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Leg 2 from Lisbon to Cape Town (I). Why an Intra-Industry Segmentation Analysis?

Today I have decided to post again. Why?

Well because I need to finish all these topics which are long and the Volvo Ocean Race Leg 2 is at halfway. The 7 teams after crossing the Equator expect to arrive at Cape Town in 9 or 10 days from today. I will have to accelerate the sailing rhythm here. Let me share a video of the Leg 2, Week 2 Review:

And here is our THEME 2 outline: Leg 2 Intraindustry analysis why outline 1.png

When doing the Leg Zero (Porter´s Industry Analysis), we were aware of the difficulty of drawing industry boundaries. There is little agreement between individuals as to precise delineation of boundaries. We have seen Porter´s industry forces as a simplification of reality. For example, The retailer sector includes so many industry segments, but many of the industries do have a mix of products and services, which are part or complement other industries. For example, a company may be categorized as a department store and at the same time has a restaurant or a gym. Such heterogeneity provokes problems for industry analysis. Another example of the blurriness of some industry boundaries: If we talk about the retailer’s sector, this huge group has different concept stores such as Tiffany´s, Exxon Gas Stations, Bloomingdales,  and Dollar Tree Stores.

Leg 2 Intraindustry analysis why outline 1.png

Why is an intra-industry segmentation analysis needed? To understand the competition closely and to identify profit opportunities accurately, a detailed analysis of industries may be needed. We will analyze the internal structure of industries. By the time we finish the theme 2 we will be able to:

  1. Segment an industry into a number of constituent markets and deploy the tools of industry analysis to analyze the attractiveness of each segment and the key success factors within it.
  2. We will learn to classify the firms within an industry into strategic groups based on similarities in their strategies.
  3. We will know about one academic framework for competitor analysis.
  4. We will comprehend the bases for segmenting business and government markets, and
  5. We will finally perform a summary and wrap-up post in order to proceed to the third and last theme for this Leg 2.

Initially, it may be convenient to define industries broadly (as we did it with Leg Zero material), but for a more detailed analysis of competition, we need to focus on markets that are drawn more narrowly in terms of both products and geography. This process of disaggregating industries into specific markets we call intra-industry segmentation analysis.

“Segmentation is particularly important if competition varies across the different submarkets within an industry such that some are more attractive than others are. A company can avoid some of the problems of an unattractive industry by judicious segment selection”.

See you in my next post to continue with this Theme 2. Safe Travels.


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Picture Source: Getty Images.


Source References:

Note: All the pictures and videos shown on this blog do not belong to me. I do not own any of the lovely photos posted unless otherwise stated.


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