Pure play companies focus on a single product line, while conglomerates offer a wider range of products. While pure play companies can capture a larger share of their market, they are more vulnerable to changes in consumer demand. However, they can also establish themselves as industry leaders and maintain their market share for many years.
Pure play is a term used to describe a company that chooses to concentrate its investment of resources in a single line of business. This type of phenomenon is often seen in retail, especially online retail. Instead of providing a wide variety of products to consumers, the pure play business offers one type of product. While this model can be very successful, it also leaves the company more open to bankruptcy should the limited product line lose consumers.
In contrast to a pure game, conglomerates offering a wide range of products can also be very successful, while remaining less vulnerable to changes in consumer taste. This is because there is a greater chance that when a particular product line experiences a downturn, another product line is attracting attention and generating additional sales. For example, an online retailer offering an eclectic mix of packaged foods, over-the-counter drugs, and a wide range of sportswear would be more likely to handle shifts in demand than a retailer that sold a single product, such as cover books. rigid.
While there are risks associated with a pure gambling approach, there are also a number of potential benefits. Because the company is focused on a particular type of product line, there is an opportunity to capture a larger share of that market. By becoming the established leader within that market, the company can effectively influence consumer expectations and set the standard by which all other competitors are judged. At best, this set of circumstances can be sustained for a number of years, allowing the company to build a reputation for quality that makes it much easier to market that limited line of products, simply because of the easy recognition of the brand name.
In some cases, a pure play approach can be particularly effective when it comes to releasing new types of products. For example, if an entrepreneur develops a new technology that is highly likely to appeal to consumers, he can establish a copyright on that technology and establish a company that is the sole manufacturer and distributor of that product. Assuming the product attracts a loyal following, copyright helps limit competition and allows the business owner to make 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 then, the goodwill and market recognition that pure gaming has amassed 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.
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