Factors Affecting Market Size

Subject: Factors Affecting Market Size

        We learned that markets are a conceptual place consisting ofcustomers who need products and services to satisfy their necessity. Usually, markets divide into current market and potential market and both kind of markets are very important for any firms. Companies should obtain some significant statistics to understand customer’spurchasing power in one area.Thus,population size, population mix, geographic population shifts, income and income distribution, and age distribution are several standards which measure customer purchasing power.

        Having a large population is vital for a firm’s opportunity. The world’s population is nearly seven billion now and it will reach about eight billion by 2030. The first three populated countries are China, India, and U.S.A. respectively. Big population means huge market. According to Kant (2010),“gross domestic product (GDP) is nothing but production of economic goods and services consumed and demanded by individuals and firms and produced using labor and non-labor factors of production. So everything remaining the same, a bigger population is always a good thing for a market.” Sardyand Fetscherin (2009) state that China has the most population in the world and its market boomed at beginning of 21 century. Many foreign famous automobile manufacturers went to China and set up their factories and shared car’s market. They had a tremendous speed to become stronger than them once ever because the population (pp1-10).

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        Population mix is another critical point for market size. Many developed countries in the world, such as the United States, have a great many of immigration and they leaded to population mix changes. Basu(2012)said “before 2000, you had to pick one: White, black, Asian, American Indian, Alaska Native or some other race.But now you can tick multiple boxes on the U.S. Census Bureau's race category. In all, the U.S. population increased by 9.7% since 2000. Many multiple-race groups increased by 50% or more” (Para. 4). Multiple races brought more opportunity for the market of the United States than other counties. If there are only local residents without immigration, people only are able to do domestic business. People in the United States, however, have more chance to do international business because their populations mix. There is a case related to Goya food, the largest Hispanic family-owned U.S. food firm, and they sell lots of imported products such as Spanish olive oil, Mexican chilies, and Caribbean fruit juices.

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        Usually, people prefer to live in metropolitan area than rural region. The reason caused people leave rural areas and go to city. More and more people living in city led to the city becoming overloaded and resource shortage is also the common issue people discussed. On the other hand, populous area has more market prospects than low-population density area. For example, the housing rental companies have good business in the metropolitan city. A house rental in New York probably is much higher than other states and the price is still going up. According to Miller (2012), the housing rental was 40 dollars per month in 1910 and it gone up 60 dollars per month in 1950gradually. But the rental had a tremendous growth in 1960 and it was nearly three times as much as 1950. Since then, the rental in New York increased sharply, until 2010 it reached to 3500 dollars per month. Therefore, geographic population shifts is another critical element to affect market size (pp.14-22).