Analysis 39: Market Share by Product Price Point

EXHIBITS:

HOW TO INTERPRET THE ANALYSIS: This exhibit shows the total market share, in units, for three Price Points in the industry. The set of Standard Leader Price Points controls 70% of the unit volume in the industry. The low-end, Price Leader, Price Point products control 29% of the unit volume. In this industry, the Performance Leader Price Points have only 1% of the industry's total unit sales.

PURPOSE: This analysis quantifies the size of each product price point category. The company would use this analysis either to anticipate its Core customer movement into a price point or to question whether the company needs to cover a price point in order to hold and grow its current Core customer volume.

Worksheet #15: Identifying High Potential Price Points

APPROACH: If possible, this analysis should be done using unit, rather than dollar, volume in the marketplace. The reason for preferring units is that costs tend to be more a function of units sold than of dollar volume. However, if units are not available, the company can use dollar volume.

A deeper analysis on this theme is to conduct the price point share analysis only for the target Core customer group. The company's target Core customers may buy somewhat differently than the market as a whole. Their needs are paramount in importance.

Examples of:
Standard Leader » Price Leader » Performance Leader» Next Leader » Industries With Four Price Points »

Self Test #15: Identifying High Potential Price Points

Return to Diagnose Products and Services: Four Price Points

Recommended Reading

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

Analyses:
Symptoms and Implications: Symptoms developing in the market that would suggest the need for this analysis.
Perspectives: Conclusions we have reached as a result of our long-term study and observations.
- "Attention K-Mart Copiers"
  To match experienced price competitors, management must be realistic about what a low cost and low price strategy really entails. (1987
  )
- "When Product Mix Matters"
  There are several price point specialists. Some are better positioned than others for long term success in a hostile market place. (1991
  )
- "Why Do Leaders Lead?"
  There are four potential kinds of leaders in the marketplace. In order to be successful, each must follow its own particular rules. (1986)
- "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 Choice of New Products"
  Companies add new products whether or not a market is hostile. But the choice of which products are most advantageous to add varies with the market situation. (1995)
- "Turmoil Below: Confronting Low-End Competition"
  There are four major types of competitor who offer your customers low prices. Each of them have distinct weaknesses. Your response to them depends on your answer to several tests that you would apply to your market and your competition.