Porter’s 5 competitive forces are 5 factors that prevent business from developing. Companies analyze these factors, see obstacles and decide what to do with them. The article tells what forces oppose business and how to use the method.
What is Porter’s 5 Forces Model
Porter’s 5 forces are the influence how to build phone number list of customers, suppliers, old and new competitors, and the emergence of substitute products. These “forces” hinder business development.
The purpose of the method is to show the degree of influence of “forces” and find ways to reduce this influence.
Economist Michael Porter identified them back in 1979, but the bookmark in the manual describing his method is still with modern marketers. The method is universal – suitable for analyzing business in any industry.
Buyers influence the price and characteristics of a product.
They have requirements for services and expectations from the product: if Crocs are in fashion, it makes no sense to offer them bast shoes.
Suppliers and their number affect the costs and final cost of your products: if there are only a few suppliers of raw materials in Russia, they will not reduce the cost to make a concession to you. Suppliers understand that their goods are difficult to find in Russia, so they dictate their prices and conditions.
Current competitors have strengthened their positions and will not give them up to you just like that. Players with a large market share will prevent you from entering it you will need a large budget for promotion or a search for a narrow segment where the competitors’ hand has not yet reached.
New competitors are also dangerous for business: their strategies are more flexible and it is easier for them to adapt to market changes. If the threshold for entering a niche is low you will have to constantly keep your finger . On the pulse and monitor what offers newcomers are bringing to the market.
What is the Porter Method for?
Understand the level of competition in the market.
Startups use Porter’s method to analyze content marketer profession threats before launching: they see the risks and decide whether to enter the niche or not.
Existing companies use Porter’s method to analyze what could reduce their profitability. Then the companies decide how to prevent this.
Use Porter’s Method if you:
Advantages and disadvantages of the technique
The method is universal it is suitable for analyzing any industry and any business. Investors can assess the prospects of investing in an industry or an individual company.
But there are problems that Porter’s model cannot solve. Urgent tasks the analysis examines the market in perspective for 5-10 years ahead
comprehensive risk analysis the model does not take into account all influencing factors
tasks within a specific business the au emai list method studies external factors and does not delve into the company culture, product features, or business model.
Order marketing research
We research your competitors and target audience. And offer the best solutions in the field of product marketing and sales
How to do Porter’s 5 Forces Analysis
There are 2 models of Porter’s method: express analysis and full analysis. Express analysis shows the general picture of the competitive environment. And full analysis studies the positions of your business in more detail.