Market Evolution Swings by the forces of Innovation and Competition: Consider the Evolution of Paper Towel Industry!

Markets evolution is the function of the forces of fragmentation brought by competition, and consolidation brought by innovation. Let's take a look at the evolution of the paper towel industry.

Originally,homemakers use cotton and linen dishcloths and towels in their kitchens. A paper company looking for new markets, developed paper towels. This development crystallized a latent market, and other manufacturers entered. The number of brands grew and created market-fragmentation. Industry over-capacity often lead manufacturers to seek new features, expanding the boundary of competition.

One manufacturer hearing that consumers complain that paper towels were not absorbent, in response, introduced Absorbent Towel, and increase its market shares. This market consolidation didn't last because competitors came out with their own versions of absorbent towels. The market fragmented again,. then another manufacturer introduced a Super-Strength Towel; it was soon copied. Another manufacturer introduced a Lint-free paper Towel, and subsequently copied.

Thus paper towel market evolves from a single product, to one with various absorbencies, strengths and applications. However, the evolution was driven by the forces of innovation and competition.

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