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From inception, one of the main focuses of or objectives of a business is to make as much profit, gain market share and also be a leading player in the industry. Businesses have incorporated expansionary measures in their “Strategic planning” and also made achievable projections towards gaining as much grounds and becoming a market player.
Realistically gaining market share could be one of the most demanding or rather upheaval task especially for new and emerging businesses. In business studies, we have come to learn that as a business entity, it’s either you create a new product for a new market, a new product for an existing market, a new market for an existing product or a market for a new product,we would consider these further in the article.
In an open market economy, where there is free entry and exit, or a highly competitive market, gaining market share has become a little painstaking, and also in relation to consumer behaviour and prevalent economic situations.
Gaining market share involves a number of factors which could include; pricing policy, sales and promotions, advertising and marketing, customer loyalty, product branding and packaging, economies of scale, economic or governmental policies.
Before launching a new product into an existing or new market, research and development must have been carried out, feasibility study done to show if the product will survive the market and an entire study of the product life cycle. It should be also monitored how a new product can thrive in the market and for how long.
Having considered all of that we need to look in what can actually help a product gain market share and its sustainability.
FACTORS(TOOL) THAT CAN INFLUENCE THE MARKET SHARE OF A PRODUCT
Some of the factors that can influence the market share of a product would include the following.
Pricing is key to any business, it can be seen as the life wire of a product, the pricing makes or mars the survival of the product. In fixing prices the business must be sensitive to the environment it operates if it’s a monopolistic market it can choose to set whatever price it wants, but in an open market, prices are controlled by the forces of Demand and Supply, and as such most businesses are price takers rather than price givers. Also in an open market, the setting of prices can be influenced by the cost incurred during production, but since they’re not allowed to fix whatever price they choose, they tend to reduce cost while trying to keep up with the benchmark in “Quality” offered.
Pricing plays a pivotal role in the survival of a product and it’s longevity on the market. Business owners should try as much as not, to cut the cost to the point where they begin to compromise quality, but rather follow through on operations of major players in the industry so as to gain a reasonable level of comparative advantage. Methods such as “Break down analysis” and “Value Re-engineering” could help in achieving this feat. For the introduction of new products, pricing method such as PRICE PENETRATION, where lower prices are charged compared to the similar product from another manufacturer, can be used at the initial stage of introduction to gain a reasonable market share before adjusting to the regulatory price of the product in the market.
2. MARKETING, SALES AND PROMOTION
Having manufactured a product, it must be sold so as to generate revenue and continue the production process. Also, a market must have been created for the product or should be sold in the existing market.
The knowledge of the product must be conveyed to the target consumer and this can be done by promotion. Promotions aren’t just about creating awareness about the product, it also includes giving the customer sales incentives such as discounts, after-sales service, souvenirs, sponsorship, sales campaign, etc.
Read Also: Go-to-market strategies to gain market share
Advertising is also a part of a promotion, information about the product is passed to the consumers, thereby distracting them from the other products. Advertisements could be informative, persuasive, etc, depending on the goal of the information.
Popular means of advertising include; fliers, radio jingle, TV commercial, billboards, posters, souvenirs, etc. This allows a product to gain footing in the market.
3. BRANDING AND PACKAGING
Branding is giving a product identity or reputation in the market. Some products don’t sell just because of the need it satisfies but because of the brand backing such a product. Some companies have built BRANDS over the years and have become the priceless jewel of their industry. So whatever product such brands produce to be sold in the market gets very high patronage. So building a “brand” should be utmost in the minds of any business person. Brands could be in form of trademarks, differentiated designs and the likes. It helps your product to stand out.
The packaging is as good as branding, but packaging deals mostly with the outlook and attractiveness of the product. How well a product is packaged could determine, how much a consumer will be willing to pay for it.
Read more: 5 Hidden sales secret to boost sales
4. ECONOMIES OF SCALE
As a company or business grows it begins to take advantage of its growth and expansion in the sense that, it can acquire raw materials at a relatively low price and with other incentives, which on the long run affect the unit price of the product. It could easily charge a Lower price compared to those of its competitors. Also, the firm could have a very standard production set up, which reduces all the bottlenecks in production, and enabling it to deliver at cheaper prices, better quality and in record time to their customers, they can reduce the price without compromising the quality of the product.
5. MERGER AND ACQUISITION
Another way by which a product can gain market share is through merger and acquisition. Two firms producing similar products or carrying out similar activities may choose to merge into a single but larger firm thereby bringing both customers under the same brand which in the long run increases the market share of products produced by that firm. In the same vein, a bigger firm might seek significant or controlling interest in a smaller firm, acquiring its assets in part or in whole. Such action bring expansion and also affect the market where they operate, they have a wider range of products and services, customer network base and overall profitability.
6. GOVERNMENT OR ECONOMIC POLICIES
Finally, in some countries especially socialist economy, the government have a way of influencing the market situation, they may choose to give preference to certain kinds of goods especially those produced locally, they can also ban some products giving their competitors an edge. More so the government could give incentives like subsidies, tax breaks, patent right or use prices to favour certain products giving such a comparative advantage over the other. Firms can take advantage of this opportunity to improve their activities and increase their market share.
In conclusion, it is very important for any business which chooses to succeed as a going concern to pay great attention to increase its market share, it should incorporate it in its corporate strategic plan and set objectives to be achieved. Market share improves overall profitability and also gives the business a comparative advantage over other firms.