Why beating the market and gross margin expansion rarely go together

The promise is seductive. Sales racing faster than the market and gross margins expanding. Share and profit, both arrows pointing up. It looks flawless in a model. It almost never survives the world outside it.

To beat the market, you must take share. And there are only two ways to take it: slash prices or sharpen your proposition.

Price cuts can deliver share - briefly. But always at the expense of gross margin. And always on borrowed time. Competitors follow, the edge dulls, and what once looked like victory leaves you stranded at a lower level. Try to restore prices and momentum stalls, volumes slip, your hard-won share dissolves like mist.

Proposition-led growth has its own discipline. A superior offer lets you hold prices and fatten gross margin. But volumes are modest - no real share conquest. Or you can hold gross margins steady and chase share. In both cases though, rivals stir, adjust, erode the edge you thought secure. Margin gains fade. Share gains renormalise.

There is a third way - but it does not come from you. Structural shifts in the market can create a window where both arrows move up: a competitor exits, stumbles, or is shackled by regulation. Suddenly you gain share while competitive intensity falls, and you can even raise prices. It happens. But it is rare. And it is not strategy. It is fortune.

Which is why the double-up - the dream of beating the market and expanding gross margins year after year - demands something exceptional. A competitive advantage that is not only specific and durable, but funded. Advantage decays unless you invest to renew it. Those investments must be visible - on the P&L, in the cashflow, in the choices you make and defend.

And this is where most cases collapse. They wave at “advantage” but never name it. They model endurance but never show the spend required to sustain it. They forget that without visible reinforcement, the fortress they imagine is just sand dressed as stone.

That is why so many plans showing both arrows climbing are not strategy at all. They are not forecasts. They are not commitments. They are simply ambition - hope masquerading as reality in Excel.