Problem Description
In the ever-evolving world of business, losing market share is a common problem that many companies face. It’s a situation where a company’s percentage of total sales in a specific market decreases over time. This issue is often symptomatic of deeper, underlying problems within the organisation that need to be addressed promptly. The loss of market share can be attributed to various factors such as increased competition, changes in consumer behaviour, technological advancements, or ineffective marketing strategies.
Analysing Impact on Business by asking the 5-WHY Questions
To understand the root cause of losing market share, it’s essential to delve deeper into the problem using the 5-WHY model. This model encourages us to ask ‘why’ five times to peel back the layers of symptoms and reach the core issue.
1. WHY is our company losing market share? The immediate answer might be because our sales are declining.
2. WHY are our sales declining? Perhaps because our customers are choosing our competitors’ products over ours.
3. WHY are customers choosing competitors’ products? It could be due to their superior product features
4. WHY do our competitors have superior product features ? Maybe because they invest more in research and development or have more efficient processes for identifying customer needs fast.
5. WHY do we not invest as much inmore in research and development or have efficient processes for identifying customer needs? The root cause is ineffective ineffective customer monitoring and market adaptability.
Finding Out the main Root Cause of losing Market Share
From this analysis, it becomes clear that the main root cause of losing market share is not merely external competition or changing consumer preferences but internal factors such as lack of investment in research and development and inefficient customer monitoring processes and market adaptability. These internal issues lead to inferior product offerings which ultimately drive customers towards competitors.
Conclusion
In conclusion, understanding the root cause of losing market share involves a deep dive into the problem, moving from the ‘WHAT’ – the obvious problem of declining market share, to the ‘HOW’ – the mechanisms through which this problem manifests such as inferior customer oriented solutions, and finally to the ‘WHY’ – the underlying internal issues that are at the heart of the problem.
Addressing these root causes requires a strategic approach that involves investing in research and development, improving customer oriented processes, and fostering effective solution development and sales management. By doing so, companies can enhance their product offerings, offer competitive pricing, regain their customers’ trust, and ultimately reclaim their lost market share.
Remember, in business, problems are rarely as they seem on the surface. It’s only by asking the right questions and digging deeper that we can uncover the real issues and devise effective solutions.
