An attendant fuels a vehicle at a fuel station Nairobi. PHOTO | FILE
By QUEEN MUNGUTI
In Summary
- Firms that continually improve products have best chance of bouncing back to the top.
Oil marketer Total Kenya has launched a new range of
fuels in a move that could see it recover the 1.3 per cent loss of its
market share to smaller distributors as reported by the Petroleum
Institute of East Africa.
“Total Excellium (for both petrol and diesel engines)
contains detergents which clean the sensitive engine parts such as
injectors and intake valves. It contributes to a reduction in polluting
emissions, by improving running of the engine which protects our
environment. Additionally, Total Excellium additive results in reduced
foaming of diesel, especially during filling,” said the company in a
statement.
By embracing product innovation, the firm seeks to
regain its market share and maintain its market leadership, which
stands at 16.7 per cent, as evidence shows that brands that lose this
top spot rarely recover it.
“Market share leadership is a strategic imperative
at many leading companies and so that is why they should fight hard to
retain it, because once it is lost, it is nearly always permanent,”
reads research paper Long-Term Market Leadership Persistence: Baselines,
Economic Conditions, and Category Types published by the Marketing
Science Institute, which specialises in marketing theory and business
practice research.
The researchers conducted a search of archival
records to compile a dataset of market share leaders in 125 consumer
products from 1921 to 2010 as well as a second study that analysed the
quarterly positions in 883 consumer product categories from 2003 to
2008.
They observed that 66 per cent of the companies
that were market leaders for a long period continuously innovated their
products to meet consumer needs. They also found that only four per cent
of the companies that were replaced by a different company ever
reclaimed the top spot.
“When brands lose their leading status, they
typically have very limited time in which to reclaim it, that is why few
companies are able to get back on top after just three quarters below
the leader. Also, losing the top spot does not mean a company will
settle into a close second, the gap in market share between the top two
brands on average, after ceding the first place, was found to be more
than 10 per cent,” said the researchers.
For Total Kenya, it is seeking to widen the gap
between its close second competitor Vivo Kenya, which has 16.6 per cent
market share, and get back customers with its latest product
innovations.
One brand that embraced this strategy and regained
its lost market share was global nutrition company, Nestle. Last year,
sales of its instant noodle brand, Maggi, were affected in India
following a ban in the country, but in November, it relaunched after
five months.
In that month it managed to win back 10.9 per cent
of the market share. But it later introduced 25 new products, entering
into different categories by targeting its ‘lost’ consumers and new
ones. Its market share was 77 per cent before the ban.
In August, it was reported that the company’s
product innovation strategy had paid off as it had reclaimed its market
leadership position, achieving a 57.1 per cent share of the instant
noodle market in India.
“Growth in the India market turned positive due to
good progress with the Maggi noodle relaunch and favourable comparables.
We regained a leading market share position,” said the company in a
statement.
Faced with this evidence, Kenya’s leading brands
that embrace product innovation as a marketing strategy stand the best
chance of keeping close competitors at bay and maintaining their top
spot.
-African Laughter
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