An industry analysis for manufacturers of a small personal care gadget observed the following characteristics:
1) Industry sales have grown at 15%-20% per year in recent years and are expected to grow at 10%-15% per year over the next 3 years, still well above the economic growth rate.
2) Some U.S. manufacturers are attempting to enter fast-growing non-U.S. markets, which remain largely unexploited.
3) Some manufacturers have created a new niche in the industry by selling directly to customers through mail order. Sales for this industry segment are growing at 40% per year.
4) The current penetration rate in the United States is 60% of households and will be difficult to increase.
5) Manufacturers compete fiercely on the basis of price, and price wars within the industry are common.
6) Some manufacturers are able to develop new, unexploited niche markets in the United States based on company reputation, quality, and service.
7) Several manufacturers have recently merged, and it is expected that consolidation in the industry will increase.
8) New manufacturers continue to enter the market.
Characteristics ________ would be typical of an industry that is in the consolidation stage.
A) 6 and 7
B) 1 and 4
C) 5 and 6
D) 2 and 8

Question

Quizplus · Accepted Answer

Characteristics 6 and 7 are indicative of an industry in the consolidation stage, where larger companies acquire smaller ones to increase their market share and reduce competition. The fact that some manufacturers are able to develop new niche markets based on reputation, quality, and service suggests that the industry is becoming more mature and stable, which is also a characteristic of the consolidation stage.

An Industry Analysis for Manufacturers of a Small Personal Care