Breakdown and Simplification of Marketing theories — Porters Five Forces

You are studying Marketing, and some of the terminologies you find in the books or hear in lectures are just overcomplicated for no reason!

Say no more…

Welcome to our little mini-series where we break down and simplify Marketing theories. So without further ado, let’s dive into another essential theory of marketing and explore what it is and what it is used for.

Porter’s Five Forces

The Five Forces model is named after Michael E. Porter- a Harvard Business School professor. It is one of the marketing theories that is widely used just like SWOT analysis, it looks at different types of forces that could affect the brand. However, the difference here is that Porter’s five forces are focused solely on external factors. Let’s have a closer look at each of the five forces:

Competitive Rivalry

• How many competitors do you have?
• What are they doing that you are not?
• Why are their customers being loyal to their product/service provided?

The Threat of New Entrants

Is there a government policy that can either encourage or discourage new entrants?

Threat of substitutes

E.g sugar versus sweetener, snack versus a healthy alternative snack.

• How many substitute products are available to your customers?
• Is there a higher cost for the buyer to switch?
• How easy is it for a buyer to switch?

Bargaining power of buyers

• How many buyers do you have?
• Are they price-sensitive?
• What differentiates you from the competitors?

Bargaining power of suppliers

• How many suppliers are there in the market?
• How easy is it to switch, what is the cost?
• By switching to a new supplier, how would it affect your business?

Over to you…

We’d love to hear what marketing theories you think needs to be simplified, or is missing on our list.

Let us know in the comments and we’ll be excited to check it out!

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Written by Maria Golovacheva