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Hitting The Market-Share Wall

Sometime around 1975, the post-World War II growth explosion fizzled. Revenue growth became more difficult to deliver, as many of the fundamental product categories reached market share highs. The 25-year run-up was over. We had hit the market-share wall—the point at which the rate of revenue growth stops increasing and starts decreasing. It also marks the relative peak of the population of two important groups that make up a particular industry or sector:

  1. Consumers in the category. The universe of consumers that make up the category has largely been determined. New consumers entering the category are primarily the young who replace that segment of the category population that dies. Population gains over time add minimally to the number of consumers in the category.

  2. Competition in the category. The universe of competitors that are part of the category has also been largely determined. This is not to say that more competitors won't join the category along the way, or that competitors in the category from the outset won't exit the category. It merely means that the chief producers for the category—along with market-share levels—are greatly established.

In fact, many category leaders have historically experienced their most significant market-share levels just prior to hitting the market-share wall. After hitting the wall, market-share levels, especially for category leaders in industries such as automotive, soft drinks, and other consumer products begin to erode from historical highs. The market-share leaders are usually victims of dozens of category options offered not only by competitors, but also by their own line extensions.

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