Marketing Challenges in the 21st Century
Poter’s five forces | Principles of marketing
BBA | BBA-BI | BBA-TT | BCIS | BHCM
Nowadays, the focus of marketing has shifted from products and selling to the customers. Competition among the firm is intense with the focus now on innovation and successful customer relationship. In this scenario, marketing has become a very tough job these days. Every marketer is facing challenges in one way or other.
Michael E porter, a professor in Harvard Business School Michael Porter has identified five marketing challenges of the firm’s competitive position which he called Porter’s Five Forces.
- The threat of new entrants: Threat of new entrants refers to the industry, greater the easiness firms in the industry. Easier it is for new firms to enter the industry great will be the intensity of competition.
- Bargaining power of customers: When the buyers are able to put collective pressure on firms producing products or services they become powerful.Bargaining power of buyers is highest at two scenarios:
When there are a number of firms producing the same type of products.
When buyers gather and are in a position to influence the firm.
- The threat of substitute products: Substitute product is a one that a consumer sees as same or with similar benefits. For example, internet service provider that provide internet service with similar speed, gas companies that provide gas cylinder in same shape and weight, etc. The threat of substitute is another major marketing challenges. It refers to the availability of the product that a consumer can purchase instead of the firm’s product. Higher the threat of substitute, greater the level of risk for firm.
- Bargaining power of suppliers: When suppliers are dominant, they reduce the profit potential in an industry. In this context, bargaining power of suppliers is another major challenge. Lesser the number of suppliers, weaker the firm and vice-versa.
- Competitive rivalry within an industry: The intensity of rivalry among competitors is another major challenge the marketer must face. It refers to the extent to which a firm within an industry puts pressure on another, limiting the profit potential. When there are a larger number of manufacturers along with the variety of products, the rivalry is strong and vice-versa.