Low sales growth rate

Question

Hi ALL,

Could you please help me with these 2 questions:

1. What are the possible reasons for a low sales growth rate?

2. What framework should I use when answering the question?

Kind Regards

Answer 1

For the framework, I'll apply the three 3 C's of Marketing and look at them through the prism of economic and non-economic factors -

Customer - Economic : Low disposable incomes, high unemployment leading to a move to cheaper alternatives or maybe a reduction in the use of the product if its a discretionary item. Also Change in customer preferences leading to an industry-wide slump, the emergence of substitutes should be looked at.

Company - Focus on other areas of business, reduction int he marketing spend, increasing costs making the products expensive, quality of the products deteriorating

Competitor - competitors reducing their prices, spending more on marketing, making better products, using newer channels, promotions to take away our growth

Hope you find it somewhat useful.

Answer 2

Hi!

It depends very much on the industry. In some cases (Growth strategy) I will use a broad structure, in others (e.g. “how to increase the excessive luggage revenues for an Airline”) I will use P, Q and the Process. Here is the broad structure that you can adapt to your industry:

Analyze the market:

Size and growth rates
Segments (geographical, customer, product)
Distributors / Suppliers
Regulation
Key market trends

Analyze the competitors:

Market shares, growth rates, profits
Product / customer / geographical mix
Products (Value proposition)
Unit economics (Value proposition vs. price vs. costs)
Key capabilities (Distribution, supply, assets, knowledge, etc)

Analyze our company:

Market share, growth rates, profit
Product / customer / geographical mix
Products (Value proposition)
Unit economics (Value proposition vs. price vs. costs)
Key capabilities (Distribution, supply, assets, knowledge, etc)

How to increase revenues:

How to increase the scope: Product / customer scope, geographical scope
How to improve value proposition (How to fix your weaknesses and improve your strengths; Potential increase in price and volumes)
How to answer the competitors (Unique or hard to build property and contracts; Customers / suppliers / complements with lock-in; Reputation and relationships; Organizational capabilities; Product features and know-how)
Other benefits of scale (Spreading Fixed costs, Change in technology, Bragaining power)

Best!