Introduction
Porter’s five forces model plays a significant role in determining the level of profitability and attractiveness of a firm or an organization. These forces have different levels of influence on an organization, thus need to be evaluated separately. This is essential prior to developing a marketing strategy that will suit the market conditions. Marketers need to plan efficient strategies that will help organizations gain competitive advantage. Factors to be considered in developing or enhancing a marketing strategy include the changing consumer behaviors and the changing business environment. These issues are captured well in Porter’s five forces. These forces include bargaining power of buyers, bargaining power of suppliers, threat of new entrants, rivalry from competitors, and threat of substitute goods or products (Kurtz, 2008).
Bargaining power of buyers
Consumers of the organization’s products can have an effect on the set prices. Consumer power when high becomes a threat to the organization. In developing a marketing strategy, the organization should aim to improve the quality of its products or services so that consumers have little effect on the price. Furthermore, in the setting of prices, the organization needs to be aware that the consumer has access to resources via the internet through which comparison of prices can be made. This can significantly affect the performance of the organization. The firm needs to use the internet as a marketing tool to provide the consumer with the necessary details as why they need to use or purchase a service or product from their organization (Kurtz, 2008). Furthermore, analysis of the buyer can yield critical information on the behavior of the consumers based on the level of changing or having different organizations or firms to purchase products (Ahlstrom and Bruton, 2009).
Bargaining Power of Suppliers
A high supplier power implies that the industry or organization is under threat. Issues such as high demand of the supplier’s products cause the price to increase. A firm needs to use inputs that can be readily supplied by a large number of suppliers and use it to make quality products, which ensures that high profits are achieved. According to Ahlstrom and Bruton (2009), a firm that owns its own supply can be able to cut supplier costs and maximize profits.
New Entrants
If the organization has been a major leader in a specific market, new entrants may pose a threat. This is the case if the quality of the product or value customers might derive from the products is high. To counter such threats, the firm needs to embark on innovative marketing strategies that may include brand improvement and use of marketing avenues platforms such as social media to reach more consumers and develop loyalty.
Competition
High levels of competition between firms in the same industry result to cutting of prices, which reduces profits (Ahlstrom and Bruton, 2009). Once a firm is in steep competition with its rivals, it is essential to develop a marketing strategy that will incorporate differentiation as a strategy to provide the organization with a competitive advantage.
Threat of Substitute Products
Presence of substitute products will cause or provide a limit to the price that can be set for a particular product. In venturing into new markets, the organization should aim to provide a product that has no substitute products, as this will maximize profits.
Conclusion
Each of the five forces will influence how the organization performs in an existing market. Further, it will provide insights on the relevant approaches that organizations entering new markets can adopt to maximize profits.
References
Ahlstrom, D., & Bruton, G. D. (2009). International management: strategy and culture in the
Emerging world. Australia: South-Western Cengage Learning.
Kurtz, D. L. (2008). Contemporary Marketing: 2009. Mason: South western educational Pub.
