Share is tougher to shift
Symptom: Competitors report that market share is becoming more difficult to shift as customers have consolidated their volume in the hands of current suppliers.
Implications for the market:
As hostility progresses, customer-supplier relationships will become much less volatile.
Supplier consolidation increases the pressure on competitors to gain and maintain volume. Competitors will struggle to meet the industry's high operating standards and still remain profitable.
Inevitably, some fail. As a result, customers encounter inconsistent service and product performance.
To avoid further disappointment, customers will begin to rely more exclusively on their tried-and-true suppliers, and will risk new competitors less often. As hostility advances, volume continues to shift among a customer's "old faithful" set of suppliers, but not between established and new suppliers.
The importance of an established customer relationship will increase proportionally. Long-term customer-supplier relationships — always a substantial competitive advantage — will become even more valuable.
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Perspectives: Conclusions we have reached as a result of our long-term study and observations.