Improving Market Share
Market share refers to the percentage of sales a company has in a specific market within a specific time period. For example, Wal-Mart has about 37 percent of the annual retail sales in the United States. Higher market share translates into higher profits. Gaining or building market share is an offensive or attack strategy to improve the companys standing in the market. There are four basic ways you can improve your market share. You can improve your product so that it is better than your competitors or you can change the price or offer special incentives for buyers, such as discounts or sales. Alternatively, you can find new methods to distribute your product so people can buy it in more places. Finally, you can advertise and promote your product. Using these techniques in any combination may improve market share.
Competitive advantage is an edge over a competitor that enables a firm to control a large market share or profits. There are four types of competitive advantage: low cost, customized products, delivery (speed and reliability), and quality. Small companies use a discount pricing strategy when they want to lower their prices to meet or undercut a competitors prices. Discount pricing can be used both on a temporary basis and even more permanently. Pricing decisions are largely contingent upon a companys overall product strategy as well as how long the product has been around. There are several key reasons to use a discount pricing strategy.
Order winners are characteristics of the product or service that compel the customer to choose your company over the competitors. Order winners comprise the competitive advantage of a company. Hence, to gain market share it is important to understand the winning criteria in the target market by using diverse information sources such as industry analysis, customer surveys and competitor analysis. At any given time, order winners are one or more of the four types of competitive advantage.