Whether you’re a solo-practitioner, or a Fortune 100™ global conglomerate. All products and services need a market. How to go about entering or creating those markets is serious business indeed. However, it has been both my experience as well as observation that many fail to achieve either penetration into, or, creation of with any staying power for one generalized reason: They only see the market through the prism of the over-referred to “business pie” model.
Sometimes I believe it’s overused because of the simplicity to draw it in a PowerPoint® presentation. Rather; than simply showing a true strategy and tactics presentation. But I digress.
The most overused yet misunderstood dynamic in my opinion is: the expansion of the business pie. Yes, when the business pie (i.e., an increase to the overall market as a whole) expands there is not only more business to be had, but also more market share to be gained by the savvy. However, Only If: they are truly aware and set about using proper tactics to achieve that market share. For if not – they might be creating market share to only have none other than their competitors regroup to take it from them if they aren’t careful. Let me elaborate…
Below is a diagram of what is generally accepted as the business pie. As you can see, the inner circle represents the existing market divided up into different competitors share of that pie. All are represented as equal for simplicity of this exercise.
What far too many will assume next is that they need to do two things. First: Compete with every competitor within the pie (i.e., their current market-share) as to try to either convert existing customers to their offerings. Or, convert unrealized customers into new customers without stealing from the current market share holder.
So what’s the issue one might ask. Or to say it differently “If the pie is increasing, and I’m not taking share from the my competitors, just an increasing of the pie and holding it as my share. What’s at stake?” To which I’ll answer: “Your entire business. Because you just might be setting the table for your competitors to dine at – with no seat left at the table for you. A table you provided the bounty for.”
Why is this? It’s because what many will do is expend valuable resources competing with everybody. They’ll go in with their great new doodad, or their “new or improved super-service” spiel only to find just at the most inopportune time (usually once those valuable resources have been depleted to near nil) they find themselves in an onslaught of competitive knock-offs or repricing structures (as in near giveaways) leaving them unable to continue the competing process. Only then to be left needing to look for a way to either sell out to the existing competition, or close shop.
The problem is they went into the market looking for expansion; and did little more than expanded the competitions market awareness. Along with raising their presence on the competitions radar to high alert status.
Sure the “pie” might have been expanded, but creating the slice or expanding the size and eating it – are two different things. And fighting a battle on all fronts from all sides with well entrenched competitors more often than not is a losing recipe. Especially for a “business pie.”
Let me share a different tactic: Expand the pie via an asymmetric approach.
So why is this approach so different you may ask. Well, the main reasoning is: It allows one to decide and implement tactics for market share in, or around, one or more of the current competition. Leaving others to possibly not pay any attention to your insurgence into the market place. (i.e., If they don’t perceive you as a threat – why allocate resources to halt or impede you?)
What this also does is allow you to dance gently on you competitors edges where you may receive the same “blind eye” treatment from others. However, the biggest difference here you’ll notice is the entire space has been both created, expanded, and occupied by you – and you alone. Your market cap as opposed to your competitors in the above example is about the same. And – it is only in direct contact with a few. In theory – half the market doesn’t even know you’re there and you may be just as large as they are.
Below is to show just how valuable as well as instructive just this small change in perception can work to one’s advantage.
Here you’ll see “you” are penetrating or converting current market share of a competitors into your own. Slowly, but surely without taking on the entire market all at once. Again, why this tactic may be of an advantage is for how it may allow one to not only compete, but use those valuable resources selectively and allocate them to acquiring business in a much more disciplined, as well as prudent manner. A seeping into a competitors market share sometimes is far more cost effective as well as defensible (as in keeping those conversions) then just some bold onslaught of “Here we are everybody! Free this, that, or whatever if you give us a try today.”
Showing in the next example is how one may enable themselves to suddenly be a force in exponential market gains. Rather than just gaining by slow infiltration process into the existing market. For with this now more dominant size and scope, one may look to acquire the proper resources to purchase outright a competitor that never realized just how much of force you had become. This is where exponential growth as well as sustainability can evolve from. Remember, It’s one thing to gain or create market share. It’s quite another to keep it.
Now as one can see. Not only have you increased the pie – you’re consuming that pie. Much better than to create it, only to then not have a seat or plate left to enjoy it because – your competitors took it all back from you – and then some.
Gaining market share as well as market creation is not only about how you deploy your own resources. It’s also about whenever possible getting the competition to hold back on using theirs – till eventually it’s too late to be of any good.
© 2015 Mark St.Cyr