Cookie and Privacy Settings

This website uses cookies to enable essential functions like the user login and sessions. We also use cookies and third-party tools to improve your surfing experience on preplounge.com. You can choose to activate only essential cookies or all cookies. You can always change your preference in the cookie and privacy settings. This link can also be found in the footer of the site. If you need more information, please visit our privacy policy.

Data processing in the USA: By clicking on "I accept", you also consent, in accordance with article 49 paragraph 1 sentence 1 lit. GDPR, to your data being processed in the USA (by Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

Manage settings individually I accept
3

Decreasing market share

Hello!

I came across a prompt stating that "our client, a B2B software company has declined decreasing market share. They have an online presence exclusively". Why is this happening and how would we fix it.

I approached it broadly in 2 ways:

a) Market is shrinking -- (size, growth, regs, lifecycle etc.)

b) Our share is shrinking -- (aka customers are going to our competition)

I'm struggling a bit with structuring part b) without making it > 3-4 mins.

I looked at it in the following way so:

i) Customer (price/customer, # of customers, customer mix) -- and provide some suggestions on each

ii) Product (price per product, # of sales, product mix) -- and provide some suggestions on each

And comparing each of these to our competition to isolate where the major difference lies.

I feel some areas I'm missing out are distribution channels etc. which I'm not sure how to include in this format.

Would appreciate any thoughts on how to structure a case where we need to find the cause of market share decline?

Hello!

I came across a prompt stating that "our client, a B2B software company has declined decreasing market share. They have an online presence exclusively". Why is this happening and how would we fix it.

I approached it broadly in 2 ways:

a) Market is shrinking -- (size, growth, regs, lifecycle etc.)

b) Our share is shrinking -- (aka customers are going to our competition)

I'm struggling a bit with structuring part b) without making it > 3-4 mins.

I looked at it in the following way so:

i) Customer (price/customer, # of customers, customer mix) -- and provide some suggestions on each

ii) Product (price per product, # of sales, product mix) -- and provide some suggestions on each

And comparing each of these to our competition to isolate where the major difference lies.

I feel some areas I'm missing out are distribution channels etc. which I'm not sure how to include in this format.

Would appreciate any thoughts on how to structure a case where we need to find the cause of market share decline?

3 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer

Hi!

I don't understand point a) at all. The question is "Why is our market share shrinking?". So how can you make a statement that the market is shrinking? This is simply a logically wrong deduction.

On more general terms, this is a nice example why you have to always first align on the definition of your focus metric. You can not just assume something!

"Market Share" is not universally defined. The most common definition is probably "Revenue divided by Market size". But the definition differs by industry. Sometimes it is not about revenue, but about number of customers. Or about volume. Or something completely crazy, like balance sheet size (this is the case in Banking!). So before you start with anything, you have to define your focus metric.

And even if it is Revenue - decline in market share does NOT mean that revenue is decreasing! It means that the numerator (Revenue) becomes smaller RELATIVE to the denominator. So you can also lose market share with growing revenue - if the market grows faster.

Thereby, you first need to understand which situation prevails. If market share is measured by revenue:

  • Is our revenue growing slower than the market? Or is our revenue actually shrinking?

Once we have clearness on this, we can outline our full structure. There are two overarching steps.

Step 1: Diagnostic (understand what has happened that has caused the market share decline, and why it has happened)

Step 2: Outline of strategic measures (what can we do to address the specific reasons identified in Step 1?)

Starting the Diagnostic means that we have to explore revenue in terms of why we are underperforming relative to our peers.

  1. Firstly we disaggregate revenue into its conceptual drivers: Price and Volume.
  2. Then we check, what is the numerical driver of the market share loss: are we underperforming in terms of pricing, or are we underperforming in terms of volume sold
  3. Once we know what causes the problem on the first level, we dig deeper. So if, for example, we are underperforming in terms of volume, we have to ask ourself "What determines the volume sold?". Or in other words, what is important to customers? And how strong are we regarding these customer-relevant aspects compared to our competitors? (for example, if there is an increasing need for post-sales support services --> how good are we in providing this?). The result of this assessment gives us a clear view on where our pain point lies. This marks the of the overarching Step 1 (Diagnostic)
  4. Once we understand the pain point(s), we can start to outline specific solution ideas to address these very pain points (and only these pain points!). This is the overarching Step 2.

I hope this helps.

Cheers, Sidi

Hi!

I don't understand point a) at all. The question is "Why is our market share shrinking?". So how can you make a statement that the market is shrinking? This is simply a logically wrong deduction.

On more general terms, this is a nice example why you have to always first align on the definition of your focus metric. You can not just assume something!

"Market Share" is not universally defined. The most common definition is probably "Revenue divided by Market size". But the definition differs by industry. Sometimes it is not about revenue, but about number of customers. Or about volume. Or something completely crazy, like balance sheet size (this is the case in Banking!). So before you start with anything, you have to define your focus metric.

And even if it is Revenue - decline in market share does NOT mean that revenue is decreasing! It means that the numerator (Revenue) becomes smaller RELATIVE to the denominator. So you can also lose market share with growing revenue - if the market grows faster.

Thereby, you first need to understand which situation prevails. If market share is measured by revenue:

  • Is our revenue growing slower than the market? Or is our revenue actually shrinking?

Once we have clearness on this, we can outline our full structure. There are two overarching steps.

Step 1: Diagnostic (understand what has happened that has caused the market share decline, and why it has happened)

Step 2: Outline of strategic measures (what can we do to address the specific reasons identified in Step 1?)

Starting the Diagnostic means that we have to explore revenue in terms of why we are underperforming relative to our peers.

  1. Firstly we disaggregate revenue into its conceptual drivers: Price and Volume.
  2. Then we check, what is the numerical driver of the market share loss: are we underperforming in terms of pricing, or are we underperforming in terms of volume sold
  3. Once we know what causes the problem on the first level, we dig deeper. So if, for example, we are underperforming in terms of volume, we have to ask ourself "What determines the volume sold?". Or in other words, what is important to customers? And how strong are we regarding these customer-relevant aspects compared to our competitors? (for example, if there is an increasing need for post-sales support services --> how good are we in providing this?). The result of this assessment gives us a clear view on where our pain point lies. This marks the of the overarching Step 1 (Diagnostic)
  4. Once we understand the pain point(s), we can start to outline specific solution ideas to address these very pain points (and only these pain points!). This is the overarching Step 2.

I hope this helps.

Cheers, Sidi

Book a coaching with Anton

100% Recommendation Rate

4 Meetings

1,089 Q&A Upvotes

USD 179 / Coaching

Hi,

I have seen numerous candidates develope BS frameworks on this. And here is why:

45% of candidates develop quantitative structures and fail. This is because these structures do not help to isolate a problem when it affects both number of clients and their spending simultaneously.

Another 45% of candidates will use Cheng structures like Clients, Company, Competitors. It does not help to isolate the problem again because the problem affects all drivers simultaneously. Your clients changed their preferences, your company has not reacted on this and your competitors have reacted.

Now what do the winning 10% of candidates do?

  1. Understand, that if you lose market share then clients think that your competitor is better at something
  2. Understand, that the only way to find out why clients think that competitors are better is to compare your company vs competitors
  3. Understand, that you need to be MECE to find the problem and the best way to be MECE in this case is to compare your company’s client journey vs competitor’s client journey

That’s it. Simple and clear.

Best,

Anton

Hi,

I have seen numerous candidates develope BS frameworks on this. And here is why:

45% of candidates develop quantitative structures and fail. This is because these structures do not help to isolate a problem when it affects both number of clients and their spending simultaneously.

Another 45% of candidates will use Cheng structures like Clients, Company, Competitors. It does not help to isolate the problem again because the problem affects all drivers simultaneously. Your clients changed their preferences, your company has not reacted on this and your competitors have reacted.

Now what do the winning 10% of candidates do?

  1. Understand, that if you lose market share then clients think that your competitor is better at something
  2. Understand, that the only way to find out why clients think that competitors are better is to compare your company vs competitors
  3. Understand, that you need to be MECE to find the problem and the best way to be MECE in this case is to compare your company’s client journey vs competitor’s client journey

That’s it. Simple and clear.

Best,

Anton

Book a coaching with Clara

100% Recommendation Rate

58 Meetings

15,735 Q&A Upvotes

USD 229 / Coaching

Hello!

When they tell you that market share is shrinking, this has nothing to do with the size of fluctuations of the market itself.

Hence, your option a is out of the picture. You should focus only on what is making your portion of the cake be smaller than it used to, not the cake itself.

Hope it helps!

Cheers,

Clara

Hello!

When they tell you that market share is shrinking, this has nothing to do with the size of fluctuations of the market itself.

Hence, your option a is out of the picture. You should focus only on what is making your portion of the cake be smaller than it used to, not the cake itself.

Hope it helps!

Cheers,

Clara

Related case(s)

MBB Final Round Case - Smart Education

Solved 17.7k times
MBB Final Round Case - Smart Education Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvantaged areas. The client is considering starting operations for its services in the Chicago area. They hired us to understand if that makes sense. Due to the nonprofit regulation, SmartBridge should operate on its own in the market, without any partnership. How would you help our client?
4.6 5 628
| Rating: (4.6 / 5.0)

Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvant ... Open whole case

Chinese Chess - Airline Business During COVID-19

Solved 4.0k times
Chinese Chess - Airline Business During COVID-19 Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April.  They've brought you in to first investigate what can be done immediatedly to prevent hemorrhaging cash and surive in the short-term. They are also looking to see how the current situation can be viewed as an opportunity, and what can be done to prepare for the future. 
4.3 5 115
| Rating: (4.3 / 5.0)

Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April. They've brought you in to first investigate what can be done immediatedly to prevent hemor ... Open whole case

LightFast - Launching high-speed broadband in Indonesia

Solved 3.2k times
LightFast - Launching high-speed broadband in Indonesia Your client is the CSO of LightFast, a Middle-Eastern telecoms and media player. They are a national incumbent player who expanded operations into South-East Asia and North Africa in late 2010s. Their operations in Indonesia include pay-TV and fibre-optic broadband. However, the broadband business has flat-lined since launch. LightFast is now looking to reset its Indonesian subsidiary and has asked you to advise them on whether they should re-launch or close operations. They would like you to advice on the size of the opportunity if they were to re-launch in Y1, estimate the expected payback period and then highlight key considerations to make a go/no-go decision.  
4.4 5 107
| Rating: (4.4 / 5.0)

Your client is the CSO of LightFast, a Middle-Eastern telecoms and media player. They are a national incumbent player who expanded operations into South-East Asia and North Africa in late 2010s. Their operations in Indonesia include pay-TV and fibre-optic broadband. However, the broadband business h ... Open whole case

Bain 1st Round Case – BlissOttica

Solved 2.1k times
Bain 1st Round Case – BlissOttica Our client is a BlissOttica, an Eyewear Manufacturer that is looking to reach a 10% increase in profits. How would you help our client?
4.3 5 105
| Rating: (4.3 / 5.0)

Our client is a BlissOttica, an Eyewear Manufacturer that is looking to reach a 10% increase in profits. How would you help our client? Open whole case

Roma Solutions - Senior/ Expert Level Tech Case

Solved 300+ times
Roma Solutions - Senior/ Expert Level Tech Case Let’s say we’re working with a large Tech company (i.e. FB, Apple, Microsoft etc.). They are interested in getting into the low-code iBPMS space. This is a space where pseudo-code is used to deploy large-scale process-based IT applications rapidly (in months, not years). In particular, they’re looking at a company called Roma, which is one of the leaders in the space. What are your thoughts here? *box-open blue* You can clarify the following (if asked) iBPMS  - Intelligent business process management suites. Think SAP for example. They are IT systems that take users through business processes. The business model of these Tech firms is primarily to find ways to integrate diverse offerings/capabilities to build better products and ecosystems.  Therefore, technical synergies are important here. The market is fairly competitive with about a dozen players. Roma is a market leader in this space, vying for 1st against 2 competitors. The top 3 dominate the market.*box-close* 
4.3 5 3
| Rating: (4.3 / 5.0)

Let’s say we’re working with a large Tech company (i.e. FB, Apple, Microsoft etc.). They are interested in getting into the low-code iBPMS space. This is a space where pseudo-code is used to deploy large-scale process-based IT applications rapidly (in months, not years). In particular, they’re look ... Open whole case