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.

Back to the top/August 2005 Main Menu


© 2005 The Daily Herald Co., Everett, WA