Fragmented Competitive Landscape Flashcards
Fragmented comp landscape definition
- Fragmented comp landscape implies that no player has considerable market power, and no dominant player enjoys market share more than 50%
- these markets are likely to have many small and medium-size competitors
Fragmented comp landscape general examples
- fast food chains in the US (top 10 food chains capture 61% of the mkt: McDonald’s has 11%, subway has 19%, Taco Bell has 5%, etc.)
- gas stations in the US
- mortgage lenders in the US
Characteristics of fragmented competitive landscape
- even the largest players typically have a lot of potential to scale further
- all else being equal, it is less challenging to enter a fragmented market than a consolidate one because in fragmented mkt, the market entrant wouldn’t need to compete against dominant players trust benefit from economies of scale and significant resources
- fragmented market often provides lots of opportunities for M&A as a market entry stately (for newcomers) or as a sales growth strategy (for existing players)
Typical indicators of fragmented competitive landscapes
- location-driven businesses (eg, restaurants, hospitals, gyms)
- taste-driven businesses (eg, apparels, toys)
- high end markets, B2B segments, and businesses with high role of IP protection (fiction books, drug makers and some software)
Fragmented comp landscape example: client is a grocery retailer. Their competitors offer lower prices for some product offerings while maintaining same profit margin as your client. How is this happening/what should your client do?
Retail grocery market:
- offline retail is a location-driven business this comp landscape may be fairly fragmented
- might be several dominant players but no one likely controls more than 50% of the market (maybe in 10-20% range)
- we might expect a lot of small and medium-sized grocery retailers that don’t enjoy economies of scale that much
