PORTER’S 5 FORCES MODEL

ON COMPETITION
M M FADNAVIS
 TO ENSURE LONG TERM PROFITABILITY……

• STRATEGICALLY RESPOND TO COMPETITION- AVOID KNEE JERK REACTION

• ( MARUTI SLASHED PRICES FOUR HOURS BEFORE LAUNCH OF INDICA)
• KEEP TAB ON ESTABLISHED RIVALS-MONITORING DIRECT COMPETITORS
• SONY – PANASONIC + SHARP ( FOR WALKMAN)
• KODAK – FUJI + AGFA
• NEED TO LOOK BEYOND ESTABLISHED RIVALS-AKASH KE US PAAR BHI AAKASH HAI
• WHO ARE THEY ?
• APPLE – I POD- IGNORED BY SONY/KILLED WALKMAN
• MOBILE MANUFACTURERS WHO ADDED CAMERA- IGNORED BY KODAK
 FOOTBALL LEAGUE IN EUROPE

• LA LIGA- SPAIN
• ENGLISH PREMIER LEAGUE- U K
• SERIE A- ITALY
• BUNDAS LIGA – GERMANY
• LEAGUE 1 – FRANCE ( FARMERS LEAGUE ) - TAUNT
P S G BOUGHT MESSI FROM F C BARCELONA
STRATEGIC RESPONSE P S G -THE FARMERS
HAVE A NEW G.O.A.T.
STAR HOTELS-NEED TO LOOK BEYOND
ESTABLISHED PLAYERS
SCOOTER MAKERS-NEED TO LOOK BEYOND
ESTABLISHED PLAYERS
RESTAURANTS -NEED TO LOOK BEYOND
ESTABLISHED PLAYERS
CAR MAKERS- NEED TO LOOK BEYOND
ESTABLISHED PLAYERS
 MONITOR DIRECT COMPETITORS
REDMI SMART BAND VS REALME BAND, MI
BAND 4 AND HUAWEI BAND 4
• WATER RESISTANCE: ALL FOUR OFFER SOME LEVEL OF WATER RESISTANCE

• PRICE: AT RS 1,299, REALME BAND IS CHEAPEST

• 4 / 13​DISPLAY: REDMI SMART BAND HAS THE BIGGEST DISPLAY

• WRIST BAND TYPE: ALL FOUR HAVE REMOVABLE WRIST STRAP

• SAVVY CUSTOMERS- CAN FORCE DOWN PRICES BY PLAYING COMPANY
AND ITS RIVALS AGAINST EACH OTHER- COMMON IN CASE OF B2B
MARKETS/LARGE BUYERS
• WEBROOMING AND SHOWROOMING BY CUSTOMERS
• POWERFUL SUPPLIERS- MAY CONSTRAIN COMPANY PROFIT BY
CHARGING HIGHER PRICES- IMPORTANT IN CASE OF SUPPLIER OF
NATURAL RESOURCES- TESLA DEPENDENT UPON JAPANESE COMPANIES
AMAZON USERS REBUKE JEFF BEZOS' SPACE
TRIP BY CANCELLING THEIR PRIME
MEMBERSHIP
• THIS HAPPENED AFTER BEZOS SAID,
“THANK YOU FOR PAYING FOR MY SPACE
TRIP” TO ITS EMPLOYEES AND CUSTOMERS
IN A POST
• “THE WHOLE THING WAS SUCH A
SPECTACLE OF A SINGLE PERSON AMASSING
SO MUCH WEALTH THAT THEY SIMPLY HAVE
LOST TOUCH WITH THE REALITY FOR THE
AVERAGE PERSON- AMERICAN CUSTOMER
• ASPIRING ENTRANTS- ARMED WITH NEW CAPACITY AND
HUNGRY FOR MARKET SHARE
• CAN FORCE COMPANY TO INCREASE ITS INVESTMENT TO
STAY IN GAME- LIJJAT PAPAD INTO DETERGENT.- EASE OF
DOING BUSINESS
• SUBSTITUTE OFFERING- CAN LURE CUSTOMERS AWAY-
CRITICAL (CDL GHAZIABAD)-
MBA/PGDM/WEEKEND/EXECUTIVE MBA
 SAVVY CUSTOMERS

• B2B
• MATERIALS MANAGER/PURCHASE OFFICER
• PURCHASE COMMITTEE
• CASE OF SALES OFFICER IN TELCO- TRYING TO SELL STALLION SHOX ABSORBERS
CASE OF AIRLINES INDUSTRY ( COMMERCIAL
AVIATION)
• LEAST PROFITABLE INDUSTRY
• ALL FIVE FORCES ARE STRONG
• RIVALS- COMPETE ON PRICE- RYANAIR/FINNAIR
• RIVALS- COMPETE ON SERVICE- ETIHAD/EMIRATES/QATAR
• CUSTOMERS- FICKLE- CHECK ON MAKEMYTRIP/BEST BARGAIN/SINGAPORE TOUR
• SUPPLIERS- AIRBUS AND BOEING VERY STRONG IN NEGOTIATION
• NEW PLAYERS- REGULAR ENTRY OF NEW /LOW COST AIRLINES- VISTARA/AIR ASIA
• SUBSTITUTES- READILY AVAILABLE- RAJDHANI EXPRESS/TIME COST MATRIX/CHARTERED FLIGHT
 PANDEMIC MADE IT WORSE FOR AIRLINES

• PROMPTED AIRLINES TO GROUND THEIR MASSIVE AIRBUS A380 PLANES

• LUFTHANSA, BRITISH AIRWAYS AND QANTAS BID THE AIRCRAFT FAREWELL
• EMIRATES IS ONE OF THE FEW AIRLINES STILL FLYING THE AIRBUS A380, A DYING
BREED OF AIRCRAFT THAT WILL SOON STOP BEING PRODUCED BY AIRBUS
 CHARTERED FLIGHTS DURING PANDEMIC

• BOUTIQUE TRAVEL OPERATORS WITNESS INCREASED DEMAND FOR

DESTINATIONS IN UAE, UK AND ITALY
• DEMAND FOR CHARTERED FLIGHTS INCREASINGLY TURNING FROM BUSINESS
TRAVEL TO LEISURE
• LONG-HAUL CHARTER FLIGHTS ARE EXPECTED TO SEE AN INCREASE AFTER
DIWALI
POSITION COMPANY WHERE THE FORCES ARE
THE WEAKEST
• HEAVY TRUCK INDUSTRY IN U S A
• MANY BUYERS OWN LARGE FLEET OF TRUCKS THUS DRIVE DOWN PRICES
• COMPETITION IS STIFF AS THE TRUCKS ARE MANUFACTURED AS PER REGULATED
STANDARDS
• OFFER SIMILAR FEATURES
• STIFF PRICE COMPETITION
• SUBSTITUTE FOR BUYER- CAN SWITCH TO CARGO OR RAIL
 PAC-CAR – HEAVY TRUCK MAKER

• CHOSE TO FOCUS ON ONE CUSTOMER GROUP

• COMPETITIVE FORCES WERE WEAK
• INDIVIDUAL OWNER/DRIVERS
• DIRECT CONTACT
• LIMITED CLOUT AS BUYER SINCE QUANTITY IS LESS
• LESS PRICE SENSITIVE- EMOTIONAL TIES WITH TRUCK AND THEIR ECONOMIC
DEPENDENCE ON IT
 INTERVENTION FROM PAC-CAR

• DEVELOPED FEATURES SUITABLE TO INDIVIDUAL TRUCK OWNER/DRIVER

• LUXURIOUS SLEEPER CABINS
• PLUSH LEATHER SEATS
• SLEEK EXTERIOR STYLING
• PUT PERSONAL SIGNATURE ON BUILT TO ORDER TRUCKS
• CUSTOMER READY TO PAY 10% PREMIUM
 JOB OF A STRATEGIST

• UNDERSTAND AND COPE WITH COMPETITION

• MISTAKE MADE BY MANAGERS- DEFINE COMPETITION TOO NARROWLY
• AMONG DIRECT COMPETITORS
• COACHING/TRAINING INSTITUTES FOR AIR HOSTESSES
• COMPETITION FOR PROFIT GOES BEYOND ESTABLISHED INDUSTRY RIVALS
• EXTENDED RIVALRY DEFINES AN INDUSTRY STRUCTURE AND SHAPES NATURE OF
COMPETITIVE INTERACTION WITHIN INDUSTRY
• REAL ESTATE – NEW TREND/LEASE INSTEAD OF STRAIGHT BUY ON EMI
 NEW MEGA TREND

• COMPETITION BETWEEN TRADITIONAL AUTO SECTOR WITH ELECTRIC VEHICLES

• WITH POPULARITY OF E V RISING
• HUGE IMPACT ON SMES MANUFACTURING AUTO COMPONENTS
AT GLOBAL LEVEL

• MET HERBERT DIESS

• VW CEO
• TEST DROVE COMPETITIVE ELECTRIC
VEHICLE MODEL
• TESLA WELCOMED IN GERMANY
• SIGN OF A HEALTHY COMPETITION
 FEW CASES IN INDIAN CONTEXT ( NARROW )

• VIP VRS ARISTORCAT • ROOH AFJA VERSUS RASNA

• RIL VRS BOMBAY DYEING
• NIHAR VRS PARACHUTE
• NOKIA VRS OTHERS
• TITAN VRS HMT
• CHITALE VERS WARNA
• KERALA =GOD’S OWN COUNTRY VRS OTHER • BIRA 91A VRS CORON
STATES
• TATA VRS MAHIDRA
• PATANJALI VERSUS FOREST ESSENTIALS
• COKE VRS PEPSI • TESLA /NICOLA
• NIRMA VRS SURF • NETMEDS/PHARMEASY
• BIYJU’S /VEDANTU
 IMPORTANT

• EXTENDED RIVALRY RESULTING FROM ALL FIVE FORCES DEFINES INDUSTRY

STRUCTURE
• SHAPES NATURE OF COMPETITIVE INTERACTION WITHIN AN INDUSTRY
• STRUCTURAL DYNAMICS OF AUTO INDUSTRY /HEALTHCARE/ MUSIC INDUSTRY-
NO COMMONALITY AMONG THEM
• HOWEVER, UNDERLYING PROFITABILITY DRIVERS WILL BE THE SAME
 INDUSTRY STRUCTURE AND 5 FORCES

• THESE FORCES ARE INTENSE IN INDUSTRIES SUCH AS

AIRLINES/TEXTILES/HOTELS
• RELATIVELY POOR ROI
• INDIAN CONTEXT- JET/AIR INDIA/INDIGO
• SOFTWARE/TOILETRIES/ SOFT DRINKS – SUCH FORCES ARE MILD
• BETTER R O I
 COMPETITIVE RIVALRY

• THE FIRST ASPECT TO ANALYZE IS THE AMOUNT OF COMPETITION YOUR

COMPANY FACES.
• THINK BOTH ON A MACRO AND MICRO SCALE ABOUT THE NUMBER OF DIRECT
COMPETITORS YOU HAVE IN YOUR INDUSTRY AND THE PRODUCTS/SERVICES
THEY OFFER IN COMPARISON TO YOURS
• COLOR T V- 40 PLUS COMPETITORS EARLIER
• NOW ONLY FEW
• JAPANESE/KOREAN
• MARKETS WITH FEW COMPETITORS ARE ATTRACTIVE BUT CAN BE SHORT-LIVED.
• ON THE OTHER HAND, HIGHLY-COMPETITIVE MARKETS WITH MANY COMPANIES
CHASING THE SAME WORK REDUCE YOUR POWER AND CAN PUSH YOU TO LOWER
YOUR PRICES AND INNOVATE NEW PRODUCTS
• EXCEPTION – TITAN- IN COVID TIMES
• LAUNCHED FIVE NEW MODELS OF WATCHES
• INNOVATION- CONTACT LESS PAYMENT FUNCTIONALITY
• PARTNERED WITH SBI FOR TITAN PAY SOLUTION
• WHAT’S THE LEVEL OF COMPETITION IN YOUR COMPANY’S SECTOR?
• WHO ARE YOUR LARGE, DIRECT COMPETITORS? WHAT ADVANTAGES DO THEY
LEVERAGE OVER YOU?
• WHO ARE YOUR SMALLER, INDEPENDENT COMPETITORS? WHAT DO THEY DO TO
STAY COMPETITIVE?
 THREAT OF SUBSTITUTE PRODUCTS

• THIS REFERS TO THE POSSIBILITY THAT CUSTOMERS WILL FIND A DIFFERENT

(READ: QUICKER AND EASIER) WAY OF DOING WHAT YOUR COMPANY DOES.
• YOU MAY HAVE ORIGINALLY CONCEIVED PRODUCTS OR SERVICES THAT HELP
CUSTOMERS, BUT AS TECHNOLOGY CHANGES OVER TIME, SO DO THE DESIRES
AND PROBLEMS OF CUSTOMERS
• LML VESPA- FIRST MODEL
• GAS TANDOOR COMPETING WITH TRADITIONAL AND ELECTRIC TANDOOR
• ALWAYS EXAMINE HOW YOUR CUSTOMER’S LIVES HAVE CHANGED AS YOUR COMPANY HAS
GROWN- MOBILE MAKING 30 PLUS PRODUCT REDNUDANT
• FOR EXAMPLE, YOU MAY SELL A PIECE OF SOFTWARE THAT AUTOMATES A PROCESS OR
SYNCHRONIZES ACTIVITY INTO ONE PLATFORM.
• AS USER BEHAVIOR CHANGES, YOU CAN FIND OPPORTUNITIES TO UPDATE YOUR PRODUCT, OR
EVEN GROW A NEW SERVICE OFFERING
• BOXABL CASITA- ENERGY EFFICIENT STUDIO APARTMENT IN A BOX
• ELON MUSK ENDORSED IT
• WAITLIST OF 50,000 PLUS
• HOW EASY IS IT TO FIND AN ALTERNATIVE TO YOUR PRODUCTS OR SERVICES?
• WHAT ASPECTS OF YOUR PRODUCTS/SERVICES CAN YOUR CUSTOMERS DO
MANUALLY?
• L G SAMPOORNA – DIGITAL DISPLAY IN REGIONAL LANGUAGES IN SOUTH INDIA
• BAJAJ SCOOTER – EASY A S S
• NOT SO WITH HONDA ACTIVA
• HOW DO CHEAPER SUBSTITUTES MEASURE UP AGAINST YOUR COMPANY FOR
ROI?
 BARGAINING POWER OF BUYERS

• ASK YOURSELF HOW MUCH POWER DO YOUR BUYERS HAVE OVER YOU.
• IF YOU’RE SELLING A PRODUCT, THEIR POWER IS LIKELY CONTAINED TO ORDER
AMOUNTS OR CUSTOMIZATION NEEDS.
• ORDER AMOUNT- RAILWAYS BUYING FROM TISCO
• CUSTOMIZATION NEED- DESTINATION WEDDING- POPLEY’S FROM MUMBAI – 1994
• 2 HOUR JOURNEY FROM MUMBAI TO AHEMADABAD
• HOWEVER, IF YOU’RE OFFERING A SERVICE, CUSTOMERS ARE MORE OPEN TO
NEGOTIATION
• REMEMBER THAT CUSTOMERS ARE EXTREMELY PRICE-SAVVY AND MAY
ALREADY HAVE EXPERIENCE OF DEALING WITH YOUR COMPETITORS
• BSNL- JIO/AIRTEL
• DETERMINING YOUR RELATIONSHIP WITH BUYER POWER IS ALL ABOUT HOW
FLEXIBLE YOU CAN BE ON SERVICE WHILE MAINTAINING AN AUTHORITATIVE
POSITION IN YOUR MARKET
 POWERFUL BUYER- AMZON/RELIANCE

• HOW POWERFUL ARE YOUR BUYERS?

• HOW MANY ARE THERE? WHAT DIFFERENT KINDS OF BUYERS DO YOU INTERACT
WITH?
• CAN THE BUYERS GET COSTS DOWN?
• DO THEY HAVE THE POWER TO DICTATE TERMS?
• RELIANCE- FINALIZATION OF CONTRACT MIDNIGHT
• INDUSTRIES THAT ARE TIGHTLY REGULATED AND REQUIRE LARGE
INVESTMENTS OF CAPITAL MEAN THAT COMPANIES WHO MAKE IT CAN GAIN A
SERIOUS FOOTHOLD IN A MARKET ( FERTILIZER)
• ALTERNATIVELY, MARKETS THAT YOU CAN GET SET UP IN QUICKLY AND WITH
LITTLE FINANCIAL RISK MEAN YOU CAN START BUILDING CUSTOMERS FASTER,
THOUGH THERE MAY BE A PROLIFERATION OF COPYCAT COMPANIES AND
SIMILAR PRODUCTS
• ON LINE EDUTECH COMPANIES
• QUESTION ON THEIR FUTURE AFTER PANDEMIC IS OVER
• THE THREAT OF NEW ENTRY IS BASED ON HOW SECURE YOUR COMPANY IS FROM
BEING SURROUNDED BY COMPETITORS.
• LET’S SAY YOU’VE DISCOVERED A WAY TO CUT COSTS IN THE IT INDUSTRY - YOU
NEED TO PROTECT YOUR COMPANY FROM IMITATORS AND RIVAL COMPANIES
WHO CAN DRIVE DOWN YOUR PRICES
• WFH- NEW NORM FOR IT INDUSTRY- EASY IMITATION BY ALL
• WHAT’S THE THREAT OF NEW BUSINESSES STARTING IN THIS SECTOR? ( 600
LICENCES THEN FOR HDPE WOVEN SACKS)
• HOW EASY IS IT TO START UP IN THIS BUSINESS?
• WHAT ARE THE RULES AND REGULATIONS?
• WHAT FINANCE WOULD A START-UP NEED?
• ARE THERE BARRIERS TO ENTRY WHICH GIVE YOU GREATER POWER?
 BARGAINING POWER OF SUPPLIERS

• WHEN IT COMES TO BRASS TACKS, YOU NEED TO FOCUS AS MUCH ON YOUR

COSTS AS YOU DO ON YOUR REVENUE.
• ASSESS THE SUPPLIERS YOU RELY ON AND THE POTENTIAL POWER THEY HAVE
OVER THE PRODUCTS/SERVICES YOU PROVIDE
• THE GREATER THE NUMBER OF SUPPLIERS AVAILABLE TO YOU, THE EASIER IT IS
TO SWITCH TO A CHEAPER ALTERNATIVE.
• IF THERE ARE FEW SUPPLIERS YOU CAN WORK WITH, SUCH AS WHEN YOU SELL
PRODUCTS MADE WITH HIGHLY-SPECIFIC MATERIALS, THE GREATER CONTROL
THEY HAVE OVER YOUR COMPANY.
• A RISE IN THEIR PRICES HAS AN IMMEDIATE EFFECT ON YOUR BOTTOM LINE
• HOW MANY SUPPLIERS ARE IN THE MARKET?
• ARE THERE MANY OPTIONS (WHICH CAN LOWER PRICES) OR JUST A FEW (WHICH
CAN RAISE THEM)?
• HOW EASY IS IT TO SWITCH, WHAT’S THE COST?
• HOW WOULD CHANGING SUPPLIERS AFFECT YOUR PRODUCTS/SERVICES?
• MULTIMETALS/ALCOBEX/INDO-SWE
 HOW TO APPLY PORTER’S 5 FORCES?

• IF YOUR BUSINESS IS THINKING ABOUT MOVING INTO NEW SECTORS OR

MARKETS, OR IF YOUR BUSINESS IS STUCK IN A COMMODITY SITUATION, THEN
PORTER’S 5 FORCES ENABLES YOU TO SEE THE ISSUES CLEARLY

• WORK THROUGH EACH OF THE FORCES TO IDENTIFY WHO HAS THE POWER IN
DIFFERENT SCENARIOS ACROSS EACH INDUSTRY YOU WORK (OR WANT TO
WORK) IN
 COMPETITIVE RIVALRY

• THESE INCLUDE ESTATE AGENTS, WEB DESIGN, AND OFFICE STATIONERY. MANY
COMPETITORS OFTEN BUY ON PRICE.
• THERE ARE MANY PROVIDERS OF VERY SIMILAR PRODUCTS, MEANING THAT
DIFFERENCES SHOULD BE HIGHLIGHTED, AND PRICES MUST BE COMPETITIVE
 THREAT OF SUBSTITUTE PRODUCTS

• THE SUBSTITUTE FOR MANY SERVICES IS DIY.

• FOR EXAMPLE, ANYONE CAN CUT THEIR OWN HAIR OR WRITE THEIR OWN WILL
• BUT MANY PEOPLE SPEND MONEY TO ENLIST THE SERVICES OF AN
EXPERIENCED PROFESSIONAL TO DELIVER A LEVEL OF SERVICE GREATER THAN
THEY CAN PROVIDE THEMSELVES.
• FOCUS ON EXPERTISE, CUSTOMER SERVICE AND ADDED VALUE YOUR COMPANY
CAN USE TO DISTINGUISH ITSELF
 NETFLIX/AMAZON PRIME/HOTSTAR/APPLE

• RELEASE OF MOVIES ON STREAMING

PLATFORMS
 BARGAINING POWER OF BUYERS

• AN EXAMPLE IS THE GROCERY SECTOR SINCE SUPERMARKETS TEND TO RETAIN

POWER OVER SUPPLIERS DUE TO VOLUME AND PRICE OF CONTRACTS.
• THEY DICTATE TERMS, SET PRICES AND CAN END AGREEMENTS AT ANY TIME
• AUTOMATIC RENEWAL CLAUSE IN CASE OF SUPPLIES TO MILITARY
ESTABLISHMENTS
 THREAT OF NEW ENTRANTS

• AN EXAMPLE IS WEB DESIGN, AS THERE ARE INDEPENDENTS IN EVERY

LOCATION.
• THIS IS AN EASY MARKET TO ENTER WITH FEW REQUIREMENTS, OTHER THAN
SKILLS, INITIATIVE AND RELEVANT HARDWARE AND SOFTWARE. THIS DOES
MEAN THERE ARE MANY NEW ENTRANTS!
 BARGAINING POWER OF SUPPLIERS

• SOME SECTORS HAVE MONOPOLISTIC (ONE) OR OLIGOPOLISTIC (FEW)

SUPPLIERS, SUCH AS UTILITY COMPANIES.
• SOMETIMES CUSTOMERS HAVE LITTLE CHOICE I.E. WHERE TO BUY DOMESTIC
WATER SUPPLIERS, THOUGH THIS IS CHANGING.
• IN THE JEWELRY SECTOR, DIAMOND SUPPLIERS OFTEN HOLD THE POWER AND
CAN SET PRICES, WITHHOLD SUPPLY AND RESTRICT SALES
• UBER’S VALUE PROPOSITION IS DISTINCTLY DIFFERENT TO OTHER FORMS OF
TRANSPORT (=SUBSTITUTES – FORCE 3) BUT VERY SIMILAR TO OTHER RIDE-
HAILING COMPANIES (=COMPETITORS – FORCE 5)
 (1) BARGAINING POWER OF BUYERS
(=RIDERS)
• BARGAINING POWER OF CUSTOMERS
• SWITCHING BARRIERS FOR THE DEMAND SIDE
• VALUE PROPOSITION FOR CUSTOMERS
• BUYER INFORMATION AVAILABILITY
• POWER OF DISTRIBUTION CHANNELS:
 (2) BARGAINING POWER OF SUPPLIERS
(=DRIVERS)
• BARGAINING POWER OF SUPPLY SIDE
• SWITCHING COSTS OF THE SUPPLY SIDE
• VALUE PROPOSITION FOR SUPPLY SIDE
• BARRIERS TO ENTRY FOR THE SUPPLY SIDE
 3) THREAT OF NEW ENTRANTS

• BARRIERS TO ENTRY
• ECONOMIES OF SCALE
• BRAND EQUITY
• EXPECTED RETALIATORY ACTION
 (4) THREAT OF SUBSTITUTES

• CAR SHARING COMPANIES – ZIPCAR

• SELF-DRIVING CARS
• BETTER PUBLIC TRANSPORT
• WORKING FROM HOME
• BIKE SHARING
 (5) RIVALRY AMONG COMPETITORS

• RIVALRY IS STIFF-LYFT IN USA/ OLA IN INDIA/DIDI IN CHINA

• OTHER COMPETITORS ARE EMERGING
• A LOT OF LOCALLY-FOCUSED ENTRANTS MAY DILUTE UBER’S STRENGTH
• UBER ITSELF IS EXPANDING- FREIGHT, FOOD DELIVERY, SELF-DRIVING CARS
• SYNERGETIC, EFFECTS THAT CAN INCREASE UBER’S COMPETITIVE MOAT
 RESHAPING THE FORCES IN OUR FAVOR

• SUPPLIER POWER- STANDERDISACTION OF SPECIFICATIONS FOR PARTS SO THAT COMPANY

CAN EASILY SWITCH OVER
• CUSTOMER POWER- EXPAND SERVICES SO ITS HARDER FOR CUSTOMERS TO LEAVE YOU FOR A
RIVAL
• ESTABLISHED RIVALS- INVEST HEAVILY IN PRODUCTS THAT DIFFER SIGNIFICANTLY FROM
COMPETITORS
• NEW ENTRANT-ELEVATE FIXED COSTS OF COMPETING : INCREASE R & D BUDGET
• LIMIT SUBSTITUTES- MAKE YOUR PRODUCT WIDELY AVAILABLE- VENDING MACHINES FROM
SOFT DRINK PRODUCERS