It is known that if you live in New York City or Chicago your preference for pizza may differ. If you’re a business you just want more pie, and it is irrelevant whether the pizza is thin crust or deep dish. You see, businesses are concerned with pie because the size of their slice determines how much of the market their business is capturing. The slice is called market share. For example, let’s examine the airline industry. Some of the top airlines in the United States are Southwest, United, American, Alaska, and JetBlue. Each of these airlines wants to have more market share. The airlines compete with each other to provide their transportation services to as many customers as possible. The more customers that each of the airlines have, the bigger their slice of market share. The airline industry as a whole can increase or decrease in size based on consumer preference for other modes of transportation, disposable income, or other environmental factors. A business can fight its competitors for a bigger piece of the pie, or if the business is agile it can create a new pie.
A Bigger Piece of Pie
Your market share is the percentage of the market that your business has in relation to all of the businesses in your industry. To get more market share you need to take away market share from the other companies in your industry. There are several ways that this can be done. One way in which your business can gain market share is through differentiation. JetBlue is a fairly new airline in the industry, and they are a prime example of how differentiation works. One differentiation strategy that JetBlue used to gain market share after launching was to provide 24 channels of live satellite television in every seat of their aircraft. This was a revolutionary concept in the airline industry. Since JetBlue was new to the industry they were able to reinvent the experience of traveling on an airplane with disregard for the history of airplane travel. Customers quickly realized that entertainment while traveling was worth it, so they stopped flying on boring airlines and switched to JetBlue. This strategy worked, based on data from statista JetBlue obtained 5.5% market share since they launched in 1999. Your business can obtain more market share by giving your customers more value through differentiation. Is your business differentiated from your competitors?
A New Pie
The only businesses that have no competition by definition are monopolies because there is no substitute for the product that they offer. A good example of this is a water company. There is no substitute for clean drinking water. I would argue that it is possible to create your own market and have no competition for a short time. Uber and Lyft took a share of the transportation market from taxis by offering a cheaper service with a better experience. In this case, market share shifted from the taxi companies to Uber and Lyft. This transportation innovation of using the shared economy opened the door for an unserved transportation need. People wanted to get places faster, and they didn’t necessarily want to carry around their own transportation vehicle. Enter electric scooter rental through an app. Electric scooters took advantage of a unserved portion of the transportation market. Short trips that are too far to walk but not long enough for a car ride on a mode of transportation that can be used on demand as needed without major capital investment of the user. Electric scooter disruption created a new market, and for some time, Bird, the electric scooter company had their own personal pizza. Your business can disrupt an industry by finding an unserved market. The key is to find customers that have been pushed to the side by incumbents who have failed to meet the needs of their customers.
Gaining market share starts with a sound strategy. Whether your business wants to differentiate or disrupt; the goal is to have more pie. DJR Jeeves Consulting will work with you on differentiation, or ideation for market disruption.