Selling Power offers up Forget Market Share; Go for the Profits in their sales management newsletter and it is a compelling read.
The problem with going after market share as a primary goal is that companies wind up sacrificing profitability in the process. When your whole marketing strategy is about preserving or increasing market share, it€™s easy to get wrapped up in aggressive bidding wars. And it€™s a downward spiral: customers learn to take advantage of that aggressiveness, demanding lower prices, which further erodes profits.
It is a slippery slope because in essence a discount in price immediately discounts your value distinction. Businesses that not only articulate their value differentiation but also successfully defend it are the ones that grow…exponentially.
Here is a comment to make sales manager’s gag:
In other words €“ and here€™s the tough part for many managers to swallow €“ when a competitor threatens your position by offering lower prices for a similar product, your first move should not automatically be to jump in to undercut him. In many cases, it is far wiser simply to walk away.
Salespeople are tempted by the discount to close the deal (I can personally attest to it). But in the long run, discounts lead to dilution of your value. I have always been one to fancy market share through extraordinary offerings as opposed to greatly discounted products or services.
Read the story about Reuters in the article for a real-world example of this principle in action.