Consulting for Small to Medium size Industrial Products companies
Increasing market share must have the right approach.
by Warren Martin, Founder on April 22nd, 2019

Going after additional market share is not always best for the bottom line of your business!
You are in the annual budget planning cycle and you have submitted your well thought out and detailed budget for the following year. Your boss congratulates you and your team on a job well done. One month later, your boss calls you in his office for a discussion on the budget... Turns out that Corporate needs 10% more to meet their promises to the equity markets (publicly traded company) which have been allocated down through the various business units. You object, but your boss tells you to just take more market share since you only have 55% according to your strategic plan numbers. If you have done your strategic planning well and know your customer base, you will be able to counter the directive to “pursue more market share.” You demonstrate that by doing so, it will in fact reduce the total profit delivered by your business at the end of the next year. In reality, your analysis shows you will need to spend more money to gain market share than you will receive in profit obtained from these additional sales. Or, you must price the product so low to get the share that you can't even cover variable costs (reducing enterprise value). You present this to your boss who is somewhat annoyed and looking to you for a solution. Again, here is where good strategic planning comes in. You remind him of the capital expenditure for a new product that will get you into a new and profitable market space as identified in your strategic plan. Your solution, "Let's move it to the front and put all resources on it to see if we can complete it quickly." "Perhaps moving forward this initiative can get us the incremental sales that will allow us to meet the additional profit number." Your boss smiles and...

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