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	The 'Myth of Market Share': Can Focusing Too Much on the Competition Harm Profitability?

Economist

What, then, would you say to an industry--the U.S. travel and tourism industry--whose dogmatic adherence to using market share as a benchmark to American competitiveness flies in the face of logic, insofar as international exports (reads: revenues) have never been higher, despite the loss of so-called 'global market share?'

Or, more simply, "I don't care that revenue and profits have never been higher. Dammit, we are losing market share! Do something!" ...lobbying game theory notwithstanding.

2007-02-26 John Terpening

The 'Myth of Market Share': Can Focusing Too Much on the Competition Harm Profitability?

If ALL focus is building market share, I agree that this is a weak strategy. However, for an organization to grow--and growth is key if attracting and retaining the best talent is important--increasing market share is essential. Again, not the only focus, but a critical one just the same. Simply obsessing on profitability does not necessarily increase market share. It MAY lead to it, but by no means is it certain. Think of a mom-and-pop bakery with the best quality bagels and say, profit margins well in excess of its competition. Does this portend increased market share? What if their head baker wants to make more money, but the only way to do it in his industry is to be regional head baker, or owner of the shop. Can't do it at the mom-and-pop. Must grow. It must be part of the strategy if you expect to keep the best people. Exceptions? Sure. But ambitious, bright employees expect to be promoted and paid accordingly.

2007-08-15 Dave

Clinical Versus Practical

I always get a kick out of reading articles written from a pure clinical viewpoint. They are usually written by people choosing only that data which supports their own inexperienced beliefs.

To think that any (hotel) company would have market share as it's ONLY goal is nieve and not practical.

I only wish that clinical researchers had some practical "hands-on" experience before expressing their "beliefs" in such definate terms, no matter what their level of education.

2007-08-15 Neil Salerno

Market Share and $1.35

According to the Bureau of Economic Analysis, the United States travel and tourism industry collectively exported nearly $108 billion of travel and tourism-related goods and services in 2006, more than any other year in the history of the Republic. Nonetheless, the United States lost market share in its share of global receipts.

The French, commanding more visitation than the United States, generated nearly half the income the United States' industry generated.

If given the choice - increased market share or the level of revenue generated by American tourism industries, I think the choice is clear. (okay, perhaps that's a bad example; using the French, that is).

Market share and $1.35 will get you a cup of coffee. Our bankruptcy courts are littered with businesses who advocate market share without considering profits to be "Job One."

I'll take 1% of the market and more profits than my competitors for $1,000, Alex.

2007-08-15 JohnGalt

is the operative term. That's like having to choose between being a good father and a good husband. It's a ridiculous proposition, and a poor basis for an argument. The two strategies are obviously not mutually exclusive, but the tenor of the article certainly implies as much. Either that or the author is singling out companies that shouldn't be in business in the first place due to their myopic view of what it takes to be successful. If that's the case, why write the article?

2007-08-16 Dave

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