Regain Lost Market Share -- Part 2 of 3
"This 'strategy' kept Americans permanently behind."
by Michael Cooney
Last month we looked at key questions you must ask yourself if you want to begin regaining lost market share. We also looked at the U.S. auto manufacturers as an example of a group steadily losing market share.
In 1985 domestic automakers controlled roughly 80 percent of the market here. Today they jointly control only 60 percent. Given present trends, it will be 50 percent in another ten years. The public mind is slow to change. The best way to avoid their predicament is to act quickly the moment you notice a market share decline.
Note: If your product or service is part of a declining trend (like film cameras) you can decide to ride your wave as long as it lasts and then switch to another business. That can be a viable option. But while you still have profits, make preparations to move to another industry or industry segment.
If a decline is due to the rise of able competitors, there are five concrete steps you can take to become a leader and regain lost share, after you do the research recommended last month in Part I. Here they are.
Customers flock to leaders. There are different ways you can lead, but one way or another, grab the lead in one aspect of your industry. It may be in perceived quality, or innovation, or variety, or color choice, or customization, or outstanding service. Depending on your type of business, there is some attribute that most likely even your strongest competitors have not taken advantage of. But you can.
Once you've decided which aspect of your business or industry you can capitalize on, you can then make it the focal point of future advertising. If, for example, you've settled on being the leader in variety, then you must make sure the world knows about this benefit you offer. Example: "The average hardware chain stocks 18 types of hammers. At ABC Hardware you’ll find 85 types of hammers."
U.S. Automakers got into the bad habit of benchmarking. They looked at Toyota or Honda products, for example, and then tried to engineer cars that matched those. By the time a new American car was introduced to match the Japanese competitor's car, those competitors had moved on and were ready with their next improved model. This "strategy" kept the Americans permanently behind. You don’t need anyone's permission to be a leader. And you can’t be content to follow the leader. Just decide where you’re going to lead and make it happen.
You’ve identified an aspect in which you can lead. Great. Now is the time to examine your product lines and cut out the dead weight. You’ll need capital to advertise your leadership position and to invest in inventory or manufacturing or design in support of your area of claimed leadership. Free up capital by trimming underperforming products or lines that may have been hanging around far too long. Especially those outside your new focus. Periodically you should carefully evaluate each product’s profitability and appropriateness to your company’s new focus.
This also applies to personnel. Unfortunately, management often thinks that the road to becoming lean and mean is paved with fired workers. Sometimes it should be the other way around -- management may need to get lighter. This could be the subject of several articles by itself, but when you get back to the basics and remember that workers produce what is being sold and managers guide the workers, you can ask the tough questions.
Can you involve workers in management activities? Could a team approach work in your company, where each worker team appoints a team lead? Can experienced teams set their own goals and then take responsibility for meeting them? There are endless permutations to consider, but it may make more sense to cut the fat out of mid-level management than to cut lower level employees. When you're lean and mean, you’ve got a fighting chance at regaining that lost market share.
It is discouraging to face declining market share and see competitors take your clients or customers. However, there are reasons why this occurs. In Part 1 we covered some areas of research needed to discover why this is happening. Part 2 began a look at steps you can take to regain leadership, and the market share that follows. Next time we’ll complete this discussion with three more steps to take.