Competitive Rivalry in Porter Five Forces Model

Competitive Rivalry in Porter Five Forces Model

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Competitive Rivalry in Porter Five Forces Model

If you want to market new product, you select the industry first. And before you start your business in that industry, you should study the nature of competition in that market; so you collect data, analyze and observe the competitors well before you decide to choose that industry.

What are factors affecting competition in Porter’s Five Forces?

The following factors will help you to understand internal competition in the industry you select to market your products in:

  1. Stage of Product life cycle (PLC) of the competing products:

Product Life Cycle (PLC) is one of the factors affecting the competition is Porter’s five forces model. When you study the Product life cycle of the competing products, you may find that there are many competing products which are having different stages of product life cycles (PLC), so this will help you to understand the market you are going to market your product in, and it will help you to know the future opportunities for your products and in identifying the existing threats that could affect your product growth.

  1. The Specialized Production Techniques of the competing products:

Specialized product techniques are one of the factors affecting internal competition is Porter’s five forces model. This will help you to know where your products will be in the future. Are your products produced by same quality that you competitors produced by? Do you have specialized production techniques that make your product differentiated in the market? Is any competitor of yours competitors having any defect in your production techniques? Could you use this weakness as opportunity to release a new product manufactured by your company and can overcome your competitors’ weakness?

  1. Liquidity and financial stability of the competitors:

Liquidity and financial stability of the competitors is one of the factors affecting the competition in Porter’s five forces model, because if your competitor is well cashed and having enough resources, then this tell you how much investments they are going to do in their marketing communications. Liquidity and financial stability also is affecting your company business as it affects your competitors.

  1. Ability to achieve differentiation and brand loyalty:

Brand differentiation and customers’ loyalty are one of factors affecting the competition in porter’s five forces model. Most of the companies are seeking for differentiating their products or services than competitors, that why marketers are spending a time to develop a competitive advantage marketing strategy for their products or services. Some competitors are differentiating themselves through the cost (cost leadership marketing strategy) or differential advantage in their quality (differentiation marketing strategy) or through a focus on special geographical market to target a niche market segment (focus marketing strategy).

  1. Competitor Intention:

Competitors’ intention means that your competitors are considering their products (that are competing with your product) as strategic product for them. So when they give intention to some products, they dedicate resources and make investments in branding, integrated marketing communications, marketing research and became a highly competing product of “A” class priority for you. Also there are companies which are having 100 products, and the product that is competing with your product isn’t considered as strategic product for them, then you can understand that you have a great opportunity to get a high market share from your target segment.

  1. The relative Size Of the competitors:

This is very important, because you may have a main competitors, in which their size is small e.g. if that company doesn’t have a good place for its headquarter, doesn’t have good resources and facilities. If your company has, this is very important factor, because the customers always looking for the trust and confidence in the company they buy the products from. Also it differs when you want to make a marketing communication with the customers, so your brand will be built fast and your products reputation will last.

  1. Barriers of existing in the industry:

This rule will be a disaster when you decide to enter a market which is already taken by a company or two with very good resources, built their reputations for many years and their customers are loyal to them. So if you want to enter that market, you should have great resources and also, you should be capable of huge investments, otherwise you will easily lose business in that market.