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An industry is a part of an economy that is concentrated with businesses that produce similar goods or provide similar services. An emerging industry, therefore, is a new segment of an economy which is based on an unexploited and perhaps new concept. This developing segment of the economy lacks almost all of the components of an established segment, such as consumer awareness, a developed line of goods, and brand loyalty.
There are numerous segments of the economy that people tend to be very familiar with, such as the automotive, health care, and fashion industries. The fact that most people know about these industries and have likely had several experiences with their products and services can be defined as consumer awareness. An emerging industry, however, is generally based on an idea that has not been widely publicized, and large numbers of people are not usually knowledgeable about it.
Establishing a business in an emerging industry is often risky. When an established company offers a new product or service, consumers are often weary despite the fact that they are familiar with both the company and its other products. It may require a great deal of promotion and marketing to motivate consumers to spend money on introduced items. When this is compared to the effort required to introduce a new segment to the economy, which involves unknown businesses with new products or services, it should become clear that the challenges are significantly greater.
With an emerging industry, people generally have little, if any, information on which they can base decisions or opinions. There are no previous products or services to examine as reference points. Furthermore, the entire concept of what is being offered may be new.
People may not be able to readily grasp the purpose or they may doubt the need and benefit of what is being offered. As such, it is often necessary to create ways to stimulate interest. This can include selling at low introductory prices, product giveaways, or on-site demonstrations.
Operating a business in an emerging market can also be difficult because securing the finances to invest in such a venture is likely to be a major challenge. Many lenders are generally hesitant to provide financial resources for businesses that they view as high-risk or experimental. This may necessitate the need for individuals in an emerging industry to rely more heavily on private financing options.
Finding suppliers with adequate supplies may be problematic. Since there is not a developed demand, the raw materials needed for production may be limited. It may be necessary to improvise certain materials for others. Since the technology to support an emerging industry is newly developed, it is unlikely to be optimal. This can have a negative impact on the effectiveness, efficiency, and speed of delivery.
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