The Porter’s Five Forces model is one of the most commonly used tools for assessing the external forces present in an industry, which can influence the business operations of an organization. This article will show you how to use the Porter’ Five Forces model to analyze any industry of your choice. For your affordable paper, the following guideline can be immensely beneficial for understanding the model and for using it in your own marketing management paper. So, let’s get right into it.
Buyer’s Power: The buyer’s power refers to the bargaining power of the customers. The buyer’s power is high when there are multiple options to choose from for the buyers. The presence of multiple brands offering identical value proposition can reduce the switching cost for the buyers, thereby increasing their bargaining power. However, fewer number of brands leads to lower bargaining power of buyers, as there aren’t many options in the market to switch to.
Supplier’s Power: The supplier’s power or the bargaining power of suppliers is determined by the switching cost of the market players from shifting from one supplier to another. The more the number of suppliers in the market, the lower is the switching cost and vice versa. However, it should be noted that a company can be exclusively dependent on one particular supplier for procuring a very specific component or material, which consequently increase the supplier’s power. Higher supplier’s power allows them to dictate price of materials, thereby affecting the cost of production for the market players.
Threat of Substitutes: Threat of substitutes come from the presence of alternative products that can provide almost identical core value and the customers can choose these products over the mainstream offerings of the industry. While discussing about threat of substitutes you should identify the core values offered by the mainstream products. For example, the threat of substitutes for the car manufacturing industry can come from public transportation, as both private cars and public transportation services offer the same core value, which is transportation from one point to another.
Threat of New Entrants: The threat of new entrant is determined by the barrier to entry into the industry. These barriers can be defined by factors like establishment and set up costs, presence of certain governmental regulations, presence of well-established brands, etc. For example, a new entrant may find it easier to open a fast-food joint, but may find it quite difficult to set a car manufacturing company, due to its incredibly high set up cost. However, in certain industries and markets, government bodies may offer financial support and guidance to new start-ups to establish their own venture.
Rivalry Among Firms: The rivalry among firms determines the level of competition among existing marketing players. The presence of large number of companies offers identical products and services to the same group of target customers, can lead to steep competition in the industry. High rivalry among firms clearly suggests that the market players can find it challenging to create a strong differentiation in the market. In this section, you can discuss about the presence of other brands and how aggressively they compete with each other.
The Porter’s Five Forces model is quite useful in analyzing any industry of your choice for your marketing management paper. However, using this model effectively can be quite challenging, especially if you are new to this domain. Before you ask someone for writing my paper for me, just follow this outline in your paper and you will be able to prepare an excellent quality marketing paper and get good grades.