Most firms today rely on strategies whose roots lie in mass-market standardization. This kind of firm is driven by the quest for increased market share, and success is measured by the raw number of new customers the firm acquires. It's getting harder to win this game. In essence, all this kind of firm really accomplishes is finding all the customers willing to buy its products at a given price. Eventually, the only way to grow further is to lower the price, since everyone who is willing to buy at the old price already has.
Competition also plays a role.
It only takes one aggressive or irrational competitor to start lowering prices, and your firm's margins will be under pressure. Mass, niche, and database marketers are all faced with these challenges. In response, increasing numbers of firms are making the transition to customer-driven competition. You start with an important customer, then bring that customer a tailored product or service. Then you start looking for other ways to meet that customer's specific needs.