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Business Strategy
Channel Development
Sales Force Effectiveness
Market Share Analysis

Most companies are able to compute or estimate their share of a particular market. If they know the size of the market in the units that are an accepted measure (currency, units, ports, lines, etc), and they know what their customers have purchased (in the same units), then simply dividing the latter by the former will give them their market share.   Furthermore, they will typically choose to publicise their market share in the units that give the larger value, so ports shipped may be preferable to systems or currency measures if their systems are larger or per port price cheaper than their major competitors.

What they may not be so aware of is where to focus effort and resource to optimally drive market share growth. Adding new features to an already feature-rich product is not the best investment if the company’s sales force is below par (see measuring sales force effectiveness) or market awareness is low. That is why we use an approach pioneered by Frank Lynn & Associates Inc., to analyse market share and determine precisely where effort and resources should be applied to drive growth.

The approach focuses attention on the attributes that impact product availability, market presence and sales hit rate. By appraising the attributes that influence and govern these three variables it is possible to determine where the company must direct its energy and resources to impact market share and to quantify that impact in terms of market share growth. As an example consider the following.

If a company’s product addresses the products needs of (say) 75% of the market and its presence is 50% and its hit rate is 33% (i.e. wins one-in-three bids), then its market share in that defined market would be 12.4%. Should it now enhance its product capability such that the product now addresses 90% of the market but maintain the other variables, its market share would increase by 2.4% to 14.8%. Alternatively, if it had increased the number of channel partners, or worked with its current partners to increase shelf space and/or the partners selling capability (through training etc), so that its market presence increased from 50% to 60%, then its market share increase would have been exactly the same.

So which is the most cost effective way of increasing market share: an investment in product R&D or in improving channel capability? With R&D budgets running at 10% plus of company turnover, it is safe to assume an investment in the channel would prove to be much more cost effective.

If you would like to better understand how you could optimally increase market share, please contact us using the details provided.