Unit II THE DIFFERENCE BETWEEN MARKET AND MARKETING RESEARCH
Market Feasibility Study
Introduction
 Once you have validated your idea by assessing the legal validity of your
project; the next step is preparing the market feasibility study.
Market Feasibility Study
- Market feasibility study is considered to be the most important study of
the detailed studies.
- This study is essential to the rest of the feasibility studies, without having
a market study it’s difficult to go for further studies of the detailed
feasibility study
You cannot continue further Steps or process if the result of the market feasibility
study is negative, but there are other choices to follows:
• Modify market study broadened to include other market elements were not
included in the study previously (e.g. find other markets were not included in the
study to increase sales and thus increase cash flow).
• Find any other investment alternatives to find a new project.
That market study prepared to achieve and assure, some of the main
objectives of the project, which cannot start without specifying these
goals confining it broadly.
• Market research is any organized effort to gather information about target
markets or customers. It is a very important component of feasibility study.
• Market research is one of the key factors used in maintaining competitiveness
over competitors. Market research provides important information to identify
and analyze the market need, market size and competition. Market-research
techniques encompass both qualitative techniques such as focus groups and in-
depth interviews, as well as quantitative techniques such as customer surveys,
and analysis of secondary data.
• Marketing research is "the process or set of processes that links the producers,
customers, and end users to the marketer through information
• information used to identify and define marketing opportunities and problems;
generate, refine, and evaluate marketing actions; monitor marketing
performance; and improve understanding of marketing as a process
GOALS FOR MARKET STUDY:
We can set up the goals of the market feasibility study as follows:
• Determine the market structure and shape.
• Determine exact demand for product.
• Identify the factors affecting the market demand and supply.
• Identify the micro and macro size of the market.
• Identify market targeted groups, and market segments.
• Selecting the price policy and the best price mechanism to sell the
products.

IMPORTANT QUESTIONS FOR THE MARKET STUDY(MS):
• In this context, several questions are to be asked, what is the main purpose to
study the market?
• What are you going to sell? (Why is this product not the other? How can you be
sure
• about what you are proposing?)
• Make no definite statement unless you can back it up!
• Who are your customers?
• (Why them? What makes you so sure of this?)
• How will you operate and how will you sell your product?
• Why this way and not another? How can you back that up?)
• How much: What is the estimated level of sales?
• What makes you expect to meet this forecasted level of sales turnover?
• What evidence is there to prove that this is a realistic estimation and can be
achieved?
• Whereabouts? (area & site) What are your reasons for thinking this is the ideal
location,
• particularly if you are counting on a local customer base?
MARKET FEASIBILITY STUDY STAGES:
1. Factors determining supply and demand in the market.
2. Identifying the data and information needed to study market factors.
3. Identify sources and methods of data, information collection and required
analysis.
4. Data analysis and information prior to accessing previous goals and
signpost market policy.
5. Specifies the size of the demand and market quota (the project share in
the market total supply) for project.
Demand is the quantity of consumers who are willing and able to buy products at
various prices during a given period of time. Demand for any commodity implies
the consumers' desire to acquire the good, and the willingness and ability to pay
for it.
Supply is the number of goods an individual or business provides to the market –
which refers to the amount they produce at a specific point in time.
For example, if Apple manufactures 100 iPhones, then this is the supply that is
brought to the market.
WHAT ARE THE 4 BASIC LAWS OF SUPPLY AND DEMAND?
1) If the supply increases and demand stays the same, the price will go
down.
2) If the supply decreases and demand stays the same, the price will go up.
3) If the supply stays the same and demand increases, the price will go up.
4) If the supply stays the same and demand decreases, the price will go
down.
FACTORS AFFECTING DEMAND:
• Market structure.
• Price of commodities.
• Price of alternative commodities
• Price of complementary goods.
• Consumer’s income.
• Consumers’ tastes.
• Gross national income and its distribution mechanisms.
• The use and the quality of the goods.
• Population and its distribution, gender and geography, and education.
• Population growth rate. TYPES OF MARKET STRUCTURES
• National developments, investment plans. 1. Pure or perfect competition
• Consumer expectations. - a market structure defined by a large number of small firms
• The governmental interferences. competing against each other. A single firm doesn’t have
• The consumer’s traditional way of marketing. significant marketing power, and as a result, the industry
produces an optimal level of output because firms don’t have the
THE FOUR TYPES OF MARKET STRUCTURE
MARKET NUMBER OF TYPE OF EXAMPLES ability to influence market prices.
STRUCTURE FIRMS PRODUCTS - Supply and demand determine the number of goods and services
Monopoly One Firm - Tap Water produced, along with the market prices set by the companies in
Railways the market.
Oligopoly Few Firms - Airlines - Products are identical to competitors’ products, and there are no
Mass Media significant barriers to entering and exiting the market.
Computers
 Agricultural Products, such as corn, wheat and soybeans
Oil and Gas
Cars
Monopolistic Many Firms Differentiated Movies 2. Monopolistic competition
Competition Products Novels - market structure refers to a large number of small firms
Restaurants competing against each other. However, firms in monopolistic
Perfect Many Firms Identical Agricultural competition sell similar but highly differentiated products. Lowest
Competition Products Products possible cost production, which leads to optimal output in a pure
Internet Related competition market structure.
Industries
- These factors give firms in a monopolistic competition market
power to charge higher prices within a certain range. The
products are remarkably similar, but small differences become
FACTORS AFFECTING DEMAND: the basis for firms’ marketing and advertising. Differentiation can
include style, brand name, location, packaging, advertisement,
 Market structure - the way that various industries are classified and
pricing strategies, and more.
differentiated in accordance with their degree and nature of competition
 Fast food restaurants, clothing stores, breakfast cereal
for products and services.
companies, service and repair markets, tutoring companies, and
beauty salons and spas.

3. Oligopoly
- dominated by a few firms, resulting in limited competition. They
can collaborate with or compete against each other to use their
collective market power to drive up prices and earn more profit.
- Entering into an oligopoly is difficult. The most powerful
companies have control over raw materials, patents, and financial
and physical resources that create barriers for potential entries.
- Products may be homogenous or differentiated. Typically, there
are three to five dominant firms, but this number can vary
depending on the market.
 video gaming consoles are an oligopoly with three companies —
Microsoft, Sony, and Nintendo — dominating the market.
Automobile and gasoline industries. Coca-cola, Pepsi cola, PLDT.
4. Pure Monopoly
- exists when there’s a single firm that controls the entire market.
The firm and industry are synonymous. This firm is the sole
producer of a product, and there are no close substitutes.
Because there are no alternatives, the firm has the highest level
of market power. Hence, monopolists often reduce output,
increase prices and earn more profit.
- Entry or exit is blocked in a pure monopoly. This can occur for
more than one reason,
public utilities are typically government monopolies (or
government regulations) for natural monopolies and
professional sports leagues. (Professional sports leagues control
player contracts and have leases on major city stadiums and
arenas. It would take a substantial amount of capital to lure away
top talent and secure a large enough place to showcase that
talent if someone wanted to start a professional sports league.
Plus, there are broadcasting rights and more at play.)
FACTORS AFFECTING SUPPLY:
• Price of goods itself
• Prices of factors of Product and service prices.
• Level of technology and advancement of the project.
• Investment environment.
• Elasticity of supply of production factors.
• Time of production process of goods or services.
• Changes in stock and storage capacity of the project.
SALES PROJECTION
• Different methods are used in sales projection, regression analysis; either
simple or multiple are important methods for the projection. The projection
depends on time series data is another method. If there is no enough data, the
projection depends on Delphi technique is the most suitable method for the sales
projection.
THE MOST IMPORTANT DATA AND INFORMATION REQUIRED FOR MARKET
STUDY:
1. Population Data
• Current population and its distribution. (geographical, age,
education... ... etc.).
• The population growth rate.
2. Data related to individual and national income.
• National income distribution over various sectors.
• national spending.
• income per capita.
 • Personal income distribution on individual consumption. Some of these tools are:
• Income distribution in different population groups. 1. Survey or questionnaire
• Data on transport and communications (transportation used within 2. scientific observation
different places/regions 3. The interview
• Data on alternative and complementary goods.
• Data on exports and imports and quantity that include global demand
trends toward our country products with world price index. 1) Survey or questionnaire
• Any information on consumers (food preferences, favorable charges, - a list of questions developed by the researcher by consulting certain
their motives ... purchasing habits ...). specialists in this area.
• State policies (boundaries and incentives).
The questionnaires are of different types:

a. Facts or reality questionnaire

We can use two different sources of information to get all the above data. - Aims to obtain data and information directly from field to
1. First: PRIMARY SOURCES express certain facts; (such as age, sex and nationality).
b. Opinion surveys
- field collection of data, and information imperative is obtained
directly from the field or from research communities that are - Aims to know the attitude of the public in a particular case at a
specific time.
targeted by researchers or specialists.
2. Second: SECONDARY SOURCES c. Motives questionnaire
- a collection and obtaining of data and information from existing - Aims to find out the real Enhancement and motivations behind
reliable sources of the most important institutions or organizations in an act or public behaviors.
the country.
The most important secondary sources: 2) Scientific Observation
- It is process of research observation based on certain strategies
a) Statistical services publications of centralized State.
b) Ready-made information from published research and articles. identified in advance and monitored by a researcher in some cases.
c) Periodic or Seasonal reports of similar projects, the most reliable
data of these reports are regular salesmen reports. 3) The Interview
- It’s the best way to answer the survey questions.
- The interview is of two types normally:
o Single individual interview
FIELD TOOLS FOR COLLECTING PRIMARY DATA OR FILED INFORMATION:
o Group or collective interview
• Researchers uses different tools for collecting data, tool differs from researcher
to another for different objectives of compiling this information and depending
on the purpose of the study.
Steps and Indicators for Market Study: • Market gap is a difference between demand and supply (demand – supply=
surplus or deficit in size supply).
1. Demand estimations
2. Supply projection
3. Determining the market gap
4. targeted group STRATEGIES OF MARKET GAP RESULTS
5. Identification of price policy • Supply – demand = (+)

- surplus stop studying and begin to search other investment

alternatives because the supply in a state of surplus.
THERE ARE TWO TYPES OF DEMAND:

1. Real or effective demand • Supply – demand = (-)

- It is the quantities actually the consumers wish to purchase at a
certain prices level at a given time. This type of demand required
three conditions to be provided:
• Supply – demand = (0)
• Need the consumer should be in real need for the commodity and
cannot delay buying the commodity for later time.
• Desire The desire to buy and have the commodity.
• Ability to have the power to pay for the price of the demanded goods or
services.
2. Ineffective demand
- This type of demand is considered in the absence of the above
preceding conditions.
- deficit continue work on your study because the supply in a state of
deficit, which represent a chance for investment
- market is at equilibrium state and cannot accommodate more goods.
In this case to continuing in your studding or to look for other
alternatives depends on the entrepreneurs decision, and whether
investment depends on factors other than or only on the current
demand, for example, the strategic importance of the good, business
plan development. If the decision of entrepreneur is to invest then
you are requires immediately fined another targeted market group of
the production to be produced.

DETERMINING THE MARKET GAP
• Determining the gap between supply and demand in the targeted market of the
product is a good indicator, to know how easy or difficult the market strategy for
the goods to be produced is.
TARGETED GROUP
• A target market is a group of customers a business has decided to aim its
marketing efforts and ultimately its merchandise towards.
• A target market consists of customers that share similar characteristics, such as
age, location, income and lifestyle, to which a business directs its marketing
efforts and sells its products.
Target markets can be separated into primary and secondary target markets.  Demographic Segmentation
- Segmenting a market according to demographics is the most basic
• Primary target markets are those market segments to which marketing efforts form of segmentation.
are primarily directed.
• Secondary markets are smaller or less important. - Age
- Sex
For instance, the primary target market for a jewelry store might be middle aged - Marital Status
women who care about fashion, and their secondary target market could be - Family Size
middle aged men who may want to buy gifts for the women in their lives. - Occupation
- Education Level
- Income
WHY IT IS IMPORTANT TO DETERMINE YOUR TARGET MARKET? - Race
- Nationality Religion
• It is important for a business to identify and select a target market so it can
direct its marketing efforts to that group of customers and better satisfy their  Behavioral Segmentation
needs and wants.
- Online Shopping Habits
• It allows for better understanding of customers and therefore enables the
- Actions are taken on a website
creation of promotional materials that are more relevant to customer needs.
- Benefits sought
• Targeting makes it possible to collect more precise data about customer needs - Usage Rate
and behaviors and then analyze that information over time in order to prepare - Loyalty
and refine market strategies effectively.
 Geographic Segmentation
- Splitting up your market based on their location, is a basic but highly
useful segmentation strategy.
MARKET SEGMENTATION

• Geographic Segmentation - Addresses, Location, Climate, Region  Psychographic Segmentation

- Is similar to demographic segmentation, but it deals with
• Demographic/Socioeconomic Segmentation - Gender, age, wage, career, characteristics that are more mental and emotional.
education.

• Psychographic Segmentation - Attitudes, values, religion, and lifestyles

• Behavioral Segmentation - (occasions, degree of loyalty)

OTHER METHODS OF MARKET SEGMENTATION 3. Place (or distribution): The activities that make the product available to
consumers.
 VALUE SEGMENTATION 4. Promotion: The activities that communicate the product’s features and
 FIRMOGRAPHC SEGMENTATION benefits and persuade customers to purchase the product
 GENERATIONAL SEGMENTATION
 LIFESTAGE SEGMENTATION
 SEASONAL SEGMENTATION MARKETING TOOLS

Each of the four Ps has its own tools to contribute to the marketing mix:

MARKETING STRATEGY •Product: variety, quality, design, features, brand name, packaging, services

- An effective marketing strategy combines the 4 Ps of the marketing •Price: list price, discounts, allowance, payment period, credit terms
mix.
•Place: channels, coverage, assortments, locations, inventory, transportation,
- It is designed to meet the company’s marketing objectives by
logistics
providing its customers with value.
- The 4 Ps of the marketing mix are related and combine to establish •Promotion: advertising, personal selling, sales promotion, public relations
the product’s position within its target markets.
MARKETING MIX (4P'S)

PRODUCT
• The marketing mix is the set of controllable, tactical marketing tools that a • Functionality
company uses to produce the desired response from its target market • Brand
• Packaging
•It consists of everything that a company can do to influence demand for its
• Services
product. It is also a tool to help with marketing planning and execution
PRICE
• List Price
MARKETING MIX (4P'S) • Discount Price
• Bundling
The marketing mix can be divided into four groups of variables commonly known • Credit Terms
as the four Ps:

1. Product: The goods and/or services offered by a company to its

customers.
2. Price: The amount of money paid by customers to purchase the product.
PROMOTION PLACE STRATEGY is also known as a distribution strategy wherein the
•Advertising mode of distribution for the product is decided by the organization
•Sales Force
• to determine where and how an organization will place its products and
• Publicity
• Sales Promotion services so that major market share and customers are attracted.

• The other term for a strategy is distribution strategy which includes

PLACE
• Channel both online as well as physical stores or any other means by which the
customers can be reached by the company.
• Inventory
• Logistics
• Distribution
PRICING STRATEGY

Pricing is defined as the amount of money that you charge for your
Marketing Mix (7P's) products
 Product Pricing strategies refer to the processes and methodologies businesses
 Price use to set prices for their products and services. If pricing is how much
 Place you charge for your products, then product pricing strategy is how you
 Promotion determine what that amount should be.
 Process
 Physical Evidence  A good rule of thumb to remember when pricing products is that your
 People customer base won’t purchase your product if it’s set too high, but your
business won’t be able to cover expenses if you price it too low

A PRODUCT STRATEGY outlines the principles that justify the creation of THE IMPORTANCE OF YOUR PRICING STRATEGY
the product and the work required to make it successful. It helps
companies answer three essential questions about their product:  Convinces your audience to purchase
 Portrays value in your brand
•Who is the customer base?
 Gives customers confidence in you service or product
•How will the product address these customers’ pain points?
•How will the product benefit the company?
 PRICING STRATEGIES 11. Dynamic pricing
1. Penetration pricing - when you charge different prices depending on who is buying your
- strategy aims to attract buyers by offering lower prices on goods and product or service or when they buy it. It’s a flexible pricing strategy
services than competitors that takes many factors into account—particularly changes in supply
2. Economy pricing and demand.
- pricing strategy that aims to attract the most price-conscious 12. Competitive pricing
consumers - when your prices either match or beat those of similar products that
3. Premium pricing are sold by competitors.
- businesses set costs higher because they have a unique product or 13. Cost-plus pricing
brand that no one can compete with. - a strategy of marking up (adding a fixed percentage) the cost of
4. Price skimming services and goods to arrive at your selling price.
- a type of dynamic pricing strategy that is designed to help businesses As a seller, you would use a calculation that includes fixed and
maximize sales on new products and services. This involves setting variable costs that will be incurred in manufacturing your product and
rates high during the initial phase of a product, then gradually then apply the markup percentage to that cost. This strategy is widely
lowering prices as competitor goods appear on the market. used since it’s easy to justify and is typically fair and non-
5. Psychological pricing discriminatory
- refers to techniques that marketers use to encourage customers to 14. Freemium pricing
respond based on emotional impulses, rather than logical ones. - strategy in which a service or product is given to a customer free of
6. Bundle pricing charge unless they want to access premium features or services
- small businesses sell multiple products for a lower rate than selling within that product.
each item individually
7. Geographical pricing PRICING OBJECTIVES
- Geographical pricing involves setting a price point based on the • maximize long-run profit
location where a product or service is sold. • maximize short-run profit
8. Promotional pricing • increase sales volume (quantity)
- competitive pricing strategy that involves offering discounts on a • increase cash sales
particular product. These strategies are often run during a holiday • Increase market share
9. Value pricing • stabilize market or stabilize market price: an objective to stabilize price means
- Value pricing is a way of setting your prices based on your customer’s that the marketing manager attempts to keep prices stable in the
perceived value of what you’re offering marketplace and to compete on non-price considerations.
10. Captive pricing • company growth
- Captive pricing is a strategy used to attract a high volume of • maintain price leadership
customers to a product intended for a one-time purchase. • discourage new entrants into the industry
• match competitors’ prices
• Encourage the exit of firms from the industry • Distribution plan
• Survival
• Avoid government investigation or intervention PRICING PLAN
• Obtain or maintain the loyalty and enthusiasm of distributors. Most organizations have pricing strategies in place to ensure that decision making
• Enhance the image of the firm, brand, or product by their sales staff is consistent.
• Be perceived as “Fair” by customers and potential customers The company has to ask the following questions related to its planned
• Create interest and excitement about a product prices:
• Discourage competitors from cutting prices • What's the right price for this product?
• Use price to make the product “visible" • How to set the prices?
• Social, and ethical objectives
PROMOTION PLAN
What plans do you have for promotions related to the following points:
WHAT IS A PROMOTIONAL STRATEGY?  Objectives
the element of a firm's decision-making concerned with choosing the most  Advertisement
appropriate mix of advertising, sales promotion, personal selling, and publicity for  Message
communication with its target market  Budget
1. Social media advertising  Tools
2. Email and SMS campaigns  Media
3. Content creation  The appropriate time
4. Paid advertising
5. Sponsorships DISTRIBUTION PLAN
6. Promotional merchandise What plans do you have for distribution related to the following components:
7. Personal selling  Objectives
8. Outdoor marketing  Efficient channels of distribution
9. Public relations  Will you have a warehouse close to your customers?
10. Influencer marketing  Intensity of distribution (intensive to exclusive)
11. Guerilla marketing  Types of wholesalers and retailers (discounters, etc)
12. Reward and loyalty programs  Degree of channel directiveness
13. Partnerships and joint promotion
 Adequate stock levels

DEVELOPING OF SALES PLAN

Developing of the sales plan includes the following three components:
• Pricing plan
• Promotion plan
SWOT ANALYSIS
S W O T OPPORTUNITIES
Strengths Weaknesses Opportunities Threats Opportunities refer to favorable external factors that could give an organization a
What are your What are your What external What external competitive advantage
personal internal personal internal opportunities threats such as
strengths that you weaknesses that such as resources, upcoming
THREATS
can lean on to you need to work people, or obstacles or
help you achieve on to achieve training can you contextual factors Threats refer to factors that have the potential to harm an organization.
your goals? your goals? take advantage of can you predict • rising costs for materials,
to help you to and mitigate to • increasing competition,
achieve your ensure you reach • tight labor supply
goals? your goals?

The S.W.O.T. analysis was initially used for the evaluation of enterprises. Today,
governments, nonprofit organizations, and private persons, such as investors and
business owners, frequently make use of it. The SWOT analysis appears to have
no end to its potential uses.

STRENGTHS
An organization's strengths are those things at which it excels and which set it
apart from other businesses in its industry.
Examples:
• powerful brand
• large base of devoted customers
• solid balance sheet
• innovative technology
WEAKNESSES
A company's weaknesses prevent it from reaching its full potential as an entity.
• weak brand,
• higher-than-average turnover,
• higher-than-average levels of debt,
• an insufficient supply chain
• lack of capital
Figure 1: Five Forces Model •Access to the latest technology
Threat of new Bargaining Bargaining Threat of Rivalry among •Access to necessary inputs
entrants power of power of substitute existing •Absolute cost advantages
suppliers buyers products or competitors •Experience and learning effects
services •Government policies
• Barriers to •Number of •Number of •Number of •Number of
•Switching costs
entry suppliers customers substitute competitors
• Economies •Size of •Size of each products •Diversity of •Expected retaliation from existing players
of scale suppliers customer available competitors
•Brand loyalty •Uniqueness order •Buyer •Industry ECONOMIES OF SCALE
•Capital of each •Differences propensity to concentration Economies of Scale refer to the cost advantages that certain companies have due
requirements supplier’s between substitute •Industry to their large size. Typically, the advantage arises due to the inverse relationship
•Cumulative product or competitors •Relative price growth
between the fixed cost per unit and the quantity produced: the greater the
experience service •Price performance of •Quality
quantity of output produced, the lower the fixed cost per unit
•Government •Focal sensitivity substitute differences
policies company’s •Buyer’s •Perceived •Brand loyalty
•Access to ability to ability to level of •Barriers to BARGAINING POWER OF SUPPLIERS
distribution substitute substitute products exit This force analyzes how much power and control a company’s supplier (also
•Switching •Buyer’s differentiation •Switching known as the market of inputs) has over the potential to raise its prices or reduce
costs information •Switching costs the quality of purchased goods or services, which in turn would lower an
availability costs
industry’s profitability potential.
•Switching
costs The concentration of suppliers and the availability of substitute suppliers are
important factors in determining supplier power. The fewer there are, the more
power they have
THREAT OF NEW ENTRANTS
New entrants in an industry bring new capacity and the desire to gain market Bargaining power of suppliers
share. The seriousness of the threat depends on the barriers to entering a certain •Number of suppliers
industry. The higher these barriers to entry, the smaller the threat for existing •Size of suppliers
players •Supplier concentration
•Availability of substitutes for the supplier’s products
Threat of new entrants •Uniqueness of supplier’s products or services (differentiation)
•Economies of scale •Switching cost for supplier’s products
•Product differentiation •Supplier’s threat of forward integration
•Brand identity/loyalty •Industry threat of backward integration
•Access to distribution channels •Supplier’s contribution to the quality or service of the industry products
•Capital requirements •Importance of volume to supplier
•Total industry cost contributed by suppliers
•Importance of the industry to supplier’s profit
BARGAINING power of buyers
The bargaining power of buyers is also described as the market of outputs. This
force analyzes to what extent the customers are able to put the company under
pressure, which also affects the customer’s sensitivity to price changes.
The customers have a lot of power when there aren’t many of them and when
the customers have many alternatives to buy from.
•Substitute producer’s profitability & aggressiveness
RIVALRY AMONG EXISTING COMPETITORS
This last force of Porter’s Five Forces examines how intense the current
competition is in the marketplace, which is determined by the number of existing
competitors and what each competitor is capable of doing. Rivalry is high when
there are a lot of competitors that are roughly equal in size and power, when the
industry is growing slowly, and when consumers can easily switch to a competitor
offering for little cost.

Bargaining power of buyers Rivalry among existing competitors

•Buyer volume (number of customers) •Number of competitors
•Size of each buyer’s order •Diversity of competitors
•Buyer concentration •Industry concentration and balance
•Buyer’s ability to substitute •Industry growth
•Buyer’s switching costs •Industry life cycle
•Buyer’s information availability •Quality differences
•Buyer’s threat of backward integration •Product differentiation
•Industry threat of forwarding integration •Brand identity/loyalty
•Price Sensitivity •Switching costs
•Intermittent overcapacity
THREAT OF SUBSTITUTE PRODUCTS •Informational complexity
The existence of products outside of the realm of common product boundaries •Barriers to exit
increases the propensity of customers to switch to alternatives. In order to
discover these alternatives, one should look beyond similar products that are
branded differently by competitors. Instead, every product that serves a similar
need for customers should be taken into account

Threat of substitute products or services

•Number of substitute products available
•Buyer’s propensity to substitute
•Relative price performance of substitutes
•Perceived level of product differentiation
•Switching costs