CONCENTRATION OF MARKET
DIVERSIFICATION OF MARKET
Fachchoschule Frankfurt am Main
Frankfurt University of Applied Sciences
• Briefing of the Case Study
• Case Analysis
BRIEFING OF THE CASE STUDY
• A middle scale Swedish Engineering Company which manufactures
Fire-Fighting Equipments was losing profit from the market.
• A new marketing director executed the basic principle of market
• He analyzed that by providing the company’s product to 100 country
markets, the orders were very small, the capital gained by the order
was comparatively small as compared to expenditure on the
services to be provided for the equipments was very big, and also it
was time consuming to provide services.
• So, the company decided to concentrate its market from 100 market
countries to 50 market companies and also out of these 50 markets,
10 markets were given special attention as the company product
was much more successful in this market.
• The company was smart enough to keep an ideal ratio up to 10
markets, which was due to taking in account of any contraction with
in a market, this can be very harmful for the company to gain profit.
• Basically the company Business level was diverted from a large
single market as a whole to a much concentrated market.
• CONCETRATION OF MARKET
• Extent or degree to which a relatively small number of firms account
for a relatively large percentage of the market.
• DIVERSIFICATION OF MARKET
• It is a form of corporate strategy for a company. It seeks
to increase profitability through greater sales volume
obtained from new products and new markets.
• Common Customer Needs
• Global Customers
• Global Channels
• Lead Countries
• Global Scale Economic
• Sourcing Efficiencies
• Favorable Logistics
• Difference In Country Cost(Incl.
• High Product Development Cost
• Fast Changing Technology
• Favorable Trade Policies
• Compatible Technical Standards
• Common Marketing Regulations
• Government-Owned Competitors &
• Host Government Concerns
• High Exports & Imports
• Competitors From Different Continents
• Interdependence of Countries
• Competitors Globalize
• Basically, in the global environment it was possible to concentrate the business to
small markets, so the company decided to concentrate there business to about 50
countries and more specifically more attention was given to some 10 countries where
the returns where promising.
• Eventually the profits increase.
• So, this nature of business act is possible in a Globalization Environment where
market Globalization provides the Global customer for the product and make a
transfer from the market to a much more Lead market, where the product can give
more returns. Cost Globalization provides more benefits for the company as it
decreases the investment on the develop of the product and also the difference in
currency becomes another factor for good returns as less amount of money will be
spent on other supporting services.
• With Government Globalization has its own impact when doing business in the
specific 50 countries, with these countries providing good policies for the company,
on the other hand it creates a Global competitive Environment, where products of
different countries are introduce to the customer, which is beneficial for the customer.
• So Globalization makes concentration of market and diversification market much
more possible for companies when they become Global.
• Economic Risk
• Trade Barriers
• Cultural Diversity
• Managerial Complexity
• Simultaneous Integration and
• High Stakes Competition
• Companies which concentrate on key markets
require less administration.
• The planning of marking can be used more
effectively for a few ‘best’ markets
• Sales develop better through better staffing,
better quality of selling and higher market
• Administration, logistics and supply can be
organized more effectively for key markets.
• Diversification and Concentration of
market are two very important strategies in
the Globalization Business world that we
live in today.
• By reducing the total number of markets,
but retaining those with significant trade,
the company improved its profit