University of Management & Technology

(Sialkot Campus)
Strategic Marketing Management
Assignment
(Fragmented to Volume Industry Structure)
Programme

MBA (1.5)

Semester

Fall 2014

Sir.Mobin-ul-

Submitted To
Haque

Group Members
Zarak Mir

(14005032-002)

Faqeed Fiaz

(14005032-010)

Awais Mushtaq

(14005032-006)

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Fragmented & Volume Industry

Structure
Fragmented industry structure comprises of high no. of options to achieve
competitive advantage but these advantages have very less impact on
their earnings. So, fragmented industry has very small competitors, no
one dominates the market with regards to market share. Hence, no one is
in the position to exert strong influence. Whereas on the other hand
volume depicts the businesses that may have only few ways to
differentiate but these differentiations have huge impact on their
earnings. The two main factors that can elaborate volume businesses well
are the nature of products that fulfill needs of large portion of
demographics of people and the significant economies of scale.

Shift from Fragmented to Volume Industry Structure

As determination of industry structure involves nature of product, one can
shift from fragmented to volume business by focusing more on the
products that can satisfy the customer needs that are very similar rather
than on the product in which customer needs are spread across different
value attributes. Because good and services for highly specialized market
requires extreme specialization by firms and that products does not lend
to achieve economies of scale that is the main attribute of the volume
business. One also has to check on consumer preferences that affects the
demand side in a market and might cause fragmentation.
After selection of the nature of product, the other important factor that
can help to shift from fragment industry to volume industry is economic
factor. One has to produce on large scale to lower production and service
costs thus gaining economies of scale. It will also help to spread marketing
& brand building costs on large number of units. One must control
inventory costs & variable sales as they are major factors that constraint
one from large scale production to reduce cost or to expand capacity that
might lower cost.
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On next page, there is an example of a shoe brand that shifts from

fragmented shoe industry structure to volume and specialized industry
structure.

SCARPE
Introduction
SCARPE is one of the leading and fast growing brands in Moscow (Russia).
SCARPE deals with all type of leather products but their core product is
their designer shoes. In 2014 SCARPE introduce them in one of the largest
populated country. On 11th JULY 2014 they open their first outlet in
Pakistan. They choose Pakistan because it is the most populated country
and also economical market to introduce them. It is also convenient for
them to introduce in Pakistan because their manufacturing units are in
Pakistan since 1985. Now after six months SCARPE has their 5 outlets in
different cities of Pakistan. The main objective of SCARPE is to obtain
maximum market share in Pakistan. To achieve this objective SCARPE is
going through different market strategies according to the market
segmentation. There are some stats which SCARPE get before coming in
Pakistan.
*Top Selling Mens Shoe Brands in Pakistan:
Brands
Bata
Servis
Borjan
Hush Puppies
Others & locals

Market share
22%
17%
9%
6%
46%

*Note: this research is based on volume17. No4 Aurora magazine

*Top Selling Female Shoe Brands:

Brands
Stylo
Borjan
Metro

Market share
16%
9%
8%
Page 3 of 7

Bata
Servis
ECS
Locals & others

8%
6%
4%
49%

*Note: this research is based on volume17. No4 Aurora magazine

How SCARPE Enters in a Market

SCARPE is an international brand but they enter in Pakistani market with
very keen observations. Their first target is to enter in such a market
where the competition is low but chances of growth is high. So keeping
this in view, they selected cities having high population but low
competition. So they open their first outlet in the economical hub of
Pakistan. City,

which is also known as the city of Iqbal (Sialkot). They

chose Sialkot because of low competition and high purchasing power of

customers. There are very few brands who are dealing with leather
products in this market but they have to face the competition with others
brands. So, now in Sialkot they are in fragmented industry structure. To
gain more market share they introduce some new products.

How SCARPE Shift to Volume Industry Structure

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Pakistan is a country where 19 million* children are school going, out of

which 12 million join government schools and other are registered in
private sectors or semi government institutes. 4 million children belong to
well economical families. There are very few brands that are targeting
these children school shoes. So SCARPE jumps in this market and
introduce their new product with the name of SKODO with new
marketing strategy. SKODO is a shoe made up of leather with one year
warranty available at very cheap rates comparatively others. So, it is
acceptable by all parties. SCARPE make contracts with many well known
schools in Pakistan. The contract includes that SKODO will be essential
part of their uniform. This is how they enter into volume stage by picking
a generic product (school shoes); differentiate it by product performance
& price. Due to contracts they gather a great market share which results
in gaining significant economies of scale that leads to higher profitability.

How SCARPE Enters in Specialized Industry Structure

Flat Feet Shoes
In Pakistan there are 7 million* people that are facing flat feet problem. The
problem is by birth but to tackle this problem there are very few companies who
make shoes for these people. So, SCARPE launch their new product named
Fleet CLOGS. These are customize shoes for flat feet customers made up of
wood

and

specialy

designed for their feets.

So

using

this

technique

and

facilitating

such

customers

they

capture

large

market share of such

customers.

Page 5 of 7

*Pakistan survey report of health and issue 2007

Customized Shoes
To get more market share and customers attention SCARPE introduce their
new product named MY STYLE. This product is introduced to special
customers who want to have shoes of their own choice. They just have to
fill a simple form on the website (www.getscarpe.com) and post the
photo/description of shoes of their own choice. The company will make it
for them within 12 working days at very affordable prices.
So by this policy they also introduce themselves in specialized market of
shoes.

Page 6 of 7

Conclusion
One can shift from fragmented to volume industry structure by
redesigning its product in such a way that it can address many customer
value attributes that are similar (generic products rather than specialized).
To differentiate more on manufacturing process to reduce costs than on
product features to be market leader in volume industry structure. Generic
products may tend to have less ways to differentiation but have high
potential advantage in the form of economies of scale.

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