▲ The way to cope with the three worries faced by lighting companies around the world is to become No. 1 in any sector. The picture is the site of'Light+Building 2018'. (Photo courtesy of = Messe Frankfurt) © World Lighting News.

 
 ●Written by : Jung-Bae Kim. Publisher & Editor. Lighting Critic.

Recently, the business conditions of lighting companies around the world are getting

worse. The problem is that this situation will not change significantly in the second half of this year. So, what is the way for lighting companies to overcome this difficult time?

<Editor's Note>
 

Create a profitable structure by increasing sales and reducing expenses
In order to increase sales, it is important to expand'market share'
May the market dominate by cultivating “power” that competitors cannot match.
 

Currently, the biggest issue in Korea is the fact that the management situation of small

business owners, self-employed, and small SMEs is rapidly deteriorating.

 

There is no need to say why this situation happened. This is because the income earned

by small and medium-sized enterprises decreases, while the cost to be expenditures i

ncreases, and the profits that remain even from doing business have decreased.

 

Of course, there are many opinions on the root cause of this. Small and medium-sized

companies in Korea blamed the increase in wage burden due to a sharp increase in the

minimum wage that occurred in the past year, and a sharp drop in sales due to a 52-hour reduction in working hours per week. The problem is that this situation is also occurring in small and medium-sized lighting companies around the world.

However, it seems difficult to expect that the current situation will change significantly in

the short term. This is because lighting companies around the world are having a lot of

difficulties. Therefore, it is not easy to solve the problem.

After all, the only way for small and medium-sized lighting companies to choose is to find and practice “What is the way to survive now?”.

 

◆ Increase sales and reduce costs to secure profits

So, what is the way? In fact, the answer to this is very simple. What makes the company

difficult? The biggest reason is that you can't make a profit by doing business.

 

If this is reversed, it is said that companies that still make profits continue to survive and

develop despite difficulties. In other words, it is important to make the company a

profitable structure.

 

If so, how? According to the reporters' interviews, we can find a common point that

companies that have survived and grown even in difficult times have increased their

market share in a short period of time compared to similar companies, thereby increasing sales and making profits.

 

This is because the size of the market in any industry is limited to some extent. Therefore, in order to increase sales in a limited market, the only way is to increase the'market share', which is the share of the company's market in the market, is the only way.

 

The question is, "How can I increase my market share?" It is a point. This problem is by no means an easy one. This is because in a situation where other companies are already

dividing the market, in order to increase our company's market share, we need to

compete more fiercely in the market.

 

◆ To become the No. 1 company by increasing ‘Market Share’

At this time, the methods that companies use are technology differentiation, product

differentiation, price differentiation, marketing differentiation, and market differentiation.

Some companies choose to move to a completely different market.

 

However, looking at the current competition among lighting companies in the domestic as well as overseas markets in each country, there are two ways to increase market share.

One is to lower the price. 'Factory automation' and'smart factory' emerged as such

measures.

 

In simple terms, this means that the manpower in the factory will be replaced with

machines as much as possible to minimize the proportion of labor costs. In this way, even high-wage German or European companies can compete in price with Chinese companies.

 

The next is a marketing differentiation and branding strategy that can be selected in a

state that equalizes technology, product, and price. This is a way to inform our company

and products as much as possible so that consumers are the first to buy our products in

the marketplace.

 

The last option that can be used after that is the “first place strategy”. This is a method

of securing an overwhelming market share even in a specialized market and maintaining

the No. 1 position.

 

Even in a very small specialized market, winning first place will enable a “monopoly effect” or “ride on famous” that the No. 1 company can enjoy. This is a management strategy

based on the logic of “the world only remembers first place” or “first place takes

everything”.

 

The important thing is that even if you become '1st place', you have to keep that place.

This is especially true in that it is highly likely to disappear from people's memories the

moment they lose their first place by another language.

 

Putting these points together, what small and medium-sized businesses, including small-

scale lighting companies, need (1) strengthen basic competitiveness (2) choose a market

that can be ranked first (3) build a brand through low-cost marketing (4) There are five

competitive strategies, including being first place (5) and sticking to the first place.

 

One thing companies need to keep in mind in this process is, "How much market share

should you secure?" It will be a point. In this regard, it may be helpful to refer to the “Lanchester-Funai Law” presented by Akio Funai, a Japanese management consultant.

 

Based on the famous “Lanchester Strategy,” Akio Funai's management consultant

calculated the market share that a company could win in the market. According to Akio

Funai, there are various types of market share, and the contents are as follows.

 

(1) Existing share : The market share must be at least 7% to secure the value of the

company's existence in the market.
(2) Share of influence : Only when the market share reaches 11%, the company starts to

influence the entire market.
(3) Dominant share : Only when the market share is 15%, a company can have the basis for a leap forward.

(4) Leading group share : If the market share is 19%, it is not safe to say that it is the

number one company.

(5) Market share of leading companies : Even the No. 1 company can make a profit only if

its market share is 26%. From the standpoint of the 2nd and 3rd ranked companies, only

26% will have the power to fight with the top companies.

(6) Oligopoly share : When the market share reaches 31%, it moves to the stage of

oligopoly.

(5) Relative share : If you secure 42% of the market share first, you will be in an

overwhelming position in the market in the future.

(6) Monopoly share : When the market share is 74%, the company is secured in its

position in the market.

 

What we should pay attention to here is that if there is one monopoly, the rest of the

companies are compelled to compete in fierce market competition for the 26% market.

In addition, even if there is no monopoly, and only one company has secured relative

market share, oligopoly market share, and leading company share, the total share of those companies will reach 99%. This can be interpreted as meaning that the survival and

growth of a company is possible only by entering the first, second, and third place in any

industry or market.

 

 

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