BrainTrust Query: Driving Market Share
Through a special arrangement, presented here for discussion is a summary of a current article from Getting Personal About Business, the blog of Zahn Consulting, LLC.
When marketers look at how to drive business or volume to their business, they often consider two different paths. The first is to get someone to switch their purchases from a competitor. The second is to create a new customer or consumer.
When one looks at how those two intersect, you create four different scenarios.
Neither purchases product nor shops at the business
The worst case scenario — the shopper not only doesn’t shop the store but doesn’t shop the category. If the store is selling pet foods, toys, cages, or other pet items, those without pets will not be inclined to shop with the store. The likelihood of winning them over to shop at that store and to make specific purchases are limited. But shoppers can be encouraged to try new categories and experiences — even pet stores can promote adoptions. The next step is to convince the shopper to shop the specific store.
Shops at the business, but not the product
An office supply store, for example, may sell copy paper to many customers, but that does not mean that the same person is a viable customer for the other products in the store. Is the lack of a purchase due to the shopper not knowing that the products are available or maybe does not know how to use certain products? This requires more insight to identify whether or not consumers have the need or interest in the products that are available but not currently purchased. It may be a matter of better promotion, advertising, merchandising or customer education that is required.
Buys item, but buys elsewhere
When the shopper does buy the item, but chooses to buy it elsewhere, the focus has to be on identifying why the customer chooses to buy an item at a competitor:
- Is it due to assortment options?
- Is it due to pricing?
- Is it due to the way it is merchandised?
This situation is most disturbing to the business in that the shopper may shop the store for other needs, but chooses to leave the store to make a purchase of a specific product because of the sense that the competition has something better to offer.
Shops with business and buys product with business
In this best-case scenario, the business gains from both securing the shopper as theirs (versus losing them to a competitor) and it gains the benefit of getting the sale of a product that is not going to the competition.
When looking at creating market share, the factors of creating a new customer versus just “stealing” some other competitor’s customers is going to create very different strategies. The best managed businesses work on both fronts — giving reasons to create switching behaviors, but also expanding the universe of customers by developing new shoppers who may not have known they could use a product, or need explanation as to how to use a product to improve their lives.
Discussion Questions: Are stores appropriately focusing on earning loyalty from existing customers versus going after new ones? Should retailers be more or less focused on competition in the marketplace?