2020 has been a very challenging year for many businesses as the impact of the pandemic sets in.
Many customers had to cut back on spending on wants. Focusing their spending on needs, they reduced spending in some areas but didn’t stop spending totally. If you are unlucky and your industry is part of the industries with cut-back spending, you need competitive intelligence to stay afloat as will be highlighted in the case study below.
If customers cut down spending in the industry you are in on the average by 60%, (that means the industry you are in has lost 60% of its market size), this will significantly affect your business if you previously held a 5% share of the market, a 60% cut-back from customer spending means you are left with (40%) of 5% market share, you are now left with 2% of the market share.
If your business operates on a 20% margin (with the new reality of the current customer spend), your business might struggle as you need 80% of current revenue to keep afloat, but with current realities of 60% wallet share reduction from customers, your business will be left with 40% revenue of previous years. (50% less revenue than you need to survive).
With these realities, you get into a strategy session and cut down spending by 50% to keep afloat, but at the end of the same quarter, you find out that instead of achieving 40% of revenue, you were left with 20% of revenue. Now you asked the question, “WHAT HAPPENED”
Like you, many brands in your industry cut down product prices (you did the same), but the major news you missed was a new entrant into your industry. This company hired a top marketing strategist to join their team. Unfortunately, you missed out on this early warning competitive intelligence signal because you didn’t have a digital system to constantly daily monitor all competition and the industry in general, so you can get reports on new hires, new product launch, new campaigns and new market entrants (Google alerts can’t help much here as most conversation start from social long before it moves to the web as news, and Google alerts do not cover that).
The impact of the entrant was already 3 months late, and your market share has gone from 2% to 1% in 1 quarter due to the entrant taking 50% of your current market share of 2%.
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See below, the level of insights on a single day’s digital competitive intelligence report on the Nigeria ICT space on Friday, October 30th, 2020.
Temiloluwa Sobowale is a Kellogg Alumni certified executive scholar in Sales and Marketing Analytics, co-founder of www.brandmanager.ng and CEO of Intelligent Interactive Limited, a Brand Marketing and Digital Analytics company in Nigeria.