porters five forces model Flashcards
what does it do
helps managers of existing markets to figure out best marketing strategy to gain a competitive advantage
decision making tool
what does it consist of
barriers to entry
buyer power
supplier power
threats of substitutes
rivalry
barriers to entry
how easy it is for new firms to enter the market
new entrants will want to compete by selling simailr products
exitsing frims interest to make it hard for firms to get in
strategies to raise barriers to entry
patent or tradmakrs make it harder for businesses to sell simialr products
threatneing new entrants with price war
large busiensses likely to be achieving EOS so are bale to undercut prices to push new entrants out of the market (predatory pricing)
buyer power
buyers want as low a price as possible
have more power thwn few buyers and many sellers
strategies to influence buyer power
if buyer increases the quantity of product that there buying from seller
supplier power
zuppliers want to get as high price as possible
suppliers have most power when there are few suppliers and lots of customers are wanting to buy from them
thrat of substitutes
how likely customers are to buy an alternative
price and quality are important
strategies to influence supplier power
busiensses can try to tie buyers into long term contracts to make it harder for them to switch suppliers
strategies to reduce the threat of substitutes
if business can differentiate their product, make it better, make it so that customer has built brand loyalty
business can identify groups of customers who needs are needs aren’t being met and market a product decided to meet their needs exectly e.g environmentally friendly
then there wont be any subsitiues for them to buy from,for time being anyway
rivaly
how much competition their is
prodcuts selling standardised prodcuts e.g milk haev intense rivalry
streategies to reduce effects of rivalry
busiensses could use bigger promotional campiagns to attract more customers
not requirable for all busiensses as expensive to do
