The ‘Rule of Three’ in Europe

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Jagdish Sheth and Rajendra Sisodia say their research demonstrates that in mature, competitive markets there is only space for three large volume-driven companies alongside several niche specialists.

Key messages:
– Efficient markets eventually get organised into two kinds of competitors: full-line generalists and product/market specialists.

– Generalists are large scale companies, which compete across a range of products and markets, and are volume-driven. Specialists operate on a smaller scale, focus on niche markets and tend to be margin-driven.

– The Rule of Three holds that in competitive, mature markets, there is only room for three full-line generalists, along with several product or market specialists.

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