Pure play companies focus on a single line of business, while conglomerates offer a diverse range of products. Pure play companies have the potential to capture a larger share of the market, but are more vulnerable to changes in consumer tastes. However, a pure play approach can be effective for launching new products and establishing market recognition.
Pure play is a term used to describe a company that chooses to focus its investment of resources on a single line of business. This type of phenomenon is often seen in retail, specifically online retail. Instead of providing consumers with a wide range of products, the pure breeding business offers one type of product. While this model can be very successful, it also leaves the company more open to the risk of failure if the limited product line falls out of favor with consumers.
Unlike a pure game, conglomerates that offer a diverse range of products can also be very successful while remaining less vulnerable to changes in consumer tastes. This is because there is a greater possibility that as a particular product line experiences a downturn, another product line is gaining attention and generating additional sales. For example, an online retailer that offers an eclectic mix of packaged foods, over-the-counter medications, and a variety of sportswear would have a better chance of handling shifts in demand than a retailer that sold a single product, such as fitness books. hard cover.
While there are risks associated with a pure play approach, there are also a number of potential benefits. As the company is focused on a specific type of product line, the opportunity to capture a larger share of that market is present. By becoming the established leader in that market, the business can effectively influence consumer expectations and set the standard by which all other competitors are judged. At best, this set of circumstances can be maintained for several years, allowing the company to build a reputation for quality that makes marketing this limited line of products much easier simply because of easy brand recognition.
In some cases, a pure breeding approach can be especially effective when it comes to launching new types of products. For example, if an entrepreneur develops some new technology that is highly likely to attract consumers, he can establish a copyright on that technology and establish a company to be the sole manufacturer and distributor of that product. Assuming the product attracts a loyal following, copyrights help to limit competition and allow the entrepreneur to earn a lot of money. This set of circumstances will continue until someone develops a different process that produces a product that gives consumers the same results. Even so, the goodwill and market recognition accumulated in the meantime may be enough to keep the competition at bay, losing very little of its market share and remaining the industry leader for many more years to come.
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