I am stumped on this question about Porter's 5 Forces?
"Over which of Porter’s Five Force’s do consumers have the greatest influence? Over which do they have the least? How might these factors affect a firm’s overall marketing strategy?"
I've only had 2 classes so far in this class but I can't seem to find in the book the answer to the question. Any help is appreciated.
Well the five forces are
-Bargaining power of suppliers
-Bargaining power of customers
-Threat of new entrants
-Threat of substitute products
-Intensity of rivalry within the industry
So the two that I believe consumers have the greatest influence over would be bargaining power of customers obviously and the threat of substitute products as consumers determine whether the substitute products become competitors or not.
The marketing strategy would need to be modified in order to take into account the factors that affect these.
So things such as
- Be aware of the price sensitivity of its customers when developing the pricing strategy
- Differentiate the product from its competitors
- Create high switching costs
- Will need to prices that are competitive with the substitute product prices - a firm's ability to raise prices becomes limited the more substitute products there are