How to Increase Market Share Channels

by Steve Brachmann

Conducting higher volumes of business is a common goal among American companies. Finding out exactly how to increase your market share, however, requires a great deal of research and experimentation. Focusing your efforts within a specific market share channel can help you improve your market share in an individual business sector without affecting your profitability in channels that already bring in a lot of revenue.

Identify the different market share, or distribution, channels that your business currently uses to engage in sales with customers. These channels include direct sales, Internet sales, catalog sales, value-added resellers, consultants, dealers, wholesalers or retail operations. Research your company's business records to find out the volume of sales completed through each channel.

Research competitor sales and separate their volume of sales by the different distribution channels which they use. Ask your customers how often they shop at your competitors' establishments. Contact an industry research firm or trade associations within your industry and see if they maintain any information on industry sales. You may also be able to find a good deal of information by contacting your competitors personally and asking.

Calculate the amount of your business's market shale across each of these distribution channels. To calculate market share within a distribution channel, divide your company's sales within that channel by the total sales in your market for that distribution channel. The figure remaining is the percentage share of the market channel for which your business is responsible. Choose one or more market share channels to develop based on which low-market share channels you feel can be easily developed.

Keep records of the amount of revenue earned through the distribution channels you wish to improve for a period of three to four months. If desired, you can also track revenue from individual customers purchasing your goods through that channel. Also, keep records of how many of your purchase products make it into the possession of an end user, the customer who will actually use a product. This will be more difficult for distribution channels that have longer supply chains, such as wholesalers or value-added resellers.

Talk to customers purchasing your company's goods through the market share channels you're attempting to increase. If they buy products from your competitors, ask what improvements you can make to your product or business practices to increase their business. Cold call customers of your competitors and ask them the same question. For example, wholesalers may be happy with your product but find it too expensive. In this way, you can find concrete steps you can take to improve your market share within different distribution channels.

Implement the business changes you've identified as necessary to increase your market share across a particular distribution channel. The main variables affecting market value in any distribution channel include product quality, pricing and promotion. If pricing is an issue among wholesalers, try to implement better bulk discounts or find other ways to lower costs for a lower price. If a better product would attract more customers, put more money and focus on product development.

Warning

  • Sometimes, increasing your market share can be detrimental. Examples include firms that are near production capacity, lowering of profits to attract customers or antitrust issues if you already dominate a market. If any of these are applicable, it may actually be more profitable to reduce your market share and stick to customers that represent better profitability.

Items you will need

  • Business records and invoices

About the Author

Hockey, football, Buffalo-area sports, making people laugh, researching unfamiliar topics, music, movies, literature, theatre and entertaining.

Photo Credits

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