Brand Strategy: 3 Keys To Increasing Market Share

Walker SmithApril 12, 20123 min

Brand Strategy: 3 Keys To Increasing Market Share

The economic downturn plaguing Western developed economies has been characterized as a once-in-75-years event, and policymakers have been criticized for mishandling economic policies because of a lack of experience with such a rare occurrence. But marketers have no such excuse. While this downturn is unusually severe, extended and difficult, it is an altogether familiar marketing puzzle. What marketers face is not unknown to them. It is a battle for share.

With Western developed economies hobbled and growing slowly at best, there is no rising tide of demand and spending to lift all brand boats. To create momentum for their brands, marketers must, instead, take demand from competitors. When more demand is not being created, brand growth can come only from greater share of the demand available.

The current generation of marketing leaders has not experienced a downturn like this before. But marketers have lots of experience with the kind of response that’s needed. Simply put, marketers who win the market share battle facing their brands will have growing brands whatever the state of the macroeconomy.

Since stealing market share is a known quantity to brand marketers, it is disingenuous to pretend that there is something new to say about what must be done. The key thing is for marketers to wake up to the fact that in the face of something utterly out of the ordinary, the best response is something completely commonplace. But even so, it’s probably not a bad idea to offer a few reminders of what this means for brand marketing, three things in particular.

First, share battles can be lost while a brand is winning in other ways. Brands on a winning streak with competitive customers may be on a bigger losing streak keeping their own customers. So in going after competitive customers, it is important not to lose sight of securing one’s own customers. Retention strategies are vital. When the economy is booming, lost customers can be replaced rapidly by multiples of new customers. No such luxury is true when the economy is weak. The first imperative in today’s marketplace is to do everything possible to keep existing customers happy.

Customers take the same view, particularly when it comes to putting existing customers ahead of new customers. In The Futures Company’s U.S. MONITOR research, the number one thing that consumers say companies “must do” to earn trust is “treat all customers fairly.” Fifty-six percent agree that companies must “offer the same deals to returning customers as they do new customers.”

Second, growth in a share battle is about the conversion of existing money not the attraction of new money. In a rapidly expanding economy, new money is flooding the market, so attracting as big a chunk as possible of new customers or new spending by existing customers is the key to growth. In a stagnant, weak economy, growth is realized only by converting a large share of the money spent by customers of competitive brands. Conversion is generally pursued through aggressive pricing, but that is just one way to attack the broader challenge of delivering a competitively superior value proposition. While this is the bottom line for marketing during any economy, during boom economies, brands that are merely good enough are generally more than enough to succeed. Not so when competitive conversion is front and center.

Finally, the bottom-line, while always important, becomes the whole ballgame in a weak economy. During good economic times, the race goes to brands with the fastest growing toplines. But during weak economic times, growing the topline is a non-starter, so winning brands are those that tighten up their bottom-lines. This is a fancy way of saying that managing costs is more important in tough times.

Generally speaking cost management weighs on marketers in the form of cutbacks and downsizing, which has been on the uptick lately. But marketers can get their heads out from under this guillotine by focusing on marketing efficiency – doing more for less. It’s time anyway to hold marketing accountable to serious quantitative metrics. This downturn is likely to be the catalyst that forces marketers to prove the enormous value they deliver — forcing marketers to measure up to the bottom-line.

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Walker Smith

One comment

  • Gary Bembridge

    April 13, 2012 at 7:11 am

    Thanks for the article and thoughts.

    I think one key point that you make is often underplayed by marketing teams, and companies. And this is that real success comes from having repeat purchasing. Repeat by existing customers, and getting them to buy more from you, is actually also likely to offer better margins and return on previous investments to recruit them in the first place. Recruitment of new customers/ consumers is a costly exercise. The old 80:20 rule usually applies – 80% of your profit and sales could well come from the core and loyal 20%. But, as you say, they are often ignored and not rewarded enough for being loyal…

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