The Myth of Market Share
Professor J. Scott Armstrong of Wharton says that obsessing about market share may cause companies to lose focus on what matters most -- profitability.
"We're not saying companies shouldn't pay attention to their competitors; they might be doing reasonable things that you may also want to do," Armstrong says. "What we're saying is that the objective should not be to try to beat your competitor. The objective should be profitability. In view of all the damage that occurs by focusing on market share, companies would be better off not measuring it."
Read more.
Comments
It was interesting to read this post on the Myth of MarketShare in the background of the recent issue of Economic Times daily wherein readers were amazed to go through the dialogue between Mr. Narayanmurthy and Mr. Azim Premji. Mr. Narayanmurthy's visionary activities never ceases to amaze me (I plumb for his candidature for the President of India). Perhaps no one has done as much to Karnataka after Sir M Visverayya. Anyway, coming back to this post, it is certainly important to understand that collaborative business models are vital; as Mr. NRN has said on one level competition is important and on another collaboration is required when it comes to competitors.
We ought to understand that benchmarking is very useful and watching competitors for this is more important than getting in to a rat race for marketshare (Bajaj versus Hero Honda).
Today, Toyota is a leader automobile manufacturer and marketer. What has Toyota pursued? Was it market share? No Toyota is a leader in Kaizen, benchmarking and they compete with themselves. Toyota is a great example on how continuous innovation and quality excellence gets marketshare.
Marketing warfare advocates strategies for gaining marketshare; however they are an offshoot of a bigger design in organisations to focus on quality excellence and innovation.
Posted by: Sunil S Chiplunkar | February 20, 2007 05:11 AM