Question

What are all five of Porter's five forces on Integrated Marketing Communication strategy changes.

Answer 1

Porter's five forces model's five factors are:
i). Risk of entry by competitors- With the entry of new players capacity of industry increases and competition begins for the share of the market and current cost decreases. There are different barriers to the entry of new competitors such as regulations by the government, an absolute advantage of cost, strong base of capital, distribution ease, cost of customer switching, the loyalty of brand, etc.
ii). Rivalry- It is a struggle by the competitors for market share between firms of the industry. The rivalry is a threat to profitability among established firms. The function of the following factors that are the strength of rivalry among established firms is exit barriers, fixed cost, global customers, absence of cost of switching, rate of growth of the industry, conditions of demand, etc.
iii). Bargaining capacity of buyers- It is the capacity of buyers to bargain down the prices charged by the firm. Profit can be extracted out of an industry by the buyers by decreasing prices and increasing costs. They sometimes buy a large number of goods and focus on the quality of the product. They hold the threat of backward integration.
iv). Bargaining capacity of suppliers- It is the capacity of the suppliers to increase the price of inputs of a product. Profit can be extracted out of an industry by the suppliers by increasing the cost of a firm in the industry. Their products have few substitutes. Products of the strong suppliers are uniques and they also have a high cost of switching. They have forward integration thread because their product works as an important input to the product of the buyer.
v). Substitute products- Substitutes have an upper limit on the returns made by industry by setting a limit over prices that can be charged by the firm for their product in the industry. A firm in an industry can raise its product and earn higher profits if there are fewer close substitutes.
Thus this was all about five forces of the model but its power differentiates from industry to industry. These forces are helpful in making strategic decisions as managers use it to determine the competitive structure of the industry.