Sampad Swain explores Marketing, Media, Technology, Social Media, Advertising trends & strategies and its impact on Business and us.
Tuesday, August 14, 2007
Market share - Is it a Myth?
Time and again we have seen that companies are learning the best practices from competitors and emulating it with their own better practices to a certain degree with a hallowed notion that it may give them an edge over the competitors. Now the question is what are we fighting for? The most probable answer would be market share.
Market share can be expressed as a company's sales revenue (from that market) divided by the total sales revenue available in that market. Now, I see a fallacy in the statement. So the article will talk about this myth per se.
The key word from the above statement is “from that market”. Now companies before launching new product have already predefined the market -– they would perhaps say that this is the market that have been segmented, these sort of customers we are targeting and this will be our positioning strategies, and so on and so forth.
Now the question remains that how much have we squeezed from the market or do we have a leeway? Taking an example it will be clear that fighting for market share isn’t the solution because you never know what is there in offering in the next turn.
It is hard to see how PC manufacturers' margins quickly shrank in the 1990's. The cause was not competition among industry players, but the superior bargaining power of their two primary suppliers -- Intel and Microsoft (referring to Michael Porter’s 5-Force Model). In this industry of publishing too, substitutes have become the primary source of competition as readers' attention is diverted to other forms of media.
So rather than fighting for the existing pie, companies can create that space and can take advantage over it (referring to “Blue Ocean Strategy”).
Now the question remains that are the companies in a flexible position with its products/services to implement two key elements – Strategy & Execution? If the company is in a position or can be in a position to take that strategic plunge, then surely the chances to get caught in the vicious fight for market share is over.
Time and again we have seen that companies are learning the best practices from competitors and emulating it with their own better practices to a certain degree with a hallowed notion that it may give them an edge over the competitors. Now the question is what are we fighting for? The most probable answer would be market share.
Market share can be expressed as a company's sales revenue (from that market) divided by the total sales revenue available in that market. Now, I see a fallacy in the statement. So the article will talk about this myth per se.
The key word from the above statement is “from that market”. Now companies before launching new product have already predefined the market -– they would perhaps say that this is the market that have been segmented, these sort of customers we are targeting and this will be our positioning strategies, and so on and so forth.
Now the question remains that how much have we squeezed from the market or do we have a leeway? Taking an example it will be clear that fighting for market share isn’t the solution because you never know what is there in offering in the next turn.
It is hard to see how PC manufacturers' margins quickly shrank in the 1990's. The cause was not competition among industry players, but the superior bargaining power of their two primary suppliers -- Intel and Microsoft (referring to Michael Porter’s 5-Force Model). In this industry of publishing too, substitutes have become the primary source of competition as readers' attention is diverted to other forms of media.
So rather than fighting for the existing pie, companies can create that space and can take advantage over it (referring to “Blue Ocean Strategy”).
Now the question remains that are the companies in a flexible position with its products/services to implement two key elements – Strategy & Execution? If the company is in a position or can be in a position to take that strategic plunge, then surely the chances to get caught in the vicious fight for market share is over.
Time and again we have seen that companies are learning the best practices from competitors and emulating it with their own better practices to a certain degree with a hallowed notion that it may give them an edge over the competitors. Now the question is what are we fighting for? The most probable answer would be market share.
Market share can be expressed as a company's sales revenue (from that market) divided by the total sales revenue available in that market. Now, I see a fallacy in the statement. So the article will talk about this myth per se.
The key word from the above statement is “from that market”. Now companies before launching new product have already predefined the market -– they would perhaps say that this is the market that have been segmented, these sort of customers we are targeting and this will be our positioning strategies, and so on and so forth.
Now the question remains that how much have we squeezed from the market or do we have a leeway? Taking an example it will be clear that fighting for market share isn’t the solution because you never know what is there in offering in the next turn.
It is hard to see how PC manufacturers' margins quickly shrank in the 1990's. The cause was not competition among industry players, but the superior bargaining power of their two primary suppliers -- Intel and Microsoft (referring to Michael Porter’s 5-Force Model). In this industry of publishing too, substitutes have become the primary source of competition as readers' attention is diverted to other forms of media.
So rather than fighting for the existing pie, companies can create that space and can take advantage over it (referring to “Blue Ocean Strategy”).
Now the question remains that are the companies in a flexible position with its products/services to implement two key elements – Strategy & Execution? If the company is in a position or can be in a position to take that strategic plunge, then surely the chances to get caught in the vicious fight for market share is over.
Time and again we have seen that companies are learning the best practices from competitors and emulating it with their own better practices to a certain degree with a hallowed notion that it may give them an edge over the competitors. Now the question is what are we fighting for? The most probable answer would be market share.
No comments:
Post a Comment