Why do I have much less market share than competitor?

[bycomet]

As the title says, it happens to almost all of kinds of product. For those products, I have much higher quality, brand rating, and brand loyalty than competitor's. Despite sold at a higher price, the overall rating is still a little higher than competitor's. And it has adequate supply that exceeds demand. However, my market share is only a fraction of that of my competitor. An example of washing machine here:

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In the retail store, supply is way higher than demand which leads to my small market share. Sales unit utilization is quite low, so adding more stores doesn't help. Let's take a closer look at the detail.

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I have:
- Better quality (93 vs. 52).
- Same overall brand at 100, but higher brand loyalty (78 vs. 19 (not shown above)).
- Higher overall rating (133 vs. 126)

So how do I describe this problem? My products are better (higher quality), more recognized in terms of brand (higher brand loyalty) and value (higher overall rating). They are placed in the stores so that buyers can buy it when they come in. But they don't buy mine, they buy my competitor's, which looks irrational. The only possible reason I can think of is that there is a hidden concept of consumer affordability. Even with a higher overall rating, there are no enough consumers can afford it.

I uploaded the saved game file here. Can anyone explain the market share issue?

[Stylesjl]

It looks like they have more stores - which means their coverage of the city would be larger than yours and they can reach more customers. Also price is weighted around 30% of the popularity of the product. I am not sure how much that would diminish your market share for having double the price but that would also be part of it. But I think its the lack of stores that are the main issue.

In addition look at the Zeta Group (dark blue) share - Stacking Blocks is also selling from their factories to them, this is adding something like 10% to the retail share. You might also get bigger market share by switching off internal sale (if you have this on). But you could also just build more stores to keep the retail profits for yourself.

[bycomet]

But I think its the lack of stores that are the main issue.

Hi Stylesjl,

Thanks for this. I have further checked game manual and I found only in media and advertisement section there is coverage concept describing amount of audience receiving it. For retail stores, the game has no geographical coverage design other than traffic index. I built stores as close to the CBD as possible, so their traffic indices are all above 20, and some of them have more than 50! Thus I believe building more stores won't create more demand and it will further deteriorate sales unit utilization.

Why competitor has more stores? That's cause and effect. They have more demand in their stores, and the sales units are 100% utilized, so they build more stores. It's not the other way around that building more stores leads to more demand.

But I experimented with building more stores to see what will happen. I now have more stores than competitor and indeed market share changes from 9.31% to 39.02%. From factory's perspective, we can also see a small increase in demand (the bottom one is newer).

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But what's the cost? I have more stores meaning more operating expenses. My market share is still lower than competior's. This means my stores are less effective than competior's. The increased operating expenses exceeds the increased revenue. As a result, my profit is lower than before. I can conclude that adding more stores doesn't help here.

Hi @David, if you see this, could you explain what caused my low market share and low sales unit utilization from a game logic perspective?

[Stylesjl]

So I had a look at the save game itself. I think the main issue is the price.

What I did was:

- Create more stores.
- Lowered the price by a lot (below cost).

But then I had to wait a little while for the share to change, it didn't happen instantly but over several months. It then expanded the share until it got to the majority. The save game I have shows how me grabbing most of the market share, but I had to fire the CFO and lower the price to a ruinous level.

I think you could do better by just having a slightly better overall rating and getting market share more gradually, which in this case can only be done with lower prices given the max quality and brand. But the CFO does not seem to like this and will try to resist by raising the prices again.

But either way it doesn't seem to be a bug, just stubborn consumers sticking to their normal brand and only changing over time.

[David]

Please see this page on the Capitalism 2 manual, which can be downloaded from https://www.capitalismlab.com/download/ (at the bottom of this webpage)

[bycomet]

Please see this page on the Capitalism 2 manual, which can be downloaded from https://www.capitalismlab.com/download/ (at the bottom of this webpage)

Thanks David! This seems the affordability that I guessed before.

In my case, I already set COO pricing policy to maximum market share, so the prices are already lowest. To further lower the price, other than firing COO and setting prices manually as Stylesjl mentioned (Hi @Stylesjl, thanks for trying this), is there any other way? I am selling almost all kinds of product, it is a lot of work to monitor and adjust them, also quite micro management for CEO.

[David]

Do you have any suggestions on this? I will forward your suggestion to the dev team for their consideration.

[bycomet]

Do you have any suggestions on this? I will forward your suggestion to the dev team for their consideration.

Hi David,

The overall rating is calculated by price, quality and brand. But when it comes to determining market share, price outweighs the other two factors, which leads to three problems:
1. Low-end products flooded the market.
2. When players improve overall rating of the product, cost increases, so price will increase. But the product is unpopular as a result. Players have to reduce production (such as medium factories to replace large factories) to save fixed costs.
3. If players lower price to gain more market share, AI will respond by lowering price too due to pricing aggressiveness. Eventually, no one makes a profit, and the game becomes last-one standing game.

This is inconsistent with some cases in reality, because in reality there is the concept of consumer education. High-quality products will gradually affect consumer preferences to have more consumers to choose high-end products. For example, the price of the iPhone mentioned in this article, even considering inflation, is much higher today than it was 10 years ago:
https://www.androidauthority.com/iphone ... y-3221497/

So my suggestion is that just like brand loyalty increases with product quality, consumer preference for cheap products decreases with high-quality products. Of course, the adjustment needs to be properly designed because high-end products don’t have most market share in reality. But in games, it is better to reflect the trend of high-end products gradually gaining more market share.

[David]

I studied your game further and found that the amount of sales of refrigerators in each store are in the same range same compared between your company and your competitors, around $250,000 per month.

It seems that the numbers of retail stores that you and your competitors have play a big role in the market shares. I would suggest that you increase the number of stores selling the same product to match your competitors'. If it is not possible to do so in this game due to insufficient real estate space available, you may start a new game and do a test on this.

[bycomet]

I would suggest that you increase the number of stores selling the same product to match your competitors'.

Hi David,

I'm not quite sure how you calculate single store sales because I see that I have two stores that sell 400,000 and 90,000 a month, so it's indeed about $250,000 on average. But my competitors, in particular Stacking Blocks (SB), sell more than $800,000 a month in almost all stores thus SB has much higher average sales.

In addition, my store is dedicated to sell a single product (4 sales units per store), and SB sells 4 products in one store, so it seems to be more appropriate to calculate the average sales per sales unit. My calculation method is as follows: Press f10 to open the corporate details panel, click products, click retail, and look at the annual revenue of the refrigerator. Mine is $2,754,233 and SB is $19,140,276. I have 5 sales units and SB have 8. So my average sales per unit is $550,846 and SB is $2,392,534. It's more than four times as big as me.

But I tried your suggestion. I changed some of my electronics stores to sell refrigerator (some of them have very good traffic index). Now I have 6 stores with 24 sales units. SB has still 8 stores with 8 sales units. But my market share is only 1/5 of SB. See screenshot and save game file.

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