Some customer groups are growing faster than others
Symptom: Customer growth rates are diverging, some segments are growing faster than others.
Implications for the market:
This divergence of growth rates will alter the economic dynamics for all competitors.
The customer segments growing fast will pull their suppliers along with them — causing some competitors to gain share at the expense of others.
Often, though, the customer segments with the fastest growth are the least profitable for an industry competitor to serve–a situation that tends to worsen as hostility progresses.
No significant industry competitor can ignore the risk that this development presents.
To protect share, each competitor must either have a sizable presence in growing customer relationships or increase its penetration of its current customer base, at the expense of another competitor serving that same base.
To protect margins, each competitor must balance the low-profit customers with those providing better margins, even if the more profitable customers offer lower growth. The company that elects to serve only high growth or high profit customers is unlikely to prosper.
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Perspectives: Conclusions we have reached as a result of our long-term study and observations.