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.
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
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?).
Why businesses care
Market size and market share help businesses make smarter decisions. They answer different questions:
- Growth planning: a large (or growing) market may be worth entering, even if the business starts small.
- Performance tracking: a business can grow sales, but still lose market share if competitors grow faster.
- Goal setting: businesses can set targets like “grow market share from 10% to 12%” or “enter a larger market”.
- Marketing decisions: if market share is falling, the business may need better promotion, pricing, or product changes.
- Risk checking: if market size is shrinking, even a high market share might not lead to higher profits long-term.
Australian (WA) 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.).
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.
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A business can grow sales but still lose market share if the whole market grows faster.