Even as Company A owns and enjoys the biggest share of demographic market for teens, it begins to direct a zealous eye towards another section of the market, the one dominated by competitor Company B.
Company A looks at the sales and profits of Company B and decides: “we’d like that share”.
Company A undertakes a campaign to grab market share from B. A few expensive months of marketing begins to make substantial progress. After a couple of years, Company A is swamped by regulatory demands which were never a problem with their other market. Consequently, the profit margins end up far far less than originally expected, and the headaches far, far more.
Companies do this all the time. They notice a market share and say: “we’d like that”.
But they forget that markets are characterised not only by profits: they also come with market costs, market responsibilities, and market risks.
It seems company B was more adept at managing the risks of that market, hence its profits. Company A did not have the experience managing the risks of that market, hence its headaches.
