Market growth rate refers to the pace by which any given market increases or decreases in value. This can be used to reference either a single part of an economy or the larger economy as a whole. Companies, financial institutes, and governments use this measurement to determine the successes or failures of current sales or gross domestic product performance. When the market growth rate increases, it is said to be a positive development, while a decrease is associated with negative growth. On a national or global level, when the market growth rate decreases steadily and significantly, it can become a recession and ultimately a depression.
Companies track market growth rate in an effort to
decide the continued direction of the business's operations. This can be
measured most accurately on a monthly or yearly rate. The firms analyze the
health of the company through numbers for an annual increase in product sales
as well as market share. Ultimately, the company wants to control as much of the
industry in which they operate as possible. This helps them determine where to
go with a marketing campaign and if the product or service is being fully
saturated to its potential.
Financial institutes use the concept of
market growth rate to determine what the future prospects of a particular business model or industry may be.
This helps them to find the correct investments in order to make adjustments to
portfolios. In regards to investment, market growth rate is controlled in the financial sector using concepts like
derivatives, options and futures. By enabling
investors to hedge against positive and negative changes in the market, it
prevents major losses to this sector. The firms generally use market growth
rate information to establish collections of these products that consumers can
purchase for investments.
Market growth rate has a larger implication in regards
to national of global economies. Measurements to determine these factors
include gross domestic product, exchange rates and purchasing power parity. Gross domestic product is the nation's overall output,
exchange rates are the differences between the value of money in various
markets and purchasing power parity is the standard of
living in different countries. These figures are
highly important to the economic well-being of a nation or region. Governments
desire the growth rate to constantly increase in order to maintain economic
viability of the country as population grows.