Published by MBA Skool Team, Last Updated: May 15, 2015
What is Market Fragmentation?
Markets are not homogeneous and customers are never the same. Market should satisfy all customers need , that’s why as market grows they fragment to form sub-markets. Market Fragmentation is the concept that all markets are composed of different segments, based on needs, wants, responses and behavior. As market grows, market is fragmented into distinct sub-markets that may break away from parent market to become potential market. Fragmented markets are formed on basis of similar customer needs.
It is difficult to decide whether market should be fragmented or segmented. Fragments are often ignored by marketers as they are small and unprofitable which give small players opportunity to dominate these new markets. Fragments reduce the effectiveness of mass media and reduce brand loyalty.
A fragmented industry does not have major players. Business practices vary because if different individuals involved in the market. There are various advantages of a fragmented industry-
• No big players give opportunities to market players to emerge as strong players using innovation, experiments and techniques.
• Advertising is focused on local customers only. So advertising costs are relatively small compared to national advertising.
• Differentiation helps in competing in such fragmented markets. Differentiation of product can help a market player to dominate the market.
For example- Different kinds of channels, magazines based on customers need.
Hence, this concludes the definition of Market Fragmentation along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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