I originally answered this question on Quora, but adapted it for this post.
Like a lot of questions on Quora, it’s is hard to answer without having information on the product, service, industry, competitors, etc. I’ll try to give some thoughts that might help.
Unless the market expands, you are working with finite numbers. Therefore, to “increase” market share you either:
1. Take market share from a competitor
2. Convince non-participating prospects in the Total Available Market (TAM) or Serviceable Available Market (SAM) to purchase your product
a. Simple example: The TAM for Rooftop Solar Panels (Homeowners) is $10M. 3 suppliers are in this Market. Your company has a 10% market share. Competitor 1 has a 10% market share. Competitor 2 has a 20% market share. But, 60% of Homeowners are not participating. Theoretically, this 60% is part of the TAM, so “Not Participating” has a 60% market share. “Not Participating” is one of your hardest competitors. Let me say that again, choosing not to purchase IS A COMPETITOR.
There’s a lot of analysis, strategy, and tactics that a business can deploy to take market share from a competitor. I’ll list a few traditional tactics and then some non-traditional:
Traditional: High level, everyone should know these
1. Marketing - You conduct competitive intelligence. You develop better Marketing Strategy and Tactics to drive more non-participants to your products or switch market participants from their current suppliers (competitors) to your products.
a. Your marketing machine is so good, when people think of X product category, they only think of brand/product.
2. Sales - Simple, your sales team is better. They go out there and attract non-participants and switch market participants.
a. Your sales team is so good, everyone loves them, they have the best relationship, and people only want to buy from you.
Non - Traditional: More tactical
1. Contracting - Better terms and conditions (T&Cs) than your competitors
a. Example 1 - Your competitors ask for payment within 30 days, you offer your customer 60 days. Your customers can hold onto their cash longer with you.
b. Example 2 - You assume more risk within your T&Cs. Your competitors try to push all the operating or product risk onto the customer. You assume more risk and offer extended warranties.
2. Pricing - Your competitor wants all the money upfront and at Net 30 terms, but you:
a. Offer traditional financing options - They can pay over time
b. Offer better discounts
c. Offer performance contracting or similar - Example 1 - Your product will reduce the customer’s cost. The customer pays you based on the actual cost reductions each month. This is continued until the product or service is paid off. Example 2 - Your product will increase revenue. The customer splits the actual increase revenue with you until the product / service is paid off.
d. Switching from a CAPEX to OPEX transaction. There are different ways to do this. Example 1 - You hold the product on your books. Your customer pays a fee to use the product. Could be leasing or lease to own. Example 2 - You sell the product to a financial institution or partner. That financial institution holds the product on their books. The customer pays the financial institution for use of the product. Another similar example in software is SAAS.
e. Price at 0 or negative margin - This is risky and only works on very specific cases. You sell the “product” at 0 or negative margin b/c you will make up the margin on aftermarket sales & services. Spare parts, labor, data, etc. In all of those areas you should have really high margins. Once the product is purchased, the customer has to come to you for them.
3. Joint Technology / Collaboration Agreements - You partner with your prospects or customers in joint R&D. Lock them into your products b/c you are sharing costs, profits, intellectual property, etc.
a. They are committed to you and your product / service b/c they benefit from using it and you selling it
4. Master Agreements - You offer to sign master agreements, simplifying the contracting process and locking prospects / market participants into long-term agreements
a. You reduce your customer's supply chain / contracting costs. Simplifying the process, agreeing on T&Cs, pricing, etc. upfront means less time negotiating, working through AP … and so on.
b. You offer discounting or rewards programs within your master agreement. When they hit a certain $value of purchases, they receive a discount or reward.
There are many more ways to increase market share. Almost too many to list. But, I hope this helps give you a few ideas. If you have any questions, please feel free to ask.
Are you ready to live an empowered and purposeful life as a Solopreneur? Yes! Is it wrong to want more, to find abundance, and to be fulfilled? No!