Analysis 21: The Cause of Volatility

• Video #66: Overview of Segments Part 1: How to Look

• Video #67: Overview of Segments Part 2: What to Expect

• Video #68: Overview of Segments Part 3: What to Do

• Video #17: Value and the Customer Buying Hierarchy

• Video #42: Leader's Trap

• Video #54: Cost Reduction By Winners vs. Losers in Hostility

Win/Fail: Industry Examples »

PURPOSE: This analysis quantifies the reasons and shares of total volatile volume moving due to incumbent supplier failure of a customer relationship as well as due to competitive wins in the market place.

"Win Market" Examples » "Fail Market" Examples »

• Audio Tip #33: Strong vs. Weak Competitors

• Audio Tip #34: How Does a Company "Win" in a Market?

• Audio Tip #35: How Does a Company "Fail" in a Market?

• Audio Tip #36: The Importance of Customer Retention in Hostility

• Worksheet #7: Wins and Failures in a Marketplace

APPROACH: This Analysis draws on the resuls of Analyses 2 and 66. The Win vs. Fail Definitions (Analysis 20) breaks all the volatile volume in the market into volume that moved on a "win," where a competitor offered something that less than half of the competitors in the market would offer, and where there was a "failure," where an incumbent supplier either could not, or would not, offer a benefit that the customer viewed as available from at least half the suppliers in the marketplace.

Test Your Knowledge: Win vs. Fail >>

• Self Test #7: Wins and Failures in a Marketplace

Return to Diagnose Segments: Win vs. Failure

Return to Basic Strategy Guide Step 7

Analyses:

• Analysis 2: Requirements for Customer Information

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

• Analysis 19: Positive Volatility Index by Position

• 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

• Analysis 66: Approach to Create the Customer Information Database

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 taking on more suppliers because shortages have appeared

• Customers are making significant changes in their supplier arrangements

• Share is tougher to shift

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

• "Overcapacity: Threat or Opportunity?"
  Overcapacity is a problem that occurs in service, as well as manufacturing industries. When it strikes, the problem affects most functions in a company, and astute managements in a wide range of industries have found common formulas to outperform competition in markets with overcapacity. (1988)

• "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. (1991)

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