The objective for most companies is to grow – organically or through acquisitions. To find new markets, new customers and to increase the share-of-wallet by existing customers.
The KPIs normally used to measure growth is top-line revenue and market share, where market share gives us an indication how we perform in relation to competitors. But correct measurement of growth development is important because in many cases we can sub-optimate if we don’t take in profitability in the calculation.
It’s relatively easy to take market shares and create volume growth if we reduce the price and/or start selling to low-cost segments and market. The question is if this is our strategic objective?
The same goes for volume and market share. Most markets have an underlying structural growth, eg food production in the world is related to the number of people that can eat and afford a certain product. The same goes for pharma products. In worst case, the topline can show a handsome growth, but we are in fact losing market shares since our competitors are growing even faster.
So, how do we get a balanced view of if we grow or not.
In some industries it’s fairly simple. The number of vessels built every year is an official statistic. This means that we for example know the exact number of ballast water systems installed and can calculate our market share based on our sales.
Another example is the number of registered heavy trucks in each market, which gives us a good estimate of how much load handling equipment that has been installed during the year.
But in most industries it’s more challenging to estimate both the market’s development and our market share, especially in fast-growing (or sinking…) markets and markets seeing significant technology conversion.
One example is humidity in industries that often has been taken high humidity as a fact-of-life during certain periods of the year, or has been mitigating it by heat. Dehumidification is a “new” technology (though 70 years old…) that step-by-step is taking market from the old way of handling humidity problems.
So, effect measurement is not always simple. Methods is though developing in order to give simpler and more accurate answers. If you want to get a comprehensive summary of today’s possibilities, visit Brand Marketing Sweden (earlier Sveriges Annonsörer) that recently launched The Effect System 3.0 (https://brandmark.se/kunskap/certifieringar/certifiering-effektsystemet/)
An if you want to grow faster, why don’t we take a coffee and discuss how. Just reach out to ulf@sfinxagency.se
