Characteristics of a consolidating industry

Your marketing espenses are lower for a fragmented market than they would be for one that is dominated by big names.Because of the fragmentation, much of your media focus can and should be local, and this kind of advertising is much less expensive than national media.

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Thus, an understanding of where in the cycle an industry is should be the cornerstone of a company’s long-term strategic plan.

, as competitors quickly arise to create the frontier of industry consolidation.

Companies in stage 1 industries should aggressively defend their first-mover advantage by building scale, creating a global footprint, and establishing barriers to entry by protecting proprietary technology or ideas.

Stage 1 companies should focus more on revenue than profit, working to amass market share. Major players begin to emerge, buying up competitors and forming empires.

You also can use word-of-mouth advertising, because customers in fragmented industries tend to look for new businesses, and those customers are much more willing to experiment.

Fragmented industries tend to have a reputation for smallness.For those players who do seek to grow through acquisitions, the intense deal competition presents the challenge of being aggressive enough to win without having to overpay.In light of these dynamics, there are two keys to preserving competitive power and realizing the full value of targeted assets: strengthen your position in sub-sectors and develop a plan to enhance – : Identify where and how new acquisitions and established assets can forge an advantaged position as the value chain consolidates across all levels.Some companies or even industries find new uses for declining products, thus extending their life cycle.The growth of an industry's sales over time is used to chart the life cycle.Life cycle models are not just a phenomenon of the life sciences. Just as a person is born, grows, matures, and eventually experiences decline and ultimately death, so too do industries and product lines.

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