoothie market is $2,000,000, then the shop’s market share is 10%.

Examples of businesses with very large market share

In some industries, one business can become the clear leader and hold a very large share of the market. Examples often discussed include:

Google in web search (dominant in many countries)
Microsoft Windows in desktop computer operating systems
Visa and Mastercard in card payment networks (major global players)
ASML in advanced chipmaking lithography machines (key supplier globally)

⚖️Market Size vs Market Share

Market Size

What it measures: the total size of the whole market.
What it looks at: total sales, customers, or units (everyone combined).
How it’s shown: $ / units / customers.
Main use: spotting opportunities (is the market growing or shrinking?).

Market Share

What it measures: one business’s slice of the total market.
What it looks at: one business compared to everyone else.
How it’s shown: percentage (%).
Main use: competitiveness (is the business gaining or losing ground?).

How businesses use market size

(“Is this market worth being in?”)

Growth planning: A large or growing market may be attractive to enter, even if the business starts with a small share.
Risk assessment: A shrinking market can limit future profits, even for businesses with strong sales.
Expansion decisions: Businesses use market size to decide whether to launch new products or enter new regions.
Long-term viability: A bigger market generally offers more room for future growth and economies of scale.

Ageing population representing growth in aged care market size

By 2030, the global aged care services market is projected to top roughly USD 1.6 – 2.5 trillion.

🌏Examples

Example 1 — Supermarkets in Perth

The supermarket market size in WA could be the total $ spent on groceries across WA in a year. Market share is the percentage of those grocery sales each competitor gets (Coles, Woolworths, Aldi, IGA, etc.).

Supermarkets representing a market size example

Example 2 — Streaming services

Market size could be the total number of Australians paying for streaming subscriptions. Market share is how many of those subscribers are with Netflix, Disney+, Stan, Binge, and so on.

Example 3 — Local cafés

The “café market” around your suburb has a market size (total coffee and food sales). A single café’s market share is how much of that total spending goes to them.