An industry composed of a large number of small and medium sized companies.

A strategy designed to obtain the advantages of cost leadership by establishing a network of linked merchandising outlets interconnected by information technology that functions as one large company.

A strategy in which the franchisor grants to its franchisees the right to use the franchisor's name, reputation, and business model in return for a franchise fee and often a percentage of the profits.

One in which large numbers of consumers enter the market.

The strategy of "filling the niches" or catering to the needs of customers in all market segments to deter entry by competitors.

Charging a price that is lower than that required to maximize profits in the short run to signal to new entrants that the incumbent has a low-cost structure that entrant likely cannot match.

Incumbent companies deterring entry by investing in costly technology upgrades that potential entrants have trouble matching.

Investments that signal an incumbent's long-term commitment to a market or a segment of that market.

The process by which companies increase or decrease product prices to convey their intentions to other companies and influence the price of an industry's products.

When one company assumes the responsibility for determining the pricing strategy that maximizes industry profitability.

The use of product differentiation strategies to deter potential entrants and manage rivalry within an industry.

The creation of new or improved products to replace existing products.

When a company searches for new market segments for its existing products in order to increase sales.

When a company develops strategies to become the dominant player in a declining market

When a company focuses on pockets of demand that are declining more slowly than the industry as a whole to maintain profitability.

When a company reduces to a minimum the assets it employs in a business to reduce its cost structure and extract ("milk") maximum profits from its investment.

When a company exits an industry by selling its business assets to another company.

1. A lack of scale economies may mean there are few, if any, cost advantages to large size.
2. Brand Loyalty in the industry may primarily be local.
3. The lack of scale economies and national brand loyalty implies low entry barriers.

Another way of consolidating a fragmented industry is to merge with or acquire competitors, combining them into a single, larger enterprise that is able to realize scale economies and build a compelling national brand.

1. The limited performance and poor quality of the first products
2. Customer unfamiliarity with what the new product can do for them
3. Poorly developed distribution channels
4. A lack of complementary products that might increase the value of the product
5. High production costs because of small volume of production

• Innovators and early adopters are technologically sophisticated customers willing to tolerate the limitations of the product. The early majority however, values ease of use and reliability.
• Innovators and early adopters are typically reached through specialized distribution channels, and products are often sold by word of mouth. They are active consumers of technical information. Reaching the early majority requires mass-market distribution channels and mass-media advertising campaigns that require a different set of marketing and sales strategies.
• Because innovators and the early majority are relatively few in number and are not particularly price sensitive, companies serving them typically peruse a focus model, produce small quantities of a product and price high.

When a company concentrates on expanding market share in its existing product markets.

               Products

          Existing                  New 

           Existing     Market Penetration/Product Development

Market segments

                New    Market Development/Product Proliferation