Market share, also known as market share, reflects the competitive position and profitability of enterprises to a great extent and is an index that enterprises attach great importance to. However, due to the vague understanding and quick success in practice, many enterprises have some problems in market share. The following are some thoughts and analysis of common problems.
First, two aspects of market share: quantity and quality.
When it comes to market share, the first thing most people think of is the size of market share. But in fact, the size of market share is only the quantitative feature of market share, and it is the embodiment of market share in breadth. Another quality feature of market share is the quality of market share, which reflects the quality of market share.
The number of market share is also the size of market share. Generally, there are two representations: one is expressed by the percentage of enterprise sales to the total market sales, and the other is expressed by the percentage of enterprise sales to the sales of competitors. The quality of market share refers to the gold content of market share, which is the sum of the benefits that market share can bring to enterprises. In addition to cash income, this kind of interest also includes income from the appreciation of intangible assets. There are two main criteria to measure market share: one is customer satisfaction rate, and the other is customer loyalty. The higher the customer satisfaction rate and customer loyalty rate, the better the quality of market share, on the contrary, the worse the quality of market share.
Many domestic enterprises' understanding of market share is still in the stage of focusing on quantity. From the "bidding king" dispute to the price war and advertising war, all of them reflect the expectation of participating enterprises, especially those who actively launched the price war, to expand market share. This behavior of paying attention to the quantity of market share has profound social and theoretical background. Many enterprises have come from the era of planned economy, and the idea that the planned economy emphasizes speed, quantity and quality is still playing a role in these enterprises. At the same time, most people at the decision-making level of enterprises are educated in the theory of planned economy, which will have a subtle influence on their decisions and it is difficult to change them quickly. The main theoretical basis for enterprises to pay attention to the quantity of market share is the theory of scale economy. Many enterprises believe that expanding market share will increase sales and output, reduce production costs, and help enterprises obtain high profits and form competitive advantages.
Domestic enterprises pay little attention to the quality of market share for two reasons: the first reason is that many enterprises have not yet established a modern marketing concept centered on customers. In the promotion and publicity of these enterprises, it may often be said that "customers are the first" and "customers are God", but once the interests of customers conflict with those of enterprises, these enterprises will show true self-centeredness. This kind of enterprise will not think from the customer's point of view at all, and will not be interested in customer satisfaction, so it is impossible to improve the quality of market share; The second reason is that the benefits brought by improving the quality of market share are not exact, and enterprises have doubts about improving the quality of market share. There are also many enterprises that realize that enterprises should not only occupy the market, but also hold the market and realize the importance of improving the quality of market share. However, in order to improve the quality of market share, enterprises must do more in-depth and detailed work from the customer satisfaction rate. Enterprises need to spend a lot of manpower, financial resources and material resources, and it takes a long time. This kind of investment is risky because of its large quantity, high requirements and long time, and the investment effect cannot be accurately measured, which makes many enterprises finally give up the plan to improve the quality of market share.
2. Which is more important, quantity or quality of market share?
The quantity and quality of market share reflect the size and advantages and disadvantages of market share respectively, and there should be no relationship between them because of different angles. However, in a certain period, under the condition of limited resources, enterprises must face the choice: what is the key investment to expand market share? Or concentrate on investing to improve the quality of market share? Or both-equal treatment? To answer this question, enterprises must analyze the industry competition pattern and product life cycle.
1. Analysis of industry competition pattern
If there are many enterprises in the industry, and each enterprise's market share is small, at this time, enterprises should strive to expand the number of market share on the one hand, and strive to improve the quality of market share on the other hand, giving consideration to both quantity and quality. It should be said that expanding market share at this time can make enterprises stand out among many competitors. At the same time, it is relatively easy to expand market share. After all, weak enterprises account for a large proportion among many competitors, and attacking the markets of these enterprises can achieve good results without consuming too many resources. But other competitors will also expand their market share in this way, thus triggering a contest between stronger competitors. If an enterprise wants to win in the contest, it must use some resources to improve the quality of market share, improve the satisfaction level of customers with excellent products and services, and increase the repeat purchase rate of customers. This practice based on the quality of market share can steadily increase the number of market share, avoid vicious competition, and enable enterprises to establish a good reputation among customers, and competitors will feel overwhelmed when competing with them.
If there are many enterprises in the industry, some enterprises have a larger market share and some enterprises have a smaller market share. At this time, both small enterprises and large enterprises should pay attention to improving the quality of market share. For small enterprises, if they want to compete with large enterprises for the market, they lack competitiveness in resources such as brands. On the one hand, enterprises can't afford to increase their market share by a large number of promotions or substantial price cuts, on the other hand, they will also be strongly blocked by large enterprises. Therefore, small enterprises should focus on the quality of market share, improve customer satisfaction from products, services, communication and other aspects, consolidate their position, and gradually expand the market with their good customer base. For large enterprises, because the market share is relatively high, the main task at this time should be to consolidate the market share. If we expand the market share, it will lead to tit-for-tat resistance from other competitors, which will eventually lead to a decline in corporate income. Therefore, after the market share increases to a certain extent, enterprises should consolidate their own territory by improving the quality of market share and lay a solid foundation for future expansion.
If there are few enterprises in the industry, each enterprise has a large market share. At this time, the industry has entered an oligopoly pattern, and enterprises should focus on maintaining and expanding the quantity of market share, and only pay attention to the quality of market share. Only when competitors strive to improve the quality of market share, it is necessary for enterprises to increase their investment in market share quality. In this pattern, if an enterprise wants to expand the market by actively improving the quality of market share, it will inevitably lead to the follow-up and imitation of other competitors (because each oligarch has the corresponding ability). In the end, the customer satisfaction level of the whole industry may be generally improved, but the market share will not change much, but the profitability of the whole industry will be reduced because of the increase in costs, which is unfavorable to members of each industry.
If the industry is monopolized by enterprises due to policies and other factors, the marketing focus of enterprises should be to stimulate demand, expand market scale and design marketing plans according to the principle of maximizing profits while maintaining the minimum acceptable satisfaction of customers.
2. Analyze the product life cycle.
In the introduction period, because there are few enterprises producing similar products, the main competitors of enterprises are not enterprises producing similar products, but enterprises producing substitute products; At this time, the focus of the enterprise's work or investment should be to vigorously publicize the advantages of the new product relative to the replaced product, urge people to buy it and try it out, and expand the market share of the product in similar products; In the growth period, the whole industry develops rapidly, and more and more enterprises produce the same product. At this time, the focus of the enterprise is to vigorously promote the brand image and expand the market share of enterprise products in similar products; In the mature period, the total market sales volume has been relatively stable and the competition is fierce. In order to maintain stability or increase in the competition, enterprises should vigorously improve the quality of market share, retain customers by improving customer satisfaction, and realize customers' repeated purchases; In the period of economic recession, expanding market share has no marketing significance. Enterprises can conditionally choose certain markets or varieties to maintain a high customer satisfaction rate and reap the later benefits of products.
Third, the greater the market share, the more profits?
Many enterprises think that the greater the market share, the stronger the profitability of enterprises, but in fact it is not that simple.
Many enterprises try to expand their market share, only to find that their profits are decreasing instead of increasing. In the process of expanding market share, although the increase of sales leads to the decrease of production cost, the cost of expanding market share increases much faster than the decrease of production cost. In addition, competition makes the price drop, the profit per unit product drops rapidly, and finally the profitability of enterprise products drops. The reasons for the rapid increase in the cost of expanding market share are: on the one hand, in the process of market expansion, additional marketing managers lose control due to lack of experience or training or low quality; On the other hand, it is the cost increase caused by the strong reaction of competitors. The actions of enterprises to expand market share will inevitably make competitors take corresponding actions. The most common ones are that enterprises will increase their advertising investment, competitors will also increase their advertising investment, and enterprises will reduce their prices, even more than enterprises. As a result, the enterprise spent a lot of money, but the sales volume did not increase significantly or the market share increased, but the profit decreased.
In fact, the profitability of enterprise products is affected by many factors, including the intensity of industry competition, the average profitability of the industry, the management ability of enterprises, the quality of market share and other factors. The market share is only one of the factors that affect the profitability of enterprises' products, and enterprises should not pin all their hopes for profit growth on the expansion of market share.
Fourth, how to face the decline in market share?
Many enterprises will rejoice in the expansion of market share, but when the market share drops, they will feel disappointed and insomnia. However, as pointed out earlier, the expansion of market share does not necessarily increase the profitability of enterprises. Similarly, the decline in market share will not necessarily reduce the profitability of enterprises. Faced with the decline of market share, enterprises must carefully analyze and study and come up with targeted solutions.
1. The decrease of market share caused by sales growth of enterprises is lower than that of the industry.
The rapid growth of the industry means that the total market demand has increased sharply, there are many development opportunities and the market is attractive. In this case, the analysis of the decline in market share of enterprises must be combined with the situation of competitors. We should focus on analyzing the changes in the number of competitors and their market share. If there are more and more competitors, the market share of each competitor is getting smaller and smaller. At this time, the decline of the market share of enterprises is acceptable, and enterprises do not need to take special actions; If the number of competitors is increasing, but the market share of some competitors is increasing, at this time, enterprises must focus on the analysis and research of these competitors with increased market share, understand the reasons why their growth is faster than the development of the industry, compare and analyze their own shortcomings and improve them to avoid being widened by competitors; If the number of competitors is decreasing, the market share of most major competitors is increasing. At this point, the reduction of market share means that the products of enterprises lack competitiveness. Enterprises must increase product investment, improve product performance, strengthen the construction of promotion and sales network, and strive to change the bad situation they face; If the number of competitors is decreasing and the market share of a few competitors is increasing, it means that the market is concentrating on a few big competitors, while small and medium-sized competitors are struggling. Enterprises are faced with an important choice: either maintain the status quo or change the status quo. Maintaining the status quo means that enterprises will not reverse the downward trend of market share. When enterprises think that they can't compete with big enterprises at all and are ready to fade out of the market, they will choose this way. Changing the status quo means that enterprises increase investment and reverse the decline in market share. This choice should be made when enterprises are confident and supported by corresponding resources.
2. The decline of enterprise sales is faster than that of industry sales, which leads to the decline of market share.
The decrease in industry sales means that the total market demand drops, the industry is depressed, and the market has no development value. The rapid decline of enterprise sales shows that the market crisis has a particularly significant and serious impact on this enterprise, indicating that its products are not competitive in the market. In view of this situation, enterprises have the following options:
(1) strategy of maintaining the status quo
Try to maintain market share or slow down the decline of market share. Enterprises can stimulate demand by increasing sales promotion or reducing prices at an appropriate time. This kind of countermeasure can be chosen when the enterprise finds that the income of the product is still good after analysis and research.
(2) the strategy of taking advantage of the trend
Enterprises no longer make more efforts to reduce market share, but still continue to implement the original marketing plan. When the enterprise thinks that the market income of the product is not very good after analysis and research, and the cost of changing market share may be greater than the income it brings, it should choose this strategy.
(3) Accelerated harvesting strategy
Enterprises cut the original marketing plan to reduce costs and increase the short-term benefits of products. This strategy can be chosen when the enterprise thinks that the product will decline rapidly and has done a good job of asset transfer.
(4) Give up the strategy
Enterprises will liquidate and sell products with rapidly declining market share, and finally give up business. When the enterprise has better business development, it can consider giving up products and developing new business with the assets obtained from the sale.
5. What is "moderate market share"?
In many articles about market share, it is often suggested that enterprises should pursue "moderate market share". Moderate market share means that the market share of enterprises can neither be too small nor too large. Too small can not reflect the scale advantage, too large may be beyond the control ability of enterprises. But what kind of market share is appropriate? There is no uniform standard, and enterprises can analyze and determine it by answering the following questions.
1. Can expanding market share bring obvious benefit improvement?
If we expand market share, we can reduce production costs and increase corporate profits. This shows that it is feasible to expand market share; If the expansion of market share does not bring about production cost savings and profit growth, enterprises should not consider expanding market share, and the existing market share is already large enough for enterprises.
2. What is the satisfaction, satisfaction rate, loyalty rate and loyalty rate of customers who have purchased enterprise products?
If the enterprise's customer satisfaction and loyalty are high, it shows that the enterprise has strong ability to meet customer needs and high market share quality. At this time, we can consider developing more markets and making full use of the capabilities and market resources of enterprises. If the enterprise's customer satisfaction and loyalty are low, it shows that the enterprise's ability to meet customer needs is poor and the enterprise is lacking in some aspects. At this time, don't consider expanding market share, or even consider the necessity of reducing market share.
3. Is there a corresponding resource guarantee for the existing market share?
Every time an enterprise develops and contacts a customer, it needs corresponding resources. The greater the market share, the more customers there are, and the more resources it needs. These resources include products, equipment, managers, maintenance and installation personnel, sales network, promotion ability and so on. In order to ensure that customer satisfaction is maintained at a certain level, resources must be required to reach a certain quantity and quality. If the resources of the enterprise are already stretched in the existing market, it means that the market share has exceeded the ability of the enterprise, and the enterprise should consider increasing resource investment or cutting some markets with low profitability; If the resources of the enterprise are not fully utilized in the existing market, the enterprise should strive to expand the market share in order to form a reasonable proportional relationship between the resources and the market share.
Six, to achieve two leaps in market share
1. Realize the leap from competing for market share of final products to competing for market share of core products.
Since 1990s, "seeking core competitive advantage" (or core competence) has become a new business philosophy of enterprises. The core competitiveness of an enterprise is its ability to develop unique technologies, unique products and unique marketing means. Core products are intermediate products between core competence and final products, such as Intel's central processing chip, Microsoft's Windows operating system, VCD player chip and so on. Enterprises with core products have the highest profits and the greatest influence in the industry. The key to developing core products lies in the innovation ability of enterprises and the ability to keep ahead in core technologies. These capabilities can only be formed by long-term accumulation within the enterprise. The market share of core products can truly reflect the sustained vitality and long-term profitability of an enterprise. On the other hand, the competition of China enterprises in recent years is centered on the market share of final products, and the methods adopted are basically relying on foreign investment, expanding scale and reducing prices. Enterprises are only trying to "do things right" and make things more efficient, but they lack enthusiasm and long-term vision in "doing the right thing"-making directional choices of core products, which should attract the attention of industry veterans.
2. Realize the leap from today's market share to tomorrow's market share.
Today's market share is of course important, which reflects the efforts made by enterprises in the past and now. But for future-oriented enterprises, we should pay more attention to tomorrow's market share. Now every enterprise has some pillar products, but after five years and ten years, can these products still become the pillars of enterprises? No one can guarantee it. Therefore, for tomorrow, for five years and ten years later, enterprises must begin to prepare technologies and products that can be used as pillars at that time. Maybe this will take a lot of risks, but if you don't do it, the enterprise will inevitably lose its future. Paying attention to tomorrow's market share requires enterprises to look at their past, present and future from a long-term perspective and seek the right direction for the development of enterprises; Paying attention to tomorrow's market share requires enterprises to increase investment and research in the future and continuously accumulate technology for future enterprises in order to maintain and expand future market share.