Businesses with a large share of the market (most sales) are best positioned to benefit from the cost savings that follow from producing on a larger scale. An example is someone whos baking 100 cakes using an equal amount of gas/elecricity as when you can produce 50. A large company can mass produce items or a product for 24 hours, the larger company will be best placed to buy products at a discounted price and so be able to spend more on advertising and so on.
All big companies will fight for a % in market share and it’s a dream to be the market leaders. Market share is vital for profit and they will fight it all out for supremacy. And if/when they succeed they will tell the entire world to gain even more. Market leaders are quite easy to spot, once they have a big slice of the market they will pump money into advertising and investment and other improvements. And obvious market leader is Mac Donalds.Another example of a market leader is Coca Cola who I have chosen to study. Coca Cola are said to hold 43.2% (net income $ 3,969,000,000 ) of the “non alcoholic” beverages market (2002) and have ruled it with an iron fist. This is a massive increase from 29.3% recorded in 1995.
Coca Cola is so dominant that 94% of the world’s population and is the most widely recognized word after “OK”. It is common sense to suggest that market share is closely linked with profit, larger profit shares means more income. This theory is also called PIMS (Profit impact of marketing strategies) which was thought of by an American businessman in 1961.
The Boston Consulancy group have provided a graph to show how the ‘experience curve’ works, the leading market shares will get lower costs because they will be supplied in a larger bulk saving more and more. The cost of producing each unit will fall as the total output increases. This will also gain efficency as you gain more experience and can spot faults easier. Coca Cola are no stranger to experience, nearly 10,450 soft drinks from The Coca-Cola Company consumed every second of every day. If all the Coca-Cola ever produced were in regular sized bottles, there would be over 4 trillion bottles, this shows the monumental size of the company and it’s massive share in the market today.
Greater experience is a blessing which stems from a few factors: Doing things on a larger scale rather than small. Getting rid of less efficient methods of production Relative market share of a company = market share of company There are many organisations in this company who fall into this catagory. They are generally called Not For Profit companies. There objectives and aims differ significantly to For Profit companies. These companies may measure their success in providing aid and assistance in war torn countries, accomadation might be measured by shelters. Of course these companies would need to operate like any other business.
Although Coca Cola are not a Charity they do provide assistance and donations. In June 2001 they announced a 3 year contract with UNAIDS to prevent and fight HIV/AIDs all over the African continent. Since then a range of Coca Cola resources have been sent to ultilise in the fight against AIDs. PRODUCING HIGH QUALITY PRODUCTS High quality means producing a good or service to a customer requirments. It does not neccessarily mean “most expensive”.