Low sales growth rate

Anonymous A asked on May 26, 2018

Hi ALL,

Could you please help me with these 2 questions:

1. What are the possible reasons for a low sales growth rate?

2. What framework should I use when answering the question?

Kind Regards

2 answers

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Best Answer
Deepak replied on May 29, 2018

For the framework, I'll apply the three 3 C's of Marketing and look at them through the prism of economic and non-economic factors -

Customer - Economic : Low disposable incomes, high unemployment leading to a move to cheaper alternatives or maybe a reduction in the use of the product if its a discretionary item. Also Change in customer preferences leading to an industry-wide slump, the emergence of substitutes should be looked at.

Company - Focus on other areas of business, reduction int he marketing spend, increasing costs making the products expensive, quality of the products deteriorating

Competitor - competitors reducing their prices, spending more on marketing, making better products, using newer channels, promotions to take away our growth

Hope you find it somewhat useful.

Vlad replied on May 30, 2018
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Hi!

It depends very much on the industry. In some cases (Growth strategy) I will use a broad structure, in others (e.g. “how to increase the excessive luggage revenues for an Airline”) I will use P, Q and the Process. Here is the broad structure that you can adapt to your industry:

Analyze the market:

  • Size and growth rates
  • Segments (geographical, customer, product)
  • Distributors / Suppliers
  • Regulation
  • Key market trends

Analyze the competitors:

  • Market shares, growth rates, profits
  • Product / customer / geographical mix
  • Products (Value proposition)
  • Unit economics (Value proposition vs. price vs. costs)
  • Key capabilities (Distribution, supply, assets, knowledge, etc)

Analyze our company:

  • Market share, growth rates, profit
  • Product / customer / geographical mix
  • Products (Value proposition)
  • Unit economics (Value proposition vs. price vs. costs)
  • Key capabilities (Distribution, supply, assets, knowledge, etc)

How to increase revenues:

  • How to increase the scope: Product / customer scope, geographical scope
  • How to improve value proposition (How to fix your weaknesses and improve your strengths; Potential increase in price and volumes)
  • How to answer the competitors (Unique or hard to build property and contracts; Customers / suppliers / complements with lock-in; Reputation and relationships; Organizational capabilities; Product features and know-how)
  • Other benefits of scale (Spreading Fixed costs, Change in technology, Bragaining power)

Best!