Analysis 40: Industry Growth by Product Price Point


HOW TO INTERPRET THE ANALYSIS: This exhibit shows the change in unit market share for three Price Points in the marketplace. Both the Performance Leader and Price Leader Price Points are growing at the expense of the Standard Leader products. The Price Leader product category is particularly fast growing. Any company in the industry without a Price Leader product is likely to be losing share.

PURPOSE: This analysis builds a case for the company's development of its product price point mix. In general, the company will want to cover any price point that is growing in the marketplace, as long as its target Core customers will buy at that price point. Failure to cover growing price points is likely to cost the company both volume and profitability in the short to medium term.

APPROACH: The company measures the industry total unit volume by price point at the beginning and end of the period. It then calculates the share that each price point had at the beginning of the period and at the end of the period. The differences in these shares from the beginning of the period to the end of the period represent the change in share points for each product price point. The sum of these share point differences is zero.

Examples of:
Standard Leader » Performance Leader » Price Leader » Next Leader » Industries With Four Price Points »

Return to Diagnose Products and Services: Four Price Points

Recommended Reading

For a greater overall perspective on this subject, we recommend the following related items:


Symptoms and Implications: Symptoms developing in the market that would suggest the need for this analysis.

Perspectives: Conclusions we have reached as a result of our long-term study and observations.

  • "Attention K-Mart Copiers"
    To match experienced price competitors, management must be realistic about what a low cost and low price strategy really entails. (1987)

  • "When Product Mix Matters"
    There are several price point specialists. Some are better positioned than others for long term success in a hostile market place. (1991)

  • "Why Do Leaders Lead?"
    There are four potential kinds of leaders in the marketplace. In order to be successful, each must follow its own particular rules. (1986)

  • "Success Under Fire: Policies to Prosper in Hostile Times"
    A hostile market evolves through six predictable phases. Most companies fail, withdraw or become acquisitions before this evolution is complete. They fail because their management policies were not effective. The few who survive and prosper do so by making decisions that follow two rules: attract customers and discourage competition. Losers lose by not following the second rule.

  • "The Choice of New Products"
    Companies add new products whether or not a market is hostile. But the choice of which products are most advantageous to add varies with the market situation. (1995)

  • "Turmoil Below: Confronting Low-End Competition"
    There are four major types of competitor who offer your customers low prices. Each of them have distinct weaknesses. Your response to them depends on your answer to several tests that you would apply to your market and your competition.