Published August 2005
‘First
movers’ can increase market share
Increasing
market share requires different strategies than those designed to increase
sales alone.
Last month’s column addressed the differences
between sales and share, and how to measure market share. This column
deals with the process of increasing market share.
There are two primary dynamics that erode
market share: 1) declining product life cycle; and 2) increasing competitive
activity. There are three factors that contribute toward market share:
1) share of preference; 2) share of voice; and 3) share of distribution.
The last two (voice and distribution) are fairly straightforward.
Share of voice is your promotional spend
level against the competition. Share of distribution refers to your market
coverage through channel partners, location(s), e-commerce and logistics,
e.g. transportation and warehousing.
Share of preference, however, is less evident.
There are macro and micro levels that account for share of preference:
macro at the brand level; micro at the feature level - both play a role
in your market share performance. You can increase share of preference
by adjusting (or enhancing) your marketing mix, specifically product,
pricing and promotion strategies. Here are a few examples of each to simulate
ideas.
Product: As a share stealing product
strategy, Cycle dog food emerged to meet the different nutritional needs
of a dog’s life-stage. This product, owned by Del Monte (also owner of
Kibbles & Bits), carved out a significant share from the category. As
a service example, Cingular’s Rollover Minutes program was equally effective
at taking market share away from competitors.
Pricing: General Motors took the automotive
industry to school with their employee-discount price program. This promotion
boosted GM’s market share from 25.4 percent (over the first five months
of the year) to 30 percent in June.
If fact, it was so successful, they’ve extended
the program. Chrysler and Ford will likely jump on board in the same way
the airlines did with frequent flyer miles.
The only challenge with launching a really
good marketing idea is that it acts like a vacuum and sucks all of the
competitors in.
Promotion: Arm & Hammer is a well
managed brand and have found themselves in the “decline stage” of the
“product life cycle” several times; yet, after 155 years they continue
to show strong share and sales. Without making any physical changes, they
promoted their product through an “alternative use” strategy.
In 1972, for instance, they campaigned for
consumers to put a box of baking soda in refrigerators and freezers to
remove odors and keep food tasting fresh.
A common thread that laces all of these examples
together is that of “first-mover advantage.” Doing something new or different
that distinguishes your brand from the competition is a non-negotiable
when it comes to developing share growth strategy.
The question is what’s the best strategy
for your business? You’ll find the answer in your marketing mix; by reviewing
your product, price, place (distribution) and promotion strategies, share
growth ideas will likely surface.
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