4 Reasons B-to-B Brand Preference Market Research Beats Market Share Data

We often have clients asking for size of market data. As pointed out in “Better Decisions Through Analytics“ by Tom Davenport, many corporate cultures have shifted to establishing a culture around “data driven decision making”. And with the growing proliferation of decisions through data Private Equity funded businesses, it is natural for founders and their staff to look to prove the market potential.

Distribution Model Shifts

In many of our verticals we have seen a shift from brick-and-mortar to e-commerce to the complete and overwhelming invasion of Amazon.com. The point of sales shopper data, to tracking of online purchases was difficult enough to track. But the entrance of Amazon.com into virtually every vertical has made reliable numbers very difficult to track. While CPG’s can get data from Amazon (as long as they maintain certain ad spend dollars), many B-to-B companies do not have access to shopper data yet. Too often we see incomplete numbers masking a digital tsunami happening behind the scenes. By focusing first and foremost on your brand, you help uncover why customers choose a certain product over another, it may be because of warranty issues, quality issues, or potentially a distribution issue. If you only focus on market share, you may miss a not so obvious shift happening right before your eyes with missing “unit sales” data.

Product Line Ambiguities

Many B-to-B purchases are too customized to allow for accurate tracking of comparable products. CapEx equipment, Installation tools, and Cloud based solutions each now inherently try to fit a different particular need with no clear identity for competitive equivalents. In fact, to try to fit the model of a competitive product inherently gives away competitive advantage as outlined in The Innovators Dilemma, you cannot take customers away from an incumbent leader unless you diversify enough to force the incumbent leader to cannibalize their existing product lines. Forcing an incumbent leader to create a product line that cannibalizes will effectively check-mater your competition, if instead you focus solely on market share you will be rolling the dice that somehow the incumbent makes a serious mistake – something not likely to happen.

Geographic Limitations

B-to-B companies can have geographic specializations or distribution models that can result in ambiguous “market share” data. Product lines can vary significantly from the South, Mid-West, East Coast and the West, and because of the differing distribution models, a leading brand in one area can be virtually unknown in another part of the country. Trying to understand who the market share leader is can result in severely out of whack numbers, and gloss over the potential for one superior product to easily break into a neighboring geographic area.

Promotions

B-to-B companies can sometimes, unknown to competitors and agencies tracking units sold, package together products/equipment or use discounts to move inventory. This tactic can result in significant moves amongst market share leaders. But does it really indicate that one product is more popular than another? Would it make sense to change your approach to a market given the sudden shift in so called “market share”? Wouldn’t a company want to lead in considerations such as Quality, Ease-of-Use, Warranty and other long term and more trustworthy indicators?

The fact is, if as a decision maker you focus too much on market share, you must ask yourself, am I truly making decision based on data? As pointed out above, your data can lead you down a dangerous path of oversight, misleading insights, and frankly putting the numbers ahead of your customer. Brand Preference will make sure that you are listening first to your customer, and second to the “market”. No one is more important than your customer, and replacing your market data with their brand preference, and why they choose a specific brand, will lead you to make better and longer lasting decisions. Put your customer, and your brand, first.