Yearly Archives: 2012
When the Truth Hurts
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What Is Your Market Share?
What Is Your Market Share?
In a recent survey of local advertisers we asked what questions local business owners would ask of a marketing consultant. One of their questions was, “How do I measure my market share?”
A very important question indeed, particularly when you consider the doubling effect of market share. You see, local advertising generally does not affect market size, but it dramatically affects the advertiser’s market share.
Advertising won’t make more people buy cars or get a haircut; however, it can persuade the marketplace to buy from you instead of your competitor.
The ‘doubling effect’ occurs when your advertising persuades a customer who usually buys from a competitor to switch and buy from you. For example, if I had my hair cut at the same shop the first week of every month but switched to your salon this month, the net difference between your business and your competitor’s would be two haircuts, not one. That is one your competitor lost plus one you gained, making a net difference between each salon two haircuts, not just one.
And because advertising generally does not increase market size, its real measure is market share. Your overall market may be down 10%, but if you’re only down 2% you’re doing something right….your market share is actually up!
The answer to, “How do I measure my market share?” is not quite as simple. In larger ticket or larger volume operations the data is usually readily available through government or industry association statistics. But for smaller businesses or niche markets, it’s a little tougher to measure.
In our Seven Ways to Estimate Market Share, method number one is to, “Talk to your suppliers.” They generally have a good handle on who is buying what and can often give you a pretty good idea how your industry is doing overall and what your share might be. Those with integrity won’t tell you how a specific competitor stacks up, but they will share with you an estimate of your share.
A very important question indeed, particularly when you consider the doubling effect of market share. You see, local advertising generally does not affect market size, but it dramatically affects the advertiser’s market share.
Advertising won’t make more people buy cars or get a haircut; however, it can persuade the marketplace to buy from you instead of your competitor.
The ‘doubling effect’ occurs when your advertising persuades a customer who usually buys from a competitor to switch and buy from you. For example, if I had my hair cut at the same shop the first week of every month but switched to your salon this month, the net difference between your business and your competitor’s would be two haircuts, not one. That is one your competitor lost plus one you gained, making a net difference between each salon two haircuts, not just one.
And because advertising generally does not increase market size, its real measure is market share. Your overall market may be down 10%, but if you’re only down 2% you’re doing something right….your market share is actually up!
The answer to, “How do I measure my market share?” is not quite as simple. In larger ticket or larger volume operations the data is usually readily available through government or industry association statistics. But for smaller businesses or niche markets, it’s a little tougher to measure.
In our Seven Ways to Estimate Market Share, method number one is to, “Talk to your suppliers.” They generally have a good handle on who is buying what and can often give you a pretty good idea how your industry is doing overall and what your share might be. Those with integrity won’t tell you how a specific competitor stacks up, but they will share with you an estimate of your share.
Click here for me to deliver our free Seven Ways to Estimate Your Market Share.
The Nicest Lie
Hypocritical Pricing
Hypocritical Pricing
Would you agree that being customer-focused, or placing customers’ needs first in your marketing strategy, is essential to building a sustainable business?
Would you also agree that the airline industry probably has one of the least customer-friendly reputations in all of North America?
If you agree somewhat to these two statements, would it seem reasonable that a customer-focused organization would adopt the airline industry’s supply and demand pricing model?
Supply-and-demand pricing and customer-focused marketing models are incongruent with each other. The airline industry uses a supply and demand pricing model, gouging their customers when customers need them most, like at Christmas, and selling at a loss when most don’t need to fly.
Customers know that fuel and crew costs do not go up with passenger demand and they resent being gouged when they need the airline most.
Ironically, this same pricing model is also responsible for one of the most financially troubled industries in North America today…four out of six major airlines are in bankruptcy protection!!
I have yet to hear a convincing argument that supply and demand pricing and customer-focused marketing are compatible models.
Advertisers do not receive more value, more audience, better service, more brand awareness or more sales because we are nearing sold-out positions, just as they do not receive less value, audience, margins or service when you can shoot a cannon through your log.
Marketers who default to supply and demand gouging or discounting do so for one of two reasons:
Would you also agree that the airline industry probably has one of the least customer-friendly reputations in all of North America?
If you agree somewhat to these two statements, would it seem reasonable that a customer-focused organization would adopt the airline industry’s supply and demand pricing model?
Supply-and-demand pricing and customer-focused marketing models are incongruent with each other. The airline industry uses a supply and demand pricing model, gouging their customers when customers need them most, like at Christmas, and selling at a loss when most don’t need to fly.
Customers know that fuel and crew costs do not go up with passenger demand and they resent being gouged when they need the airline most.
Ironically, this same pricing model is also responsible for one of the most financially troubled industries in North America today…four out of six major airlines are in bankruptcy protection!!
I have yet to hear a convincing argument that supply and demand pricing and customer-focused marketing are compatible models.
Advertisers do not receive more value, more audience, better service, more brand awareness or more sales because we are nearing sold-out positions, just as they do not receive less value, audience, margins or service when you can shoot a cannon through your log.
Marketers who default to supply and demand gouging or discounting do so for one of two reasons:
1.) They do not care about, or have confidence in, the value they deliver,
OR
2.) They have not trained their sales people to sell their product for what it’s worth in slower demand seasons resulting in the need to make up for that weakness in high demand seasons.
Oh, I almost forgot one other reason for hypocritical pricing….followersyndrome… “We have to sell cheap in slow times because our competitors do”, is not an excuse that leaders use.
Selling is simply an exchange of value. The seller delivers value and receives value (money) in exchange for that value. It is not ‘selling’ if the seller does not realize value too.
If you have made a conscious decision to engage in customer-focused selling, then you must build your rate grids around value…..value to your customers, and value to your stations, 12 months of the year.
Selling is simply an exchange of value. The seller delivers value and receives value (money) in exchange for that value. It is not ‘selling’ if the seller does not realize value too.
If you have made a conscious decision to engage in customer-focused selling, then you must build your rate grids around value…..value to your customers, and value to your stations, 12 months of the year.