The company that owns its markets wins big. Consider the following benefits of market ownership:
The company that owns its market is usually “brand dominant”—the first to be considered. It is the “logical choice” or one of only a few considered in the purchase process. This is the company that is usually thought of as the category leader for a particular product or service type or generally thought of as best for solving a specific problem. If a particular company or product is top-of-mind, first to be remembered, it clearly owns the market.
The dominant company can afford to be selective in picking its new business partners. While most companies want rapid growth or high market shares, the company that owns its market may continue its growth by being selective. Although a company that owns its market may have only a single digit share of the overall product/service category, its “ownership” of its chosen market segment may be 50 to 90 percent. This company sticks to a clearly defined market strategy.
Strong Brand Equity
Throughout the sales/service process, competitors have a long way to go to overcome the strong credibility of the company that owns its market. The company that owns brand equity owns the premier spot in the minds of customers and prospects. The company may spend a great deal on advertising, but it uses advertising to enhance its success model and usually spends far less on advertising per dollar of sales than does its average competitor.
It can do so because it carries an image of trust—the perception of being a safe purchase because it follows through on promises. Often, the company with market ownership dominates highly profitable and attractive market segments, leaving the larger companies to compete for the less attractive segments and to do so on the basis of price competition.
Profitability on Customer Loyalty
A company with exceptional customer retention usually has strong market ownership. Even in highly volatile, price-sensitive markets where average customer defection rate may be as high as 20 percent per year, the company that owns its market may lose only five percent of its customers annually. Raising customer retention rate by just five percent can increase the customer lifetime values by as much as 25 percent. In some sectors, an increase of customer loyalty of just two percent is equivalent to a 10 percent cost reduction.
Larger Purchases; Higher Cross-selling Ratios
This high degree of customer loyalty and trust manifests itself in other ways too. The company with market ownership often has deeper relationships that generate both larger sales for existing products and high cross-sell ratios for new ones. While competitors try new cross-selling strategies with only mixed success, the company with market ownership appears to cross-sell effortlessly.
More Referrals From Existing Customers
Another sign a company owns its market is its higher referral rate. Referral business is highly attractive. The referral customer is a buyer who is strongly predisposed to select the company and undoubtedly believes that he or she is buying the best.
Sound intriguing? Interested in owning your market? Corporate Images makes market leaders. Call us today 262.633.7772 to discuss the steps you can take to take the lead in your industry segment.