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Driving Market Share

When marketers look at how to drive business or volume to their business, they often look at 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: 

  1. The shopper or customer does not buy a product nor shop with the business for any of their needs.
  2. The shopper does not buy the product, but does purchase other items currently with the business.
  3. The shopper buys the product, but does not currently make any purchases with the business (they do all of their shopping with a competitor)
  4. The shopper buys the product and they also shop with the business (though they may not buy ALL of their purchases of the product with the business).

Neither Product Purchase Nor Shopping with Business

In this scenario, the prospective shopper does not buy the product and does not make any purchases with the business.  So, in this scenario, there has to be justification provided to get the shopper to change two habits.  One, give the shopper a reason to switch where they do their shoppping and start shopping with the business (which entails understanding why the shopper is NOT shopping with the business.  Is it because the business is not located where the shopper prefers to shop?  Is it due to a previous bad experience?  Or other reasons).  The other requirement is to provide a rationale for purchasing the product.  No matter how convenient the store may be, and regardless of the price, assortment, or attractiveness of displays within a store, 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.

Shop at the business, not the Product

In the scenario where someone does walk into a specialty retailer and occasionally buys something or does make purchases with a business; but doesn’t purchase a specific product, the situation is a little different.  The office supply stores 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.  So, for example, the person may not buy thumb tacks, rubber bands, or calculators at the store.  Is the lack of a purchase because the shopper does not KNOW the products are available there (and if they did know that, they might purchase it?).  Do they not know how to use certain products and so they don’t even know that they COULD use the product (if someone explained how to use a label-maker, the customer might buy it – but they are not even aware that such a product exists or how to use one)?  Is the person aware of the other products, but purposely has not make a purchase out of a lack of need or interest (I know they sell pens, but I don’t have a need to buy pens at any store, I get all I can use from my employer)?

The ability to get that shopper to shop for more of their potential needs with the business requires more insight to identify whether or not they 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

In the event that the customer or 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?
  • Other reasons?

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 the sense is that the competition has something better to offer.

Shops with business and buys Product with Business

In this scenario, the business gains from both securing the shopper as theirs (versus losing them to a competitor), AND they gain the benefit of getting the sale of a product that is not going to the competition.  The potential “total share” of purchases though may be split across numerous providers.  Think about how many different places we each frequent to make a beverage purchase.  Some of the purchases occur in a restaurant.  Others, at a drive-through.  Still others at a convenience store.  For some of us, we buy some of our beverages in a grocery store.  And still other purchases happen in drugstore or other retailer.  While we are customers of ALL of those outlets, no one of them has us as a particularly loyal customer where we make all of our purchases.  Instead, we share our purchases across all of them.  Imagine how much more profitable we would be to any of them if we made our beverage purchases with just one of them.

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 in one way or another.

Some experts say it is better to create new customers than to steal from competition.

David Zahn