"General Mills actually grew from #2 to #1 in market share the last few years. But the cereal category declined $4 billion dollars from 2000 to 2015, so it didn’t matter. In fact, total sales at General Mills has declined for 15 of the last 16 quarters.
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General Mills highlights three things that are the root of the problem of the axiom “Be #1 or #2 in your category.”
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The first problem is it encourages managers to focus most of their attention on market share and not enough on the category itself. It assumes your category will continue to be relevant and grow so you can be a big fish in a big and growing pond. But what happens when your category is not growing — or even declines? Being number one in a declining market isn’t a great place to be.
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Few companies are willing to consider that its category’s best days are behind it and lay out a radically different strategy to win in the midst of category decline or exit the category entirely.
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General Mills doesn’t compete with just Kellogg’s cereal (what), but a growing number of breakfast and snack categories (when), with a shrinking consumer base in the face of anti-sugar and anti-carb trends (who) [Moi ici: As tais tribos assimétricas] and smaller brands, sold in smaller format stores and e-commerce (how). Looking at it this way, and you see a seemingly endless array of Russian nesting dolls hidden competitor one after another. Carbs are losing to protein. Meals like breakfast are giving way to snacks. Big brands are giving way to smaller brands. Grocery is giving way to food service and e-commerce.
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The first step in strategy has to be to assess whether the category is growing or declining, then choose your strategy tool kit accordingly. Most traditional strategy axioms like “create a competitive moat,” “the low-cost producer wins,” “execution trumps strategy,” and “the customer is always right” makes sense when your category has a tailwind you can count on.
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But if your category is declining or about to decline, your moat, your leadership in cost, and your execution will all look silly at best and could be a big write-down at worst.
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And in a declining category, you should still treat all customers with empathy and respect, but you shouldn’t be listening to most of them. If superconsumers are 10% of consumers that drive 30-70% of category sales and 99% of category insights and wisdom, then 90% of consumers may in fact be misleading you.
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Companies like General Mills have three choices. You can exit and enter a better category via a merger or acquistion. You can re-invent the category through category creation and category design strategies. Or you have to change your stripes, and radically shift your business model. It is still possible to win in a declining category. But you likely need to trade out your mass-marketing business model for a niche, premium, and specialty model and scale strategies for a superconsumer strategy.[Moi ici: Mongo é isto e isto é muito unfriendly para os gigantes]
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Is it likely that General Mills would sell or spin off cereal? Can they re-invent and create a new category? Can they shift from mass marketing to super-premium, direct to consumer strategies? It’s unclear. It is very hard for large companies to change. These are the questions that their leadership and board just be wrestling with."
Excelente artigo "Why Dominating Your Category Can Be a Flawed Strategy"
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