Prepared by: Huỳnh Hạnh Phúc

Michael Porter’s
competitive five forces

Define the competitors

Analyze the competitors

Competition strategies
 Potential
competitors

Threat of new
Power of
competitors
suppliers

Current Customer
Suppliers competitors
Power of
Threat of customer
subtitution
Substitute
products
Definition:
The process of identifying major
competitors, assessing their objectives,
strategies, strengths and weaknesses,
and selecting which competitors to
attack or avoid
1. Who the competitors are
2. What the competitors’ objectives are
3. What their strategies are
4. What their strengths and
weaknesses are
5. What their reaction patterns are
6. Who to confront and how to avoid
Competitors could be
DIRECT (within the same industry or market sector)
INDIRECT (competing for the consumer dollar-
substitutes)
LATENT (potential threats)
Brand competitors
• Same product
• Same segmentation
• Same price
• Pepsi & Coca Cola, 7 Up & Sprite
Generic competitors
• Different product. Provide same
function. Eg. drink, transports, etc.
• It attempts to satisfy the same basic
customer need. Pepsi & sugar cane,
ice tea
Product competitors
• Same product
• Different segmentation
• Different price
• 7 Up & Xá xị Chương Dương
Total budget competitors
- It would be any companies that have a
same costs
- Customer can spend 7000 VND (7up’s
price) for many different kind of
products
BRAND COMPETITORS
PRODUCT COMPETITORS
GENERIC COMPETITORS
TOTAL BUDGET COMPETITORS
v Each competitor has a mix of objectives.
v The company wants to know the relative importance
that a competitor places on current profitability,
market share growth, cash flow, technological
leadership, service leadership, and other goals.
v Knowing a competitor’s mix of objectives reveals
whether the competitor is satisfied with its current
situation and how it might react to different
competitive actions.
v A company must also monitor its competitors’
objectives for various segments
vThe more that one firm’s strategy
resembles another firm’s strategy, the
more the two firms compete.
vA strategic group is a group of firms in
an industry following the same or a
similar strategy in a given target market
v Marketers need to assess each competitor’s strengths
and weaknesses carefully in order to answer the critical
question: What can our competitors do?
v As a first step, companies can gather data on each
competitor’s goals, strategies, and performance over the
last few years.
v Companies normally learn about their competitors’
strengths and weaknesses through secondary data,
personal experience, and word of mouth.
Development rate
Market share
Profitability
Objectives
Strategy
Target market
 R&D

Production

HR

Customer’s perception

Marketing & brand

 Normal Colgate- Colgate- Colgate-
Product Segmentations
toothpaste Pamolive Pamolive Pamolive
P&G, P/S P&G, P/S, P&G,
Unilever Unilever
Fluoride Colgate- Colgate- Colgate-
toothpaste Pamolive Pamolive Pamolive
P&G, P/S P&G, P/S P&G, P/S
Gel Colgate- Colgate- Colgate-
toothpaste Pamolive Pamolive Pamolive
P&G, P&G, Unilever P&G,
Unilever
Kid 19-35 years old From 36 years
old
What are they looking
for?

What does it motivate

competitors?
v What will our competitors do?
v A competitor’s objectives, strategies, and strengths and
weaknesses go a long way toward explaining its likely
actions. They also suggest its likely reactions to
company moves such as price cuts, promotion increases,
or new-product introductions.
v Each competitor reacts differently.
v Strong or Weak Competitors: Most companies prefer to
compete against weak competitors. This requires fewer
resources and less time. But in the process, the firm may
gain little.
v Close or Distant Competitors: Most companies will
compete with close competitors—those that resemble
them the most—rather than distant competitors.
v “Good” or “Bad” Competitors: Good competitors play
by the rules of the industry. Bad competitors break the
rules. They try to buy share rather than earn it, take large
risks, and in general shake up the industry
 Biti’s Converse
Strategy

Marketing

R&D

HR

Finance
Customer’s
perception
1. Read the content of chapter 5 and analyze
your company’s customer behavior
and the factors that impact to the
customer behavior
2. Present the implication of the analysis
result (Customer insight)