Many building material manufacturers are enjoying an upturn in sales. For most of them this is due to an improving housing and construction market. It is not due to anything they are doing.
These sales increases are not due to improvements in products, sales or marketing. The tide is rising so everyone is rising along with the tide rather than through any actions they are taking.
The downturn in the building materials market hurt margins as well as sales volume. Many building material manufacturers see the rising tide as an opportunity to catch up on both sales and profit margins. If they are going to see an increase in sales anyway, why add any expenses? They may even be able to raise prices due to increasing demand.
For people who only care about their short-term financials, this is a great situation. Sales are up and maybe margins are as well. The danger of this is that they may be setting themselves up for a bigger problem in the future.
They may be gaining sales but loosing market share.
In the consumer packaged goods industry market share is as important a measurement as sales and profit margins. Because the CPG industry is so large, accurate market share is readily available. In the building materials industry, accurate market share data is harder or expensive to find so it is often ignored.
For smarter people who take a longer term view this is an excellent time to gain market share. It is always smart strategy to outflank your competition when they are not paying attention. You can make a lot of progress without any interference from your competition because they don’t see what you are doing.
There are a few times when your success is so large that it gets the attention of your competitor such as when you replace them at a large customer like a big box, large builder or distributor. Most of the time market share advances are spread out over smaller customers and harder to see
Gaining market share is about outperforming, outflanking and outsmarting your competition. It takes a different type of strategy than just selling to the customer. Most of the time I tell companies that they spend too much time worrying about the competition and not enough about the customer.
In order to gain share, you need to think about what changes you can make to outperform your competition. You not only gain share when you do this, you also force your competition to react to you. It’s easy to react to something predictable like a price cut. It’s not so easy to react to a game-changing concept like drastically reducing delivery times.
Don’t be celebrating sales growth alone. If you aren’t trying to gain market share your sales are really declining.
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