How Can You Tell Whether Your Organization's Slumping Market Share is Due to Product- or Service-Related Issues? And, What Can You Do to Find Out?

By William K. Pollock

Organizations that provide both products and services to the marketplace often find that when sales revenues or market share take a downturn, they are unable to determine whether the decline is primarily product-related, services-related, or a combination of the two. While the answer is generally the latter, this is still a relatively easy problem to solve, but one that can otherwise lead to a costly and ineffectual "fix" if not researched properly. Read on to learn how you can obtain the information you need to solve this important marketing dilemma.

In today's market environment, it is entirely conceivable that your organization is doing everything right, and yet its sales revenues and market share continue to slump. The main reasons for this may ultimately range anywhere from an increasingly-outdated product line, to an outmoded service and support infrastructure, to changes in the way your historical customers now use (or don't use) your products and services. It may also be due to increasing competitive pressures, or the use of a no-longer-effective sales compensation and bonus plan.

The possibilities are not endless - but by mistakenly focusing on the wrong scenario, you may actually let the situation grow worse. Therefore, the question should never be "Which one of these factors is most likely the root cause of our declining revenues or share", but rather, "What do we need to analyze in order to, first, identify the root problem, and, second, fix it"!

Whenever a situation like this occurs, the research thrust of the organization must focus squarely on the analysis of a prioritized set of customer, market and competitive data obtained through the use of a carefully structured and implemented research program including, but not limited to:

  • An assessment of customer/market needs, requirements, preferences, expectations and perceptions with respect to key product- and service-related issues;
  • The identification of specific features, characteristics and attributes that define the company's products (e.g., quality, reliability, functionality, cost, etc.); and the corresponding features, characteristics and attributes that similarly define the levels of service required to support those products (i.e., quality of maintenance service, preventive maintenance, telephone help desk, customer service, etc.), all from the customer's perspective; and
  • The development of recommended enhancements and/or improvements to the existing product and service portfolios, based on the overall research findings, designed to improve the organization's ability to meet the total needs and requirements of its customers (both in the present and the future).

If employee morale, empowerment (or lack thereof), compensation or rewards are an issue, a "mirror-image" survey of employee skills, concerns, attitudes and perceptions may also be appropriate. Similarly, if the competitive environment is thought to have a significant impact on the company's ability to successfully penetrate its targeted markets, then either a standalone competitive analysis, or the incorporation of the key competitive factors into an existing market/customer survey analysis will also do the job.

The strategic findings from a study of this nature would be extremely useful to the organization's sales and marketing management in terms of their ability to utilize the analyzed data and resulting strategic recommendations to:

1.Modify, re-tool and/or enhance the company's existing product/service lines to address changing market demand;

2.Develop new products and/or support offerings to meet the most important needs and requirements of the market, and fill existing gaps;

3.Identify and cultivate the most attractive new and emerging customer segments to pursue based on identified patterns of decision-making and purchase behavior, product/service preferences and levels of satisfaction with existing product/services vendors; and

4.Strengthen the company's overall product/service market awareness and image through a prioritized set of recommended refinements, enhancements and/or modifications based on the study findings, and in conjunction with an appropriately re-tooled product/services marketing program.

More specifically, the primary benefits of conducting this type of study would be:

  • First, to identify the basic customer/market needs, requirements, preference, expectation and perception information that can be used to enhance and "fine tune" the strategic market positioning of the company's evolving product and service lines; and
  • Second, to ensure that the company is effectively marketing the right mix of products and services, to the right market segments, utilizing the most effective marketing communications.

For example, a telephone or mail survey directed to a representative sample of the organization's product/service customer base can easily be conducted, optionally supplemented by a "companion" survey of general market users and prospects (i.e., non-customers). Sufficient responses should be collected from each of the designated respondent segments to ensure a statistically valid survey sample. The results of the survey would provide company management with a full quantitative and statistically valid assessment of the broad array of customer/market needs and requirements, preferences, expectations and perceptions that define its "relevant" marketplace.

The specific types of questions that would need to be incorporated into the overall survey design should include, but not be limited to:

  • Customer/user attitudes and perceptions toward the importance of the company's products and services with respect to supporting their day-to-day business operations;
  • Corresponding levels of customer satisfaction with respect to both product and service performance;
  • Identification and ratings of the principal product and service evaluation factors used by customers to evaluate the performance of their product and service vendors, in total, and by key individual customer/market segments;
  • Prioritization of the principal factors that define both the "core" required product/service attributes, as well as the "value-added", or premium, product/service features most desired by customers;
  • Identification of those customer segments most likely to require/use premium or "value-added" products and services;
  • Likelihood of purchasing new, or replacement, products and services in the near-term future;
  • Willingness to pay for improved, or "value-added" product features and support in terms of graduated levels of perceived value measured against relative pricing thresholds; and
  • Other areas as identified during the course of study.

A comprehensive analysis of the full study results would then lead to the development of a set of strategic implications and recommendations for action with respect to defining/redefining the requisite product line features, characteristics and attributes, and the corresponding customer service and support requirements. The final study analysis and recommendations would then be developed in terms of:

  • Identifying and comparing customer/user purchase and evaluation patterns, in total, and by key individual customer/market segments; and
  • Identifying, assessing and prioritizing the key product/service features, characteristics and attributes that would serve to suggest any recommended changes, modifications and/or enhancements to the company's existing product and service lines.

Identifying - and distinguishing between - what may be either a product- or service-related problem is difficult only if there is no clearly defined method of approach for collecting and analyzing the required data. However, through the use of a well-structured and implemented research methodology, the information your organization will need to identify, strategize and implement corrective actions may actually be easier to obtain and process than you think.

Until next month, keep your customers satisfied!

Very truly yours,

Bill

William K. Pollock

President

Strategies For GrowthSM

P.O. Box 1024

Westtown, PA 19395

USA

Tel: (610) 399-9717

Fax: (610) 399-9718

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