When managers evaluate potential new businesses, the first question they often ask is: How fast is the market growing? By focusing only on growth, however, they often overlook another critical measure of market potential — high turnover of the customer base. High turnover can make a market dynamic, even when the overall growth rate is low
Consider the US market for smoking-cessation aids. In the past 10 years, this market has hardly grown. Yet, during that period, the market shares of the leading brands, Nicorette and Nicoderm, were cut almost in half by the brands of Walgreens, CVS, WalMart and others. Compare this to the market for cigarettes. Although growth was equally flat during the same time period, the market share of leaders Marlboro and Camel hardly changed and no new brands gained a foothold.
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