Analysis 11: Company Compared to Market in Volume by Role

• Video #64: Core Customers Part 2: Finding Core Customers in Your Marketplace

PURPOSE: This analysis tells the company how it performs relative to the average competitor in obtaining volume in the primary and secondary positions in customer relationships.

APPROACH: The company conducts this analysis by summing its total volume by each position in all of its customer relationships and then dividing that volume by the total volume sold in order to arrive at a percentage of volume by role. A similar analysis conducted for the market produces the market's volume by role.

The company would use this analysis to evaluate its program compared to others in the marketplace. The more primary relationships a company has, the stronger is its market position. The company position becomes stronger still if these relationships are with VL and L customers.

In the example above, the company offers a much stronger program than the average competitor for primary relationships. This is a profile of a strong leader in the market. A follower, and smaller companies in the market, will tend to have higher percentages than the market in secondary roles and below.

Supplier Roles Examples >>

Return to Diagnose Segments: Position on the Matrix

Analyses:

• Analysis 9: Purpose of Roles Other Than Primary

• Analysis 10: Size and Role Segmentation Matrix

• Analysis 12: Company Volume Index on the Size/Role Matrix

• Analysis 13: Company Role Reasons

• Analysis 14: Customer Size Segments' Allocation of Volume By Role

• Analysis 15: Average Unit Volume By Position

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

• Customers are consolidating their purchases

• Customers are adding suppliers because incumbent suppliers failed them

• Customers are making significant changes in their supplier arrangements

• While still growing some competitors are losing share

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

• "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 Big Slice of the Pie": The head of one industry leader explains his company's insistence on being a key supplier to each of his customers: "The guy with the big slice of the pie doesn't go hungry." The workings of the typical hostile market provide solid support for this philosophy. (1995)

• "The Two Best Consultants in the World": The two best consultants in the world are a company's customers and its competition. The customer informs a company about the value of its product. The competitor is an authority on the company's cost. Neither consultant is ever wrong. (1988)

• "Use Subtle Strategy in Tough Markets": A hostile market operates differently than a market with "normal" competitive conditions. But as difficult as a tough market can be, it can also present an astute management team with an unusual opportunity. (1999)