November 03, 2022

Market Share and Profit

In my project work, there is a fundamental truth that is evidenced via the percentage of sales that are at/above historical averages, and the percentage of sales that are below historical averages.
  • Market Share and Profit are at opposite ends of the strategic spectrum.

There are people in your company who misguidedly think that increasing sales from $88,000,000 to $97,000,000 causes you to increase market share and therefore, any profit you give up is worth it. Strong hint - increasing your market share from 0.04% to 0.06% is irrelevant.

Increasing profit is relevant. You can pay your ownership team, you can pay your executive team, you can pay all employees, you can reinvest the money in marketing, you can reinvest the money in capital expenditures. You have choices.

Do not be seduced by the co-worker who wants to increase market share. Market share is a game that Best Buy plays. It is a game not played by a brand selling widgets.

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