Analysis 40: Industry Growth by Product Price Point

• Video #69: Overview of Products and Services Part 1: How to Look

• Video #23: Full Explanation of Price Points and Competitor Types in a Market

• Video #78: Competing Against Low-End Competition Part 1

• Video #79: Competing Against Low-End Competition Part 2

• Video #19: Definition of Standard Leaders

• Video #20: Definition of Performance Leaders

• Video #21: Definition of Price Leaders

• Video #22: Definition of Next Leaders

• Video #24: Price Point Specialists in Hostility

PURPOSE: This analysis builds a case for the company's development of its product price point mix. In general, the company will want to cover any price point that is growing in the marketplace, as long as its target Core customers will buy at that price point. Failure to cover growing price points is likely to cost the company both volume and profitability in the short to medium term.

• Audio Tip #81: Standard Leader Products and Companies

• Audio Tip #82: Performance Leader Products and Companies

• Audio Tip #83: Price Leader Products and Companies

• Audio Tip #84: Next Leader Products and Companies

• Worksheet #15: Identifying High Potential Price Points

APPROACH: The company measures the industry total unit volume by price point at the beginning and end of the period. It then calculates the share that each price point had at the beginning of the period and at the end of the period. The differences in these shares from the beginning of the period to the end of the period represent the change in share points for each product price point. The sum of these share point differences is zero.

• Audio Tip #86: Withdrawing From a Product Price Point

• Audio Tip #87: Potential Low-End Competitors in a Marketplace

• Audio Tip #88: Questions to Determine Your Response to a Low-End Competitor

• Audio Tip #89: Price Point Bias

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

Return to Diagnose Products and Services: Four Price Points

• Self Test #15: Identifying High Potential Price Points

Analyses:

• Analysis 38: Definition of Price Points in the Market

• Analysis 39: Market Share by Product Price Point

• Analysis 41: Price Point Product Mix by Competitor

• Analysis 42: Target Customer Purchases By Price Point

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

• New entrants are growing much faster than the market

• Price points are growing at differential rates as companies enter higher end niches to improve profits

• Companies are trying to create upscale niches

• Some competitors proliferate products around the heart of the market

• One or more companies have introduced a better product at a lower price

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.