Perils of Defining Market Share

It is comforting to define what we can see as current spend the market, identify who the competitors are and take solace in the fact that we have a high share of the market. There are two ways we size markets,

  1. We rely on analysts who survey players like us in the market, add up our forecasts and define what the market size should be.
  2. We add up customer spend on the specific product category and model a growth in spend and number of customers.

As long as we maintain share or show growth we are winning. Or so we want to believe. What we miss here is the clear understanding of customer job to be done growth matrix. With these approaches we do not fully understand why customers buy and what will make them buy. In other words, what would the market size be if we add up what all the customers are willing to spend for the job to be done.

This is why disruption happens when a new player from a completely different domain enter the field to compete for the same customers. Successful new players come from customer job to be done perspective with a product that is far better than current players and can bring in new customers who stood on the sidelines because none of current candidates were worth hiring for their job to be done.

Swiss watch makers were happy to define their market as number of luxury watches sold and measured their share of those units. This worked well until smart watches came along. Take a look at this chart of what happened to the market from Q4 of 2014 to Q4 of 2015 (data comes to us from Strategy Analytics).

watch-market

Before 2014 Smart Watches seemed just a fad but by the end of 2014 they were selling 1.8 million units in 3 months. The 18% share grab alone should have been a concern to Swiss watchmakers. But what happened next is even bigger. The new entrants enabled the unit volume to double and grabbed all of the new sales. As you notice carefully, not only did the Swiss watchmakers did not gain share in new customers but also lost share as their unit sales declined from 8.3 million units in Q4-2014 to 7.9 million units in Q4-2015.

If you are not growing you are dying. This is not failure of product strategy. This is the failure to understand how growth happens. The traditional way of looking at growth has been to sell more of the same, sell to more customers or sell new things (Ansoff growth). The right approach to growth is not making it product centric but defining customer job to be done, the new growth matrix,

Customer Jobs To Be Done Growth Matrix

How do you define market and growth?