30 years ago, American Express had a handful of cards and a market share of 27 percent.
That’s when it started to push out a multitude of cards: Senior, Student, Membership Miles, Optima, Optima Rewards Plus Gold, Delta SkyMiles Optima, Optima True Grace, Optima Golf, Purchasing, and Corporate Executive, to name a few.
American Express wanted to become the financial “Walmart”—something for everybody. That makes sense, right? Now, it can capture a lot of the overall financial market.
Guess what, the market share actually fell down to 19 percent (today).
Charles Lazarus owned a children’s store called Children’s Supermart, which sold only furniture and toys. But he wanted to grow.
The usual course of action is to add a few other lines of products like baby food, diapers, bicycles, and so on.
However, Charles did the opposite. He threw out the furniture and doubled down on his toy inventory. He renamed the store as Toys “R” Us.
Today Toys “R” Us sells 20 percent of all the toys sold in the United States.
You strengthen it by narrowing it. You weaken it by expanding it.
Expansion leads to a short-term boost in revenue but a steady decline in the long term.
Narrowing restricts short-term growth but ensures the business’ longevity instead.
If you look at some of today’s market leaders, they know this.
Home Depot in home supplies.
The Gap in everyday casual clothing.
The Limited in clothes for working women.
Victoria’s Secret in ladies’ lingerie.
PetsMart in pet supplies.
Blockbuster Video in video rentals.
CompUSA in computers.
Foot Locker in athletic shoes.
They OWN their category because they do not belong anywhere else.
What about your business?