In order for us to address the matter of a specific competitive advantage, we should first define what a fragmented industry is and how it affects the actors (businesses) of the said industry based on our own opinion.
A fragmented industry is one in which there exists a multitude of small-scale enterprises that compete with one another in a disunited fashion, lacking any significant degree of coordination or consolidation.
Such an industry is characterized by a lack of dominant firms, with no one entity possessing a significant market share or influence over the industry as a whole.
We are to cite the main issue that makes an industry fragmented in a simple form.
The barrier to entry is low. Types of businesses that can be started with median capital depending on the kind of industry. Certain businesses require minimal-to-no experience in the given field to enter.
As soon as entry commences, it adds to the volatility of the given industry, making other competitors fight for the same slice of the pie.
Almost making all the businesses involved in the industry a commodity, since certain strategies cannot be extrapolated. Therefore, on the buyers' (Clients and customers) side, it gives them more options to choose from, which entity seems to benefit them the most and almost always concerns the price.
However, a certain remedy can be placed, which is superior customer service.
We have been customers or clients to certain businesses, and we know for a fact that as soon as we contact a given business pertaining to our needs, we expect to be treated with quality and professionalism, but most of all, someone who answers.
Earlier, we discussed that the buyers have more options to choose from. Should we fail to answer a certain call, they’ll be our competitors’ customers, and not ours.
One of the factors to eliminate this concern is by encouraging easy access to service via phone calls, customers with questions or issues need easy access to service.
However, we also understand that not all the time someone will answer the phone due to certain activities or tasks within the business that needs to be attended to.
Part of the remedy mentioned earlier is outsourcing customer service calls to a company that offers superior value, especially in customer support.
We are to end this and continue the discussion of “easy access to service”
We may also add within the faculty of “Customer service” that a positive service system is not just satisfying, it efficiently creates an emotional connection, it prevents future problems, and it generates positive WOM (Word-of-mouth) which leads to more customers even if the industry that you’re in is slow.
Customer service is one activity that is tied to the sphere of operational effectiveness. Pursuing this undertaking may withstand an industry that is fragmented.
Internally, the cost of customer service needs to be managed efficiently, and externally, it needs to provide a positive customer/client experience.
We addressed the benefits of having a cost advantage towards outsourcing customer service in a different essay, which can be accessed through our website.
If we look at the cost of customer service, we see recruitment, hunting for prospective staff, training, benefits for the employees, constant monitoring, etc.
Taking these matters into consideration, perhaps we are blessed to have a business these days because of the internet, we can be able to remove those costs by outsourcing customer service to a company, whose driving factor is to become an extension of your business through customer service.
Furthermore, superior customer service is one of the facets of maintaining competence in a fragmented industry, at the same time, having a cost-benefit while initiating the activity.
We can logically declare that the internet is complimentary for businesses on a large scale, which can be an understatement, if you know where to look for that advantage within it, to sustain competence.
By Juan Paolo Granada/Paul Granada