Business Pundit

For an organization to succeed in present competitive environment, it needs to continuously reinvent itself.

Now, I would like to bring into your attention to a concept, which helps organizations to increase their category growth and inturn increase their profits.

Category Growth = A*B*C

where, A = No of Customers in that category
            B = No of Units sold in that category
            C = Price Per unit for item in that category

For an organization to increase it's profits, will have to increase any of the values i.e. A/B/C or combination of them.

Now, let me provide you with, few examples to illustrate the concept further.

Gillette a century old brand is world's largest brand for men's razors.

It is also famous for many of its revolutionary products including Mach3 blades. The brand was once in stagnation or in Cow stage of BCG matrix when the market share of the company was relatively high but market growth wasn't. The company then came with an innovative solution to introduce razors for women with revolutionary Gillette Venus.

In this case the company was only increasing the 'A' section of category growth. Later on company introduced a new razor for men for body shaving (As most men don't use the same razor for shaving body and face)

This led to increase in sales and creation of a new category by itself.

Let's take another example of Maggi, the biggest brand in instant noodles under nestle.

Maggi was once in same situation as Gillette was i.e. in Cow stage of BCG matrix, then Maggi came with a innovative product range which included Maggi Atta Noodles,  Maggi Multi Grain for customers who were health conscious and were concerned on having flour Maggi on regular basis.

In this way the company not only increased it's 'A' section of category growth but this also led to increase in 'B'.