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Market Segments

By Kevin

Slice 'em up!

Competition is definitely cool, it rids the world of crappy stuff and drives everything towards excellence. The article by The Economist makes it appear as if aviation industry is only driven to compete when there is changes in technology that gives one or another a particular advantage. In many sense it is true, but with the airline industry seeking to reduce emissions, the aviation industry will have to make changes to keep up. It is interest that the main force outside the control of Boeing and Airbus is actually the competition that is taking place in the aviation engines industry.

It is not so obvious that throughout the supply chain, firms competing are actually pushing the next level of the chain to work harder as well. For industries like aviation where development is slow and orders take ages to complete, it was more obvious when firms are trying to take on new strategies or making more radical changes. At least they don't really have market segments to think about.

In James Surowiecki's recent article about the iPad and the shrinking middle market, he highlights how businesses targeting the middle market is finding themselves increasingly squeezed as the higher end products gets cheaper and freer information has made it difficult for firms who are making the 'ordinary stuff'. Competition have made the really good stuff cheaper (or cheaper stuff better, much like the way the aviation engines are trying to beat each other and end up improving the overall product quality of the aviation market) and information about products way more accessible to people. Things have either become cheap and good enough or work so nicely that you have to pay more; there is no point buying something in-between.

In many sense, this matches the widening income gap of the consumer market.