Wednesday, January 24, 2007

Sound Advice: Can Focusing Too Much on the Competition Harm Profitability?

It is a common practice of many companies to focus their attention on grabbing market share from their competitors. But such efforts can actually be detrimental to the firm's profitability, according to Wharton marketing professor J. Scott Armstrong.

For years, Armstrong has been conducting research showing that competitor-oriented objectives, such as setting market-share targets, are counterproductive. After co-authoring a paper in 1996 that reached this conclusion, he and a different co-author, Kesten C. Green of Monash University in Australia, have written another paper summarizing 12 new studies that add additional weight to the original conclusion. Their study is titled, "Competitor-oriented Objectives: The Myth of Market Share."

Read more here and then ask yourself, "Has your objective always been to beat your competitor?"

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