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Part 3: Target Segments

You use the information on the industry to benchmark your own results. You check your customer mix against the best in the industry. You determine the sources for your change in market share. You use your specific performance to shape the process of choosing customer targets for the future.

This section of StrategyStreet covers these issues in the following topics:

Position on the Matrix
Capsule: You should compare the percentage of your Company's sales made to the industry's larger customer segments to that of the industry as a whole. If you are one of the top competitors in the market, you should have a better than average mix of your sales with these customers. If you have a medium to low market share in your industry, your customer mix will be more strongly tilted toward the Medium and Small customer, sometimes a weak position.

Company Share Change and Volatility
Capsule: The Company's market share change is the net result of five factors expressed as a percentage of annual sales: its customers' growth relative to their markets, the Get In and Increase Use forms of Positive volatility and the Get Out and Decrease Use forms of Negative volatility. For most companies, market share shifts because of the Company's good result on volatility compared to everyone else in the industry. In a fast growing market, this good result means beating the industry on Positive volatility. In slower growing and highly competitive markets, though, this good performance may mean having lower Negative volatility than the average competitor in the market.

Final Targets
Capsule: Set your customer targets by determining the profitability of each customer and assigning each to category based on the objectives you have for the customer: Stay In, Increase Use, Get In or Opportunistic. Then compare your projected results to your goals.

Summary Points

Next: Position on the Matrix