Hi experts,
I have a simple question -
If the market grows at 5% in revenue, our client grows at 2% in revenue, it means, our client is losing its market share to its competitors (existing and new entrants.)
It means the same if our client's revenue declines at 5%, while the market declines at a rate of 2%.
Is my understanding correct?
Thanks
Yes, it's the same logic with either positive and negative numbers.
The conclusion is that you are losing market share which means your competitors are doing something better than you, and you need to find out what that is.
Hi Anonymous,
Yes, your understanding is correct. You could always do a sanity check if you have any doubts (e.g. a company with 50% market share in a global market revenue of $1m; the company market share would become ~48.6% if its revenue increases by 2% while the global market revenue increases by 5%).
Cheers,
Yes, that's correct.
But make sure to consider this in relation to which stage the company is in i.e. growth, maturity or decline. For a new business or start-up the could start slow and speed up later. Hope you get the point.
Yes - you want to always grow at or above market rates to stop losing market share, or to shrink at a lower rate than the market to avoid losing market share. However note regardless of your growth rates, you never want to be in an industry with declining growth rates.
Udayan
Sounds all good. Grow faster than competition to gain market share, and fall slower than the competition to preserve/grow market share.
Hello,
That logic sounds right to me!
That's exactly right!
As you may have guessed, this is not good! It essentially means we're doing something wrong…we'll need to figure out what our competitors are doing right that we're not doing.
