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Marketing Academy.

Dominate your competitors with the study of Porter's 5 forces

Action is nothing without information

One of the advantages of carrying out an analysis phase before planning in a marketing plan is certainly that of being able to acquire greater awareness of the market in which a company operates, especially when we talk about the competition.

We at Deep Marketing repeat some "mantras", among these:

We can't control the market. But we can control our reaction to the market.

Which, in practice, implies having a rather realistic idea of our competitors and what is "out there". Otherwise the control of our actions is practically useless, because decisions are based on stereotypes and hot air.

Among the most useful methodological grids for carrying out this analysis operation we find Prof. Porter's expanded competition analysis model, also known as the Five Forces Model. It summarizes the forces that influence the category in which we operate, and which ultimately determine the ability our company has to serve customers and make profits.

Michael Porter
Prof. Michael Porter

The five dragons to study and dominate

Specifically, regarding the intensity of competition, Porter identified five forces that interact simultaneously within any market.

1) direct competition, understood as competition between companies operating in the same sector and offering an identical product. In many fields this is the factor that most determines the degree of competitiveness. Translated: we must know our main competitors very well.

2) The threat of new entrants, determined by the possibility that potential competitors can access the market, depending on the barriers to access to the market itself, represented by entry costs. New entrants can put pressure on companies already operating in a particular sector.

There is a lot of empirical evidence that not even a leading company is safe since new, more aggressive and better companies in product development and marketing can always arrive!

3) The threat of substitute goods or services, or the risk that goods similar to those already present will be introduced into the market, or which consist of different, and sometimes more effective, ways of meeting to the same need.

In the book Digital Deep Marketing Remastered we explore this thorny problem very carefully, starting from 'customers' unconscious. As entrepreneurs and professionals we are in fact always rather "biased" towards the supply side. But by placing ourselves on the customer's side, that is, the demand side, it seems all too easy to notice how people want to satisfy general needs and are not too scrupulous in deciding what type of service or product to reach their goal with.

So we are constantly threatened by other market categories that solve the same problem that our products solve!
4 Porter forces
Porter's 5 Forces. Copyright: Management Week

4) The increase in the bargaining power of suppliers (the input market), potentially caused by a limited presence of suppliers, who therefore have the power to increase prices and reduce supply, influencing the entire supply cycle.

With an extreme example, if there is a single supplier of raw materials for us who produce chocolate bars, we are by definition forced to source from this single supplier. Which could decide to raise the price of its raw materials skyrocketing, leaving us no choice. If not to buy from him anyway!

5) The increase in the bargaining power of customers (i.e. the output market), which also establishes the possibility for customers to exercise their bargaining power, and consequently capture greater value by forcing us to lower prices, demanding greater quality or better services.

The main result obtained from the competition analysis through these five forces is to be able to determine a lasting competitive advantage in the economic environment in which companies operate, analyzing the structure of the reference sector, its profitability and potential profitability.

Not bad.

Porter's 5 forces: Practical Examples

Let's now see some practical examples of the application of Porter's 5 forces matrix. Let's analyze each example in detail to illustrate how Porter's 5 forces apply in specific contexts:

Zalando, or any relevant e-commerce platform

1. Threat of new entrants: Moderate, given the need for significant technological investments and the scalability needed to compete.

2. Bargaining power of suppliers: May vary based on market segment and availability of alternative suppliers.

3. Customers' bargaining power: High, because customers can easily compare prices and products online.

4. Threat of substitute products: High, due to the wide range of alternatives available online.

5. Rivalry between existing competitors: Intense, due to low differentiation and price competition.


1. Direct competitors: International fast food chains such as McDonald's and Dunkin' Donuts, which offer substitute products at a competitive price.

2. Bargaining power of suppliers: Content thanks to an efficient supply chain and long-term relationships.

3. Customer bargaining power: Moderate, influenced by brand loyalty and the experience offered.

4. Threat of substitute products: Present, but mitigated by product diversification and distinctive environment.

5. Rivalry between competitors: High, but Starbucks' strong brand identity provides a competitive advantage.


1. Direct Competitors: Other beverage companies, such as Pepsi, that offer similar products.

2. Bargaining power of suppliers: Limited, given the size of the company and its negotiation capabilities.

3. Customer bargaining power: Varies, but is often reduced by strong brand equity.

4. Threat of Substitutes: High, with many beverage alternatives in the market.

5. Rivalry between competitors: Intense, but Coca-Cola's position as market leader provides it with a strong defense.


1. Direct competitors: Varies from country to country, but includes other ride-sharing services and traditional taxis.

2. Bargaining power of suppliers: In this case, the drivers, whose bargaining power has grown with the gig economy.

3. Bargaining power of customers: High, given the ease of switching to different transport services.

4. Threat of substitute products: High, with multiple alternatives to personal transportation.

5. Rivalry between competitors: Generally high, with many companies competing for market share.

Each practical example seen in this list shows how the 5 forces can be used to decipher the structure of an industry and to formulate strategies that exploit market weaknesses or defend against its risks.


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