That tube of lip balm in your pocket might be small, but it means major business. In 2020, lip balm made up 45% of the revenue market share of the $2 billion global lip care product category.

Burt’s Bees, a brand known for its all-natural products, is owned by none other than Clorox. Chapstick, the brand whose name has become genericized to refer to lip balm products more broadly, is owned by pharmaceutical giant Pfizer. Together, these two companies made up 33.6% of the revenue market share of the U.S. lip balm product category in 2019. Behind them, at 7.8%, is the instantly recognizable red-and-yellow Carmex.

At 41.4%, the U.S. lip balm category has a relatively low market concentration, which means that the top three companies do not have total control of the category–meaning there is room for competition and ample opportunity for a company to grow its market share. 

No brand knows this better than Carmex, the privately held, family-owned company based out of Wisconsin. Just a decade ago, the brand was struggling; for five years, from 2010-2015, it had the worst annual growth of any brand in the category. Just over three years later, it had a major growth spurt–13.7% compared to the category’s 3.1%, according to data from IRI. How exactly did Carmex go from having such a dismal performance to having the third-highest revenue market share in the category, faring better than brands like Blistex, Eos, and Vaseline?

For one, Carmex started selling multi-packs. In a scenario like this, it could be possible that their volume market share might have stayed more or less the same. A pack of one and a multi-pack are both considered one unit, despite the quantities of the product inside them being different. A multipack naturally has a higher price than a one-pack; therefore, selling the same number of multi-pack units as one-pack units will yield a higher revenue market share.

Though both value market share and volume market share are important metrics to track, this provides a great example of why neither can be viewed in isolation, especially because value (also known as revenue or dollar market share) is what companies ultimately place greater weight on. (One way to resolve this inherent issue inherent with volume market share is to calculate equivalized volume, where the units are made to be equal to each other so that we can compare apples to apples.)

But Carmex’s meteoric growth was not due just to selling multi-packs. During this time, they also brought in Jona Mancuso, now Vice President of Marketing, to create their own in-house marketing department. Mancuso has freely admitted that Carmex simply cannot compete with lip balm brands backed by companies like Clorox and Pfizer in terms of share of voice–a metric which can be looked at as a company’s market share in terms of advertising (how much money they spend relative to the category or, better yet, their share of the overall number of impressions in the category). Carmex simply does not have the same ad spend capacity.

But what they can compete with them on is innovation. And, boy, did Carmex innovate: they underwent a brand refresh, added new flavors to their lineup, and expanded their packaging offerings. Carmex rose to the top because it embraced innovation in all the ways it could–and captured new customers in the process.

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What innovations has your company made to grow their value market share?