Analysis 23: Competitor Share Change

Examples of Weak Competitors » Examples of Strong Competitors »

HOW TO INTERPRET THE ANALYSIS: Explanation: There is only one Strong competitor in the industry, Westroc, who gained 11 share points at the expense of all other competitors in the marketplace. Each of the other competitors lost share points and was, therefore, a Weak competitor.

APPROACH: This data is usually available through industry statistics. If not, the company can develop its own market share and market share change analyses from a sample of all customers in the marketplace and their suppliers. The company would do this by evaluating the market share of those suppliers at year end of the beginning period and again at year end of the ending period. The net share change across all competitors must be zero.

Once the company has developed a preliminary set of target customers, it should do this particular analysis again. This time, the company should do the analysis for the "market" defined solely by its customer target segments. On several occasions, we have found that the strong and weak competitors change when we examine different segments of the market. For example. a competitor who is weak overall and losing market share, may be strong in the segments of interest to the company.

Return to Diagnose Segments: Competitor Weakness

Analyses:

• Analysis 16: Positive Volatility Across the Industry

• Analysis 17: Share Shift Across the Customer Size and Role Segmentation Matrix

• Analysis 18: Positive Volatility by Position

• Analysis 19: Positive Volatility Index by Position

• Analysis 20: Win and Fail Definitions

• Analysis 21: The Cause of Volatility

• Analysis 22: Likelihood of Share Gain from Lower Position When Higher Position Fails

• Analysis 23: Competitor Share Change

• Analysis 24: Competitive Vulnerability

• Analysis 25: The Expected Gain Index

Symptoms and Implications: Symptoms developing in the market that would suggest the need for this analysis.

• Some customer groups are growing faster than others

• Some companies in the industry have begun to replace their direct sales forces with independent distributors (or vice versa)

• Fast growing competitors focus on the industry's large customers

• Share is tougher to shift

• The industry leaders are losing share

• While still growing some competitors are losing share

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? (1994)

• "Is Bigger Really Better?"
  In the average large industry, the market share leader is only slightly more likely to lead the industry than is any one of the next three competitors in the industry. Market share leaders often fail to become return leaders because they serve some customers who yield low returns and rely on size alone to create economies of scale. (1998)

• "The Real Reason Market Share Matters"
  Market share does count, but for more than the reasons thought previously. (1991)

• "Which Customers Matter Most?"
  Average customer profitability differs dramatically in non-hostile and hostile markets. Does the relative importance of one customer versus another change as well? The answer is less evident than many business leaders believe. (1994)