Competitors in formerly underdeveloped markets have begun meeting one another
Symptom: Until recently, most suppliers in the industry have stayed within tightly defined geographic areas in order to avoid head-to-head competition with other suppliers. Now they are beginning to expand aggressively, saturating geographic areas and meeting one another in competition.
Implications for the market:
The growth of the larger competitors was in part fueled by the ability to gain share against smaller, weaker competitors. In effect, the winners raised the standards of performance and "won away" the smaller competitors' customers.
As a market becomes hostile, however, the basis for gaining share changes. Most customer volume is no longer "won away" by a new competitor offering higher performance standards ; it is more often "failed away" by an existing competitor. In hostility, some customers, caught up in cost cutting to maintain margins, fail their customers by no longer meeting common industry standards of performance. Their failure opens up their customer relationships to other suppliers.
Companies who can identify areas in which competitors are failing their customers, can develop or maintain strengths in those areas of weakness. By then putting special marketing emphasis on those customer relationships shared with weak competitors, these stronger companies can gain share by being the natural beneficiaries of the volume "failed away" by the weaker suppliers.
|For a greater overall perspective on this subject, we recommend the following related items:
Perspectives: Conclusions we have reached as a result of our long-term study and observations.