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Low sales growth rate

Anonymous A

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

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Deepak replied on 05/29/2018

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 05/30/2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

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!

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