What are the advantages of increasing market share?

At the beginning and end of the year, the marketing director is most concerned about the company's market share and profit rate. Because of the formulation of the company's marketing strategic plan and the inventory of annual marketing performance. Market share and profit rate are two different concepts. Market share refers to the percentage of sales of brand products in the overall market of the industry at a certain time; Sales profit rate refers to the ratio of the sales amount profit realized by the enterprise MINUS the sales cost. Market share and sales profit rate are interrelated. With the increase of market share, the profit rate is also increasing. In traditional industries, market share leaders adopt the strategy of expanding market share to improve their profit rate. In 1980s, an American scholar made a survey on the relationship between market share and profit rate, and found that in the food industry, the market share of a world-class brand increased by 1 percentage point, and the sales profit increased by $60 million. In another survey of hundreds of manufacturing enterprises, market share and technical content are among the most important factors related to profit rate in enterprise management value chain. When the market share exceeds 40%, the return on investment can reach about 30%. For a long time, the market strategies of large international companies have been oriented to market share, hoping to gain greater profits through the improvement of market share. However, in the actual market competition, due to excessive competition, it is more difficult to expand the market, and the increase of marketing expenses exceeds the cost advantage brought by marketing economies of scale. Enterprises even sacrifice profits in pursuit of market share, which leads to the market share is not proportional to the sales profit rate. The balance between the two has stumped many marketing officials and become a common "dilemma" for marketing directors. As a marketing director for many years, the author once believed in market share, paid attention to the scale benefit of marketing, and drove the market with strong and continuous brand value integration. Because of this, the sales volume reached the whole industry 1 within three years. This figure and performance are enviable, but after careful inventory, it is found that the sales expenses are also high. Advertising expenses account for 9% of sales, while the reasonable budget at the beginning of the year is 5%. Overexpenditure of 4% means that the company's sales cost has increased by 8 million yuan. Of course, from the sales point of view, it is also good to increase the marketing expenses by 8 million to win the first place in the industry and create a profit of nearly130,000. However, the author repeatedly thinks that if the promotion fee is controlled at 5% and the annual marketing amount is reached, it will not create a net profit of more than 8 million. The author thinks: 1. The marketing director should have a strong concept of cost and profit: he should know that "profit is the life of the company", and in the strategic implementation and monitoring of the marketing director, he should highlight the concept of "profit is king" and form the marketing concept of the whole team. Second, the art of meticulous and accurate cost and profit control: but many companies only mention cost and profit control when making marketing plans. The author believes that the marketing director should have the art of meticulous and accurate cost and profit control in every goal realization cycle. The specific measures are: 1. Set up marketing cost accounting in the marketing headquarters, establish a special marketing cost index control file for each customer, and timely reflect the transaction volume, transaction cost and profit of each transaction through the marketing cost index control table. Many companies do not realize the importance of this position because of the heavy staff, and instead use the accounting part-time job in the company's financial center. However, the accounting affairs in the financial center of the company are numerous and non-administrative, and the single transaction volume, cost and profit of each customer cannot be reflected in time, which leads to the lag of information. 2. The marketing director should regularly send the control table of marketing cost and profit index of each customer transaction to the regional manager, so that the marketing headquarters and the marketing region can have a docking of marketing cost and profit index control, and the marketing operation chain within the company can clearly control the marketing cost and profit index. 3. The control table of marketing cost and profit index must be comprehensive, timely and true, which is formulated in combination with the annual trade volume of the target market and various marketing costs. The "minimum indicator warning line" column of marketing cost and profit indicators should be set up. Once it is found that it has crossed the "minimum indicator warning line", it is necessary to resolutely adjust the target market plan. And revised in time with the change of marketing plan. 4. Through the control table of marketing cost and profit index, the marketing director and regional manager can clearly understand the real situation of their comprehensive customers, and it is convenient to distinguish key customers, sub-key customers and non-key customers. Effectively formulate the corresponding customer service system. Third, the profit-oriented market game: In marketing practice, the author advocates the profit-oriented market game, which can better reflect the real wisdom of the marketing director: strategizing, gaining insight into thousands of miles and fighting thousands of pounds; How free and easy and smart you are to achieve the goal that others can achieve with one yuan. So how to strategize, gain insight into thousands of miles and fight a decisive battle? 1. Scientific setting of the annual marketing plan: when making the marketing strategic plan, the marketing director should have four indicators: one is the growth index of brand awareness and reputation, the other is the marketing task, the third is the sales profit index, and the fourth is the marketing network construction index. They are interrelated: the growth of brand awareness and reputation is conducive to the completion of marketing tasks, the development of marketing networks and the realization of profit targets. Under the condition of not exceeding the fixed marketing cost, setting the development index of marketing network and completing the marketing task will help to improve the sales profit and brand awareness and reputation. The marketing director should treat the four indicators systematically and dialectically, and deal with them scientifically and in a balanced way. According to the author's understanding, many enterprises' marketing strategies only have two rough indicators: marketing task and sales profit, and the completion of these two indicators is limited to the decomposition of plans, and there is no remedy for the dialectical relationship between them and the change of the relationship between them due to the change of marketing environment in the actual marketing process. For example, the marketing plan is to achieve a monthly sales of 6.5438+million and a net profit of 700,000, but in actual operation, the sales are only 7 million and the net profit is 400,000. What remedial measures are there? Is it to increase marketing efforts to ensure sales? Pay attention to net profit and not pay much attention to sales? How to improve net profit? Is it to reduce marketing costs? Change the product structure? Is it to give corresponding investment and realize the synchronous improvement of sales profit rate through economies of scale with increased market share? Are the indicators adjusted according to the market changes before the company's current situation? These must be fully considered when making the annual marketing plan, and there must be accurate quantitative indicators. Otherwise, once there is a change, you will be at a loss and get quick success. The author's point of view is that when the amount of marketing tasks and sales profits change due to environmental changes, we should pay attention to net profit instead of paying too much attention to sales? Because the purpose of setting the marketing task quantity is to realize profit, if the net profit is increased and the profit index is realized, it is a pity that the marketing task cannot be completed. 2. Combination marketing of products and markets: products are the weapon for companies to complete marketing tasks and achieve profit targets. How does the marketing director use the product combination marketing artistically? It is to skillfully understand the cost and profit of each product and market it as a combination. We can learn from the product portfolio analysis method (PPM) of Boston Consulting Group in the United States: star products (newly profitable products), problem products (declining products), cash cows (products that ensure the operation of the company with large capital flow) and thin dog products (products that have passed maturity). According to the product mix analysis method (PPM) of Boston Consulting Group, the best product mix is: 1. Quickly eliminate "problem products". 2. Turn "star products" into "cash cows" to ensure that "cash cows" are not affected; 3. Keep "thin dog products" as a weapon to attack opponents in the price war and as a fire barrier for "cash cow". If the company only has a single series of products, it is necessary to develop new products and create new cash cows and stars according to the actual situation of the company and the market, combined with the cost and profit relationship of each model of a single series of products, or according to the market prospect. If the company has multiple products, it should make product combinations according to market conditions, such as "star products", "problem products", "cash cow" and "thin dog products". Secondly, according to the actual market, carry out large-scale marketing in market portfolio. In years of marketing practice, the author summed up the "trinity" market game strategy. "One" is to classify scattered markets into one market from the perspective of system integration. From the macro-strategic point of view, countless markets in China can be integrated into one market of the company, and countless small-scale markets can be integrated into a large-scale market. "Three" is to capture the "one" market in terms of resource allocation, troop deployment, attack and defense angle, advance and retreat speed, and priority of defeating the enemy. Through the operation of "one divided into three" and "trinity", the goal of capturing the "one" market is finally realized. How to choose three target markets depends on their market potential. What are the strengths and weaknesses of our brand in the target market? Advantages and disadvantages analysis of opponents? Reasonable layout of the network? It is necessary to comprehensively consider the relationship between the size of market entry resistance and the realization of goals. The author divides the whole market into three parts: the first part is the profit part, which gives the company great returns. We have a competitive advantage in this part and are the key market of the company. The market input we should give accounts for 40% of the total, and the return benefit accounts for more than 50% of the total. The second sector is the "competition sector", which has huge profits and great development potential. This plate is evenly matched, and the final ownership of the market is unknown. The resources invested by the company account for 50% of the total, making it transition from the "second department" to the "first department". The third sector is the "side attack sector", which is a high-profit sector of competitors. The company has no advantage in this market. The resources invested by the company in this sector account for 65,438+00% of the total, which has played a role in containing and consuming the effective strength of competitors. (For the full text, see Sales and Market magazine,No. 12, 2000) 3. How to play the price war in the market: adopt a combination tactic of one high and one low, and challenge the opponent with a product combination of a low-end price and a high-end price. The low-end products after the company implemented the overall low-cost strategy (without reducing operating costs) entered the market at a more advantageous low-end price, which directly offset the price advantages of other products; Simultaneously cut into high-end products and make up for the profits of low-end products through the profits of high-end products. This product combination scheme is feasible in game theory. Success depends on the following conditions: first, it is not worth the price war in the marketing chain to have an all-round low-priced product, because the product you reduced the price is not all-round low-priced, so your profit has been lost; Second, products with considerable selling points (unique products) can generate spillover value through uniqueness, and the width of this spillover value must make up for the falling profits of low-end products. When these two factors are satisfied, this strategy can be implemented. In practice, the focus of enterprise marketing power should be on high-end products, and only by measuring high-end products can the profits of combined products be completed. The sales of high-end products have risen, and enterprises have gained new commanding heights, which can block the next round of price wars of their opponents. Fourth, the iron shoulder bears morality: the marketing director will inevitably be influenced by the company's leaders when dealing with market share and sales profit rate. If the market share is high, the company will think that the profit rate is low and the sales profit rate is high. It may think that the market share is low and fish and bear's paw are rare. It is really a "dilemma". As a marketing director, in the face of this "dilemma", he should shoulder the moral responsibility in high spirits, correctly state to the board of directors that the company's marketing strategy should take into account both market share and sales profit rate, and improve sales profit rate on the premise of ensuring a certain market share. For a company, market share is a variable, and sales profit rate is an immediate benefit. Market share needs corresponding profits to ensure. Without profit, no matter how high the market share is, it is empty. We must not easily sacrifice profits to maintain market share, and the sales profit rate should become the "first iron law" of the marketing director.