May the [marketing] force be with you...

Unfortunately this is not a blog about Star Wars (or is it Star Trek - I often get the two mixed up...) and I won't be talking about this little green guy...

I know! I am sorry... If your only interested in Star Wars then I sincerely apologise. However, if you're interested in Marketing or you are a business owner there is another force I would like to talk to you about...

What are you on about?

I hear this a lot! Whilst many of my friends and family would say that I have a tendency to talk rubbish from time to time... You know when you get told a fact, you share this fact only to realise there is no way this can be true. I also ramble...#awkward...

Back to the point... I would like to discuss with you 'Porter's Five Forces' thoery and how you can apply it to your marketing.

What is Porter's Five Forces?

Porter's five forces analysis is a framework for analyzing the level of competition within an industry and business strategy development. It draws upon industrial organization (IO) economics to derive  five forces that determine the competitive intensity and therefore the attractiveness of an industry.

Source: Wikipedia

How can I apply this theory?

Before applying Porters Five Forces we have to begin by asking ourselves the following questions for each area (the forces)...

1. Force 1: Threat of New Entry?
2. Force 2: Buyer Power?
3. Force 3: Threat of Substitution
4. Force 4: Supplier Power
5. Force 5: Competitive Rivalry

Breaking down each force

Now lets have a closer look into each force... Let's dive a little deeper...

Threat of New Entry: Can a new business be started up in your sector without a great deal of investment? If the answer is yes then this is a threat. This is a reality these days with how far we have come on with technology and the internet.

Buyer Power: If your sector, product or service has fewer buyers, then they will often control the market. If this is the case ask yourself, how powerful are the buyers and how many are there? Also, can they reduce the price and can you control the terms?

Threat of Substitution: If there are alternatives available in your market, then there is a threat of substitution. The impact of the threat depends on how easy it is to find an alternative and whether or not your product/service can be outsourced or automated?

Supplier Power: Sectors where there is a decreased number of suppliers results in them having the power. If this relates to you, I suggest researching how many suppliers there actually are, how many of these suppliers control prices, can they easy switch etc.

Competitive Rivalry: When there are few competitors in a market this can be very appealing, however can be short lived. Where there is high levels of competition, you'll have a scenario where many companies are chasing the same work and thus reducing your overall power in the market.

Applying Porters Five Forces

When moving into a new market, sector or industry, using Porter's Five Forces gives you the ability to highlight any issues that you may face. Work your way through each force to identify who has the power and what you can do to combat this.

For example, what all companies need to be aware of is that DIY is a substitution threat for all services. So for a solicitor this would be people choosing to write a will themselves using a free guide they have found online.