Manage for Profit, Not for Market Share: A Guide to Greater Profits in Highly Contested Markets

by Hermann Simon, Frank F. Bilstein, Frank Luby

How do companies in mature markets—where savings from cost-cutting have been exhausted and breakthrough innovations are hard to come by—achieve sustainable increases in profits? For decades, managers have been told the answer lies in pursuing high market share. But Hermann Simon, Frank F. Bilstein, and Frank Luby argue that this misguided advice has destroyed, rather than created, an additional profit potential.

In Manage for Profit, Not for Share, the authors contend that companies can extract a profit potential of 1%-3 % of revenue by pursuing a profit, rather than a market share, orientation. Based on their extensive consulting work, the authors lay out a practical, proven program for making significantly more money by reconfiguring the marketing mix to sell existing products and services in different ways. The book offers practical strategies managers can use to differentiate mature products, raise prices effectively, time promotional activities properly, better understand consumer preferences, and more.

A convincing counterargument to the reigning market share dogma, this book outlines the new mind-set and tools managers will need to bring their companies closer to peak profit performance.

Genres: Business, Management

240 pages, Hardcover

First published April 1, 2006

Reviews

[Robert Marshall]

I don't recall if I finished. Worth checking it out again maybe

[Alejandro Sanoja · Rating 3 out of 5]

This is an excellent book for someone who wants to build a sustainable and profitable business by focusing on one of the most important and most overlooked variable: PRICE!

This book is not as tactical as some of the other books written by the author. Yet, it's filled with case studies and stories (which is how you will retain the value of reading the book) about how many companies have successfully applied the principles that are shared in this book.

Flow: It took me a bit longer than usual to read because the examples get a bit repetitive. Yet, it is worth pushing through.

Actionability: High, this book will help change your mental models about business and pricing. You could apply it right away.

Some of My Highlights:

"The most important questions is whether the relationship between market share and profit represents a true causal relationship or a mere correlation."

"It is foolish not to explicitly consider the demand side in setting prices. The customer's willingness to pay is not determined by the costs of a product but by its performance and resulting value to its customer."

"Low prices and high profits rarely come together." - Peter Drucker

"The locations of the peaks and valleys of your profit curve are determined only by customer willingness to pay and your variable costs. Fixed costs do not matter in this calculation."