Saturday, October 21, 2006

Market share vs. Practice embeddedness

Market thinking, as it is used in most places, namely as a definition of which products, geographies and customers the company is involved in does not give a very innovative approach to finding new market opportunities.

This has been discussed quite often in different context; one should try to find new ways of depicting markets, and the real opportunities there are in a market. One suggestion is that market share is only relevant when doing comparisons with competitors in the same industry. More important for long term growth would be to build a sort of embeddedness in the consumption practices one can vision as a lucrative market.

Embeddedness is measured by presence and relevance, whereas market share is purely a reactive measure of how succesful one has been in a given industry structure. This may sound as theorizing, but yet (I have seen it) as an crucial question for many businesses today.


At 3:55 PM, Anonymous Anonymous said...

Good thinking. I have been pondering the meaning of the construct "market" for quite some while now. It seems that it does not make a lot of sense as a starting point for defining competitive strategy.
Instead it may make sense to use the construct "competitive arena", which depicts the activity (or as you like to call it, the practice) that the company wants to engage in. A comptitive arena can be defined in many different way, it is in the conjunction of geography, customer's (life or business) processes, existing product categories. A lift company, for instance, is not serving "China" as a market, but rather looking a many different compatitive areans within China, such as "high rise, residential buildings, in fast growing cities in mainland China". The activity would be to support people in a residential settingin their "vertical movement practices".
The competitive dynamics will vary significantly between different competitive arenas. Hence, an innovative company can create a temporary monopoly also in a highly competitive "market" by redefining its focus.

At 10:24 PM, Blogger Oskar Korkman said...

Thanks for the comment!
I think the complexity you bring into the discussion is very important. Practice is not the only dimension to to competition, but an important one. Let us continue this; these discussion may be a basis for a new theory on markets. This has partly been discussed before by for instance Christensen, but can certainly be further developed into a theory of markets. Great!

At 10:25 PM, Blogger Oskar Korkman said...

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