What are the features of market concentration?
4 years ago
Marketing
Features of the concentration strategy:
- There exists an intensive company assignation of efforts in a few markets and a more efficient use of resources so as to prevent them from being dispersed.
- A higher level of commitment and operation consolidation in each selected market is promoted.
- A selection of the few markets that the company considers “key” for international operation development is made. In general, the company turns to more dynamic and internationally stable markets. Those markets sale levels develop an increasing tendency to company participation in the markets selected.
- When the international operations risk is concentrated on a few markets, there appears a company’s greater dependency on that small number of markets. The fact that the enterprise is exposed to the different selected markets ups and downs makes it more fragile.
- It brings about more knowledge about those markets, and a greater learning capacity about commercial practices, consumer’s behaviour and markets competitive environments.
- It is advisable for use when the new markets access, administration, sales and distribution costs are very high for the entrepreneur. Concentrating on a few markets makes it possible to generate economies of scale in sales and distribution activities.
- It has proved to be very efficient in goods that need to be adapted as regards product variables and market communication, which is why it is not advisable to diversify expansion in numerous countries because adaptation cost would be too high. It is efficient for the marketing of goods that have a repetitive purchasing process and that allow consumer’s loyalty.
- It is useful for the products that need a direct or indirect company’s strong control and participation in the different stages of the marketing process (through pre and post-marketing services). In general, it is used in middle stages during the company’s internationalization.
Susmita Sah
Jan 17, 2022