Segmentation

When the new era, after the pandemic, is about to begin, the companies – small and big, public and private, manufacturers, commercial and service- are all encountering a growing complexity in all their environment: Turbulence in the market, inconstancy in demand, the global proliferation of competitors, short life circles, flexible production, complex distribution systems, are some examples. It can be assured that complexity is the face of everyday reality. In any market where we put our attention, two fundamental factors are apparent that explain this growing complexity: On one hand, new product proliferation and, on the other hand, the appearance of alternative ways of distribution. The increase of new products (and services obviously) appears as a consequence of the differing efforts: The companies, in their search of differing strategies, generate an increasing offer of products for different market segments. This way, the stock levels increase and the risk of obsolete products, lowering at the same time the use of assets of the company, included- by the way- the logistics assets. The proliferation of new products and services is then an essential factor that explains this growing complexity.
The other factor for this appearance of alternative ways of distribution, as an answer to an increasingly changeable and diversified demand. The companies are learning to respond to the distinct segments of customers who present different service requirements. However, distribution systems are more sophisticated each time.

The costs have gone up, increasing the client segments with different service requirements. The companies must respond to the increasing needs of various services, on the other side, they must struggle with the resulting increase of costs being this another factor that, in my judgment, explains the increasing complexity which we are witnessing in every market.

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