Any business has a specific target market(s). ‘Markets’ can be defined and grouped in different ways such as by geographical location, demographics, customer type or a combination of several elements. This concept is relatively easy to understand but the tricky question lies in defining a market leader. The word ‘market leader’ seems to have different meanings for different people. Most importantly though what does it mean for your customers? They are the ones who are buying your products so you need to know how they define it, not just how you define it. According to an online business dictionary it means:
A brand, product, or firm that has the largest percentage of total sales revenue (the market share) of a market. A market leader often dominates its competitors in customer loyalty, distribution coverage, image, perceived value, price, profit, and promotional spending.
This definition includes a variety of elements and some market leaders dominate in all categories whilst others might only dominate in a few of them. When specifiers and architects are choosing building products, what is most important for them and how do they a define market leader? Do they focus on the company with the largest sales volume and profits, the widest distribution network, the best proven product performance?
We put this question out into the Twittersphere and started a discussion in the CIMCIG LinkedIn group to get some opinions on what other construction professionals thought a market leader was. And, as predicted, not everyone was in agreement. The question even inspired a blog post ‘a market leader defined’ from Twitter follower @DalmenyClose. Below are some of the responses we got from the LinkedIn discussion:
From just these 5 responses you get various definitions of a market leader. Some look at expertise – how the product has performed and the reputation of the product itself or the company as a whole, production volume and share of the market and the prestige associated with being used in iconic buildings is also key. This aspect of prestige was something we had not thought of before but does make sense. Like in any other industry, if you see influential people or companies using a certain product you might be more inclined to think favourably of it and be more likely to remember it.
Take technology for example, if influential people are seen using a certain type of phone or gadget, then people are more likely to want to buy products from this brand because they trust that person’s brand choices. It gives the buyer reassurance. This analogy can be applied to famous or iconic buildings. If building products from a certain product manufacturer were used to construct an important building, architects and specifiers would assume this is a good product. Does it necessarily have to be the market leader? Products used in iconic buildings are not always from market leaders so this takes us back to the question of what is most important. Is it production/distribution volume, brand reputation or product performance?
What about branding and marketing? Is a company seen as the market leader because it is the most well known brand due to a greater focus on marketing communications targeted at architects/specifiers? A comment made by a specifier in the CIMCIG LinkedIn group on this topic stated that for them it is the product performance that mattered most. The product has to be able to do the job and at a decent price. For them branding plays a small role in the decision making and would only become important when deciding between two very similar products. Another idea that was brought up is innovation. Some companies are well known for their innovative products. How much importance is placed on this by architects?
So how many building products companies actually claim they are ‘market leaders’ without actually proving or providing us further information on this ‘market leader’ status? I did a search for ‘market leader of rainwater harvesting systems’. How many?
As you can see, they are all ‘market leaders’. Yet they all fail to clarify on what terms they are market leaders for? Volumes? Innovation? Number of products? It can’t be volumes because if they all supply rainwater harvesting systems then surely they have to all supply the same volumes each other?
We would like to keep this discussion going and hopefully hear more from Architects and Specifiers who are actually involved in making these decisions regularly. When choosing or specifying a new product, what matters most to you and if they claim to be the market leader, does that influence your decision? What is a market leader in your terms?