An example of a fragmented market would be the retail sector, where there are many small and medium-sized businesses vying for customers. Market fragmentation is the concept that all markets are diverse and over time break into distinct groups of customers (i.e., fragments)—especially as markets grow. For example, when an entirely new product is created, until consumers can spend enough time with it, it solves the needs of most early adopters. As more customers adopt the product, however, the need for more unique product features, benefits, and other aspects arise. It’s all about turning the challenges posed by a fragmented market into opportunities by creating targeted groups within your audience.
OpenSignal acknowledged that while this made it problematic to develop apps, the wide variety of models allows Android to enter more markets. Navigating the maze of market fragmentation can be complex, but understanding how to segment your customer base is a powerful way to steer through it. ‘How to Drive Profits with Customer Segmentation’ is your free guide to mastering this craft. Leveraging market fragmentation can be a game-changer for businesses – particularly nimble and adaptable startups and smaller companies. It’s a fragment of the groceries market that has grown in response to stricter food safety and farming regulations, and consumer demand for food products free of things like pesticides.
Android and iOS operating systems
It can increase competition, innovation, and the personalization of products. But it can be a challenge for brands who don’t know what market fragments to go after or those that don’t have the means to do so—but there are solutions to help with that. Market research provides the means to identify and hone in on a fragment and understand their specific preferences and habits as compared to the rest of the market. Marketing can then take this information to micro-target or adopt advertising with specific elements that appeal to their fragment in question. On the upside, fragmentation can be a catalyst for competition and innovation, often resulting in better quality products and services for more customers.
- Here’s a breakdown of the major causes and real-world examples of their impact.
- Market fragmentation often spells trouble for an industry’s big guns – the giants who’ve long relied on casting a wide net to catch as many customers as possible.
- A business leveraging market fragmentation is also empowered to allocate their resources in a more cost effective way.
- Download the infographic below to see an agile solution that provides tangible answers that enable you to build products and content that speak directly to your evolving consumer fragments.
By identifying and capitalizing on a market fragment before anyone else does, a company can carve out a niche for itself to operate in with less competition and more visibility. This first-mover advantage means that a business can establish strong ties with https://www.tradebot.online/ its customer base early on and set the stage for robust brand loyalty – which itself can often lead to word-of-mouth promotion and repeat purchases. For some businesses – especially the larger industry incumbents – market fragmentation often spells trouble.
See how Qualtrics Strategic Brand works
With an in-depth understanding of the concept of a fragmented market, businesses have a better chance of dealing with the challenges that the market offers and thus succeed. Download the infographic below to see an agile solution that provides tangible answers that enable you to build products and content that speak directly to your evolving consumer fragments. New regulations can fragment markets by creating space for alternative products that comply with new rules. What we often find here is that compliance with the changed regulations becomes the new fragment’s unique selling point. The creation of the internet led to the music market – once dominated by generic radio stations and music channels – receiving a new fragment in the form of online streaming.
One big market transforming into multiple smaller ones will naturally lead to a rise in competition that can compromise a once dominant position for the clear leader. Just like globalization fuels diversity among people and within communities, it in turn does the same for the products and services being demanded. New submarkets are created and new businesses are launched to cater to them – often leveraging globalized supply chains to make it all happen.
A concentrated market also makes it easier for an existing player to dominate the market and increase their profits. You can also look at the amount of innovation and R&D in a market to get a sense of whether it is fragmented or not. Fragmented market is here to stay and it would do well for businesses trying to enter such as market to understand it in detail. Download your free copy now and start tailoring your strategies to meet the exact needs of every market segment.
Spotify then used technology to offer personalized music experiences that fragmented the music industry even further. Market fragmentation happens when multiple competing firms offer highly-incompatible technologies or technology stacks, likely leading to vendor lock-in. Two common varieties of fragmentation are market fragmentation and version fragmentation.Fragmentation is the opposite of, and is solved by standardization.
Reflections on Season 1 of Gutsiest Brands
Market fragmentation isn’t random; it’s typically the result of various evolving forces within the marketplace. Here’s a breakdown of the major causes and real-world examples of their impact. Market fragmentation is the concept that a marketplace can divide into many small markets, each containing customers with distinct preferences or requirements.
Want to stay up to date latest GutCheck blog posts?
Companies are pushed to up their game, think creatively and personalize their offerings to stand out. Going back several steps, market fragmentation creates new companies altogether. However, something could be said for the fact that consumers fragment themselves whereas businesses segment consumers. Further, fragments are typically specific to products and services while segments can define other activities. The crux of the problem is a lack of awareness or acknowledgment of emerging market fragments.
Definition of Fragmented Market
Market fragmentation and market segmentation are two sides of the same coin, but crucially they’re not the same thing. Hitesh Bhasin is the CEO of Marketing91 and has over a decade of experience in the marketing field. He is an accomplished author of thousands of insightful articles, including in-depth analyses of brands and companies. Holding an MBA in Marketing, Hitesh manages several offline ventures, where he applies all the concepts of Marketing that he writes about. While on the other hand, concentration allows companies to establish a strong foothold in the market.
Some brands still choose to appeal to the masses, but market fragmentation can make that difficult and lead to disadvantages when it comes to mass marketing efforts and achieving brand loyalty. As a result, market fragmentation can pose more of an obstacle for larger companies, or those with a greater market share. Smaller companies that focus on distinct fragments can focus their efforts on building relationships with a unique set of consumers—and making those consumers feel special.
Other examples of a fragmented market include clothing retailers, businesses selling furniture, agriculture, plant nurseries and landscaping, book publishing, bulk building supplies and others. Market fragmentation often spells trouble for an industry’s big guns – the giants who’ve long relied on casting a wide net to catch as many customers as possible. These larger enterprises, with their mass-market strategies, suddenly find that their one-size-fits-all approach starts to look a little out of touch. Market segmentation is a strategic tool companies use to deliberately divide a broad market into manageable, targeted groups based on specific characteristics like demographics or behavior. Market fragmentation, on the other hand, occurs naturally as consumer interests and market conditions evolve, leading to a scattered landscape of niche groups.