Hi there,

Very good question!

I agree with Udayan that you should first clarify the objective.

Once you have done so, you can analyze which market would help you to achieve that particular goal.

Say for example that your goal is revenues. This would be given by:

• Market size
• Market share you can get

Say market size is equivalent, the best market will be defined as the one where you can get the highest market share in this case.

A fragmented market may be good (and a concentrated bad) in terms of market share because:

1. Barriers to entry are low (you could enter – unlike a concentrated one where that may be impossible – so at least get some market share)
2. The reaction of competitors is low
3. It is easier to get market share from the weakest players (at least some of them should be worst than you)

But a fragmented market may also be bad (and a concentrated one good) in terms of market share because:

1. Competitors will continue to enter the market in the future
2. It may be difficult to grow (which is why the market is fragmented in the first place), unless you have a disruptive product or service

So overall, you should consider both the plus and minus of the fragmented market, and evaluate accordingly if it is the best.

Best,

Francesco

Hi,

Here is the logic:

1. In most of the markets, players are competing on price
2. Those who have lower costs can compete on price better and lower the price further
3. If the players are big, they'll have lower costs due to: economies of scale, supplier power, brand power, etc
4. Thus it's hard to compete with big players when you are small

Here are the implications:

• Consolidated markets are hard to enter from a scratch (organically)
• Consolidated markets are great if you want to acquire someone big (non-organically)
• Consolidated markets OK if you have investments and a business in the other country that you can replicate quickly

Best

The answer depends on the objective and the nature of the market.

Broadly speaking - a market can be fragmented for 2 reasons

1. It is a highly commoditized market like coffee or cheap electronics etc.- which is less appealing as anyone can enter it and the growth largely comes for marketing and not innovation. Entering here is easy but profits are low and expected to get lower and this is a market best avoided.

2. It is a new space where companies are still targeting various niches/growth opportunities - for example ecommerce in 2000. The growth potential was very high but many companies started and failed until Amazon figured out a way to deliver products in 2 days for free. Here growth is based on true innovation which allows you to capture the market in the future once there is a behavioral change that takes place. This is a market you do want to be in.

In general you want to be in a market which is not easily accessible as your profitability is highest there (peaking theoretically in a monopoly)

Best,

Udayan

Hello!

Classical 5Ps of Porter :)

It depends on the position of the player you are anlyzing.

In case of a market entry in which you are consulting the player who is considering entering, indeed a consolidated market with few players is a very difficult scenario -to enter-.

Hope it helps!

Cheers,

Clara