Know-How Exchange : Student Questions

Do you mean market share as a percentage of customers, or as a percentage of revenues ?

I assume you mean the former, the cynical response and the quickest way would be to cut your margin completely, I know, chances are your business will not last long like that.

The longer and more commercial approach is to look at something called the Attractiveness Model. Think of the Boston Box and you will be close, I always think that the Boston odel needs a little tweaking for different businesses, but its close enough.

I would always consider three versions of the model, one short term, one medium term and one long term.

Hope this helps you a little!

If you mean that the competition has more products and supplies - like they have a broader portfolio - this is not necessarily a "threat" so much as an opportunity. You competition has a broad approach to the market, which can mean they are not focusing on the customers' needs. With a more narrow product offering, you have an opportunity to meet the needs of the customers more fully. While you might not have a large over all market share, you will have a deep penetration in a niche.

If you do that well, you can use your success to pick another niche to attack and drive for meeting the needs in that niche very well (better than your competition), and drive for deep penetration and large share. And then do this again and again. Pretty soon, the competition is wondering where you came from and why you are eating away their customers!

So, the way to do this is do your basic marketing:

Understand the market

• How big is the market (revenue, units, average selling price)?


• Who are the customers?


• What are their needs?


• How can you define niches of customers by needs and/or demographics and how big is each niche?


• How can you best reach these customers (what media, what message, etc)?

Understand the competition

• Who are the competitors?


• What share does each of the competitors have or what niches


• What are the strengths and weaknesses of each competitor?


• How well does each of the competitors meet the needs of the customers (by niche)

Understand your company

• Conduct a SWOT - strengths, weaknesses, opportunities, and threats for your company


• Comparing your SWOT versus the competitive analysis, how can you use your strengths to attack the competitors' weaknesses, how can you turn your weaknesses into strengths, how can you take advantage of the opportunities, and how can you avoid the threats?


• How can you position your product/service to better meet the customers needs versus the competition?


• For which niches do you have the best compelling unique selling point? Also, what are the pricing needs for each based on the value you bring to the customers?

I hope this helps.

Wayde

manzoorkoleth,

As Wnelson has rightly pointed out the fact your market share is smaller than that of your competition does not mean you are or will be on the losing side.
You have every possibility of concentrating on your customers' needs building a consistent retention program and taking advantage of referrals.
Larger market share does not necessarily mean bigger profits and sounder business.You should make sure to enjoy good share of wallet instead, meaning your customers when on the lookout for products or services you do carry do decide to opt in 9 of of 10 cases for your offering and not that of your competitors.
Otherwise you have to increase your product/ service range and improve supply chain though it's not always good to look to what your competition is doing and follow them.

Adam