The pace of market growth will depend on many factors. It is the Marketing Department’s job, one of its objectives, to identify different features of markets to satisfy customer requirements profitably.
Here are several reasons that can be identified as potential causes of market growth:
1. Economic growth. Specifically, general growth of the world’s economy in recent years stimulated by free trade agreements that led to the phenomenon of globalization. The overall growth of the global economy results in increased incomes of people in different countries, especially those countries involved in international trade and benefiting from the process of globalization. Globalization fuels business growth! In the past decade, there has been immense rise in disposable incomes globally as well as easier and faster access to cheap credit that is fueling up economic development.
2. Social changes. As economic transformation happens resulting either in industrialization or deindustrialization of the country’s economy, many changes in the society occur along the way. Growth of the country’s economy stimulates social transformation as people have more money. With the development of tertiary sector in developed countries, more people are eating out, traveling abroad for holidays, buying insurance services and using online banking.
3. Social awareness. With more people receiving secondary and higher education these days, the society is becoming more knowledgeable. And, with better educated citizens, the levels of social awareness increase. Also, as a result of convenient access to medical services in many developed countries, there are less and less people falling into addictions such as smoking cigarettes, excessive consumption of alcohol, etc. In many highly-developed societies, organic food is also becoming popular caused by increased health awareness in the general population in those countries.
4. Changes in fashion. In the modern society, there are many frequent changes to fashion and tastes, such as dyed hair, tattoos, skateboarding clothes, baseball caps, golden jewelry, etc. Once basic human needs of food, safety and security are fulfilled, people dare to try new things and start experimenting with their lives. In order to fulfill the demand, companies must anticipate those changes and should act quickly to respond not to leave customers empty-handed.
5. New technology. New technology being an innovative product itself, helps to bring new products to the markets as well. Thanks to technological advancements, many markets have experienced new growth levels such as online banking, insurance, supermarkets selling groceries online, newspapers and magazines, education, etc. Technology can indeed boost market sales when innovations become widely available among the people. However, many new technological products quickly become obsolete such as computer hardware and software, the Internet applications, smart phones, etc. Also, the development of new products can reduce sales of existing ones even causing them to become completely withdrawn from the market.
6. Better ability of suppliers. Market growth can lead to more suppliers entering that market as the number of customers increases and prices grow, hence companies are attracted to potentially higher profits and profit margins. This intensifies competition. And, when competition is increasing, this forces the suppliers to improve their product portfolios and product quality. Better ability of suppliers to meet customer needs is needed to retain market share. The number of smartphone producers, mobile phone app developers, coffee shops and international schools has grown tremendously in recent years following the huge growth in the global market.
While some markets are obviously growing faster than others, the rate of market growth depends mainly on whether the market is ‘saturated’ or not. Once people own a product, sales of that product do not rise each year that fast. Most purchases will just be replacement models. However, when people have yet to purchase the product, companies can expect the market for that product to grow rapidly in the future.
