Regain Lost Market Share -- Part 1 of 3
"An entire generation of Americans had come to the conclusion 'never buy American'."
by Michael Cooney
One frustration in business that generates more anxiety and head scratching than most is loss of market share. Occasionally the cause is obvious. More often it is a gradual erosion of sales in the face of emerging competitors, and it may take several years before identifiable reasons become apparent.
If you are struggling against changing market forces and are losing market share, there are steps you should take immediately to begin the reversal. Realize, however, that regaining lost share may eat up years of time, just as it may have taken years to lose it. Some of these remedies will help in the short term; others will take time to reach full effect. But if you don’t begin now, you'll only have to climb out of a deeper hole -- lost share does not return on its own.
Before knowing what actions are appropriate, you'll first need to determine why your company is losing share, and that takes research. Here are some questions that demand careful, honest, thorough answers:
Which primary competitors are gaining market share, and how are they doing it? This takes considerable research, but should give you some of the important answers you'll need to formulate your future plans. You need to analyze and understand their product mix, packaging, warranties, customer service attributes, and so on.
Are your products or services poised to benefit from emerging market trends? Again, you won’t know how to position your products in the market, or even what trends you need to align with, unless you carefully research market trends in your field.
Are you purchasing from your primary and rising competitors? And are you or your surrogates buying from your own company? There is a massive amount of invaluable information to be gained by taking an hour each month to buy from competitors, and from your own company when appropriate, and compare quality, price, sales pitches, customer service, packaging, shipping, and how other details are handled.
Have you personally contacted your former best customers to learn why they no longer buy from you? This must be handled delicately to obtain honest answers, but when done properly you will not only learn valuable information, but may win some of them back.
This research is designed to help you answer the critical question: “Why are my prospects buying from the other guy?”
It's important to understand how long the times frames can be in dealing with market share gain and loss. Look at the U.S. auto industry for example. Through the 1950s and '60s, U.S. automakers had nearly total control of the U.S. market. In the 1960s, Volkswagens, Hondas and Toyotas started making inroads. GM, Ford, Chrysler and American Motors took little notice. They should have.
Through the 1970s, rising Japanese market share cut into domestic corporate profits. Domestic automakers initiated half-hearted countermeasures (remember the Cadillac Cimarron?) during the 1970s and '80s, while market share weakened. Attempts were made at producing more fuel-efficient products, but quality was poor and the public wasn’t convinced. Placing accountants in key decision making posts didn't help. The Detroit bean counters hardly had a clue as to what made American car buyers switch, in ever increasing numbers, to Japanese (and European) makes.
By 1990 the domestic makers finally got the message: quality, reliability, fuel economy and ease of maintenance mattered. Domestic quality began improving. But after two decades of downward momentum due to poor quality and maintenance complaints, the domestic manufacturers found it difficult to turn things around. An entire generation of Americans had drawn the conclusion "never buy American." That momentum continues to this day. Even though domestic autos have largely caught up in quality with the Japanese (believe it or not, it’s true), those who believe American-made cars are inferior are not about to gamble with their dollars—they will never buy another American brand auto. Never.
Just as it took decades for American auto manufacturers to lose market share (it’s still declining) it will take decades to get it back, if they ever can. The Japanese, naturally, won’t be resting on their laurels. This example should cause concern for any company’s leadership that believes it can take its market for granted. As an executive or owner, you must always -- always -- strive to know your market and stay on top of emerging trends. If it takes you years to discover why you’re losing share, it may take an equal number of years, or more, to get it back. To be continued….
VISIT OUR PORTFOLIO