Price Compression A Major Threat In 2007

Market share erosion and employee retention other concerns.

The chief threat businesses face this year is price compression. Sixty-three percent (63%) of Aberdeen Group's survey of 3,170 respondents named price compression as one of their primary competitive threats (#1 threat for 35%), with 18% identifying market share erosion as the predominant issue and 17% naming employee retention as the key challenge.

From a global perspective, European companies are slightly more concerned than their North American counterparts about price compression (39% vs. 35%) and employee retention (18% vs. 16%), but are less worried about market share erosion (15% vs. 18%.)

The size of the company is a factor with regard to price compression. For large companies ($250 million sales) only 16% cite this as a concern while 73% of small businesses (under $50 million) see this as a major concern.

Those identifying pricing pressures (58%) or market share issues (55%) as challenges planned to invest in sales and marketing to thwart the threat. Meanwhile, companies primarily concerned about employee retention plan to mitigate their risk by investing in additional staffing, a top two-budget item for 60% of this group.

The destructive tendencies of the top three 2007 competitive threats can be mitigated, in part, by strategic investments in customer and employee facing technology, explained Alan Hubbard, sales & marketing group, Aberdeen Research. "Investments in the areas of personalization and analytics can have a pronounced impact on business deterrents and profitable growth. These technologies shape the customer experience and provide invaluable insight into market dynamics. Better information and real-time insight into customers and consumers are key components to managing price pressures and market share issues. In the end better business also means happier employees leading to improved retention."


Interested in information related to this topic? Subscribe to our weekly Value-chain eNewsletter.

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish