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Competition is beginning to focus resources on market segments as market growth slows

Symptom: As growth slows, competition is concentrating resources on segments where they expect to be strong.

Implications for the market:

  • In many markets, the easy growth is gone and future growth can come only at the expense of other competitors.

  • Success in taking share will depend increasingly on distinguished service to a carefully chosen group of customers.

    • Each competitor will strive mightily to innovate and change in order to take share away from others and thus to grow its own business. But no one will succeed in being highly effective for all customers.

    • As a result, every company will focus its resources on only a part of the market, and will offer that chosen part a far-better-than-average product and service package.

  • But the successful company will need the help of a failing peer. The customers on whom this attention is lavished will not usually change their buying arrangements unless the supplier who has their business does something that the customer views as a product or service failure. Then the customer is likely to shift some of its volume.

Recommended Reading
For a greater overall perspective on this subject, we recommend the following related items:

Analyses:

Perspectives: Conclusions we have reached as a result of our long-term study and observations.

  • "Staying Alive in a Hostile Marketplace"A few companies survive and even prosper during periods of hostility. How do these companies avoid being the victims of tough market conditions?

  • "Failure Shifts More Share Than Success" For a company trying to gain share in a mature market, nothing succeeds like failure – the failure of a competitor.

  • "Success Under Fire: Policies to Prosper in Hostile Times"A hostile market evolves through six predictable phases. Most companies fail, withdraw or become acquisitions before this evolution is complete. They fail because their management policies were not effective. The few who survive and prosper do so by making decisions that follow two rules: attract customers and discourage competition. Losers lose by not following the second rule.

  • "The Rust Belt Revival" The revival of the U.S. Rust Belt in the late 1980's holds lessons for companies who would prosper in hostile market places.