Business – 3.1 The nature of marketing – Markets | e-Consult

Answer 3:

1. Advantages

   • Provides a clear picture of a firm’s competitive position relative to rivals.
   • Helps identify whether a market is expanding (growth) or contracting, guiding investment decisions.
   • Simple to calculate and communicate to stakeholders.
   • Can be combined with profitability data to assess the quality of growth.

2. Limitations

   • Market share does not reflect profitability; a firm may have a large share but low margins.
   • Growth rates can be distorted by short‑term fluctuations or seasonal effects.
   • Both metrics rely on accurate market data, which may be unavailable or estimated.
   • They ignore qualitative factors such as brand strength, customer loyalty, and technological change.