Competitive forces are the outside factors or elements from the company that are threatened from the market. To observe the threats it is better to identify the new products that the competitors bring towards the market. According to that the business has to make up the marketing strategies and the factors should be observed, they are:
● NEW COMPETITION
New competitors should be under watched. Some unseen strategies that are put forward by the competitors may result in the failure of the business. The product specification of competitors, their pricing policy, the way they give the promotions etc…. All things have to be observed.
Knock-offs means the replication of branded products with low cost and with the same quality. These problems are mainly faced by manufacturing units. To escape from the knock-off the company has to advertise them more than before and also increase customer service and also to prove in between the consumers that they are the originals.
Impact of Competitive Forces on Marketing Strategy
● Competitive Rivalry
Organizations have to make new or different strategies according to analysis made on the amount of competitors present in the market. The organizations came with different discounts and promotions or offers which results in reduction of their profit. Sometimes organizations lose their loyal customers and also have to reduce the quality of their product. The customers can simply move to purchase other company products easily. The quantity of rivals and their capacity to undercut a firm are the first two of the five factors. The weaker a firm is, the more competitors it has and the more equivalent products and services it offers. Suppliers and customers will seek out rivals if a competitor can provide a better deal or a lower price. When there is less competition, on the other hand, a company has a greater flexibility to set higher prices and negotiate better terms in order to enhance sales and profits.
● Threat of new Entrants
All the organization has a dangerous threat that is a new entrant. They are more dangerous than old competitors. Because they enter the market with the latest technology and latest type of products with low price to withstand in the market and also for attracting the customers. The entry of new entrants increases when there is easy access to new specialized technology or to a new infrastructure. The organization should always be flexible with their marketing strategies to make changes acridly when needed. New competitors have a significant influence on a company’s strength. A well-established firm’s position becomes more vulnerable the less time and money it takes a competitor to enter a company’s market and establish itself as a credible competitor. As a result of the increased entry hurdles, existing companies in a sector with high entry barriers will be able to demand higher prices and better terms.
● Threat of substitute
All the customer looks for low price products with high quality and which they can fulfill their needs. There are many similar products which are lower in price and can fulfill the need. For example: Laptop and desktop computers, Laptop is easy carrying and weightless but in case of desktop computers they are hard to carry. If there are more substitute products in the market then there will be lower potential of profit and also an increased environment of competition. The last of the five troops is the replacement force. Alternative products or services that can be utilized in place of a company’s goods or services pose a danger. Companies that manufacture commodities or provide services for which there are no substitutes will have more flexibility in setting prices and negotiating advantageous conditions. Customers will be able to avoid purchasing a company’s goods if close replacements are available, reducing the company’s impact.
● Bargaining power of buyers
Bargaining power of buyers is directly proportional to the demand and supply. If the demand of the product increases then the organization can have an advantage and the organization can increase the price of the product. The organization can reduce the supply of products which helps to decrease the buyer power. One of the five factors is the capacity of customers to demand price reductions, or their degree of power. It is influenced by the number of buyers or customers a firm has, the value of each customer, and the cost of obtaining new consumers or markets for the company’s goods. Each consumer has greater negotiating power to achieve better rates and packages with a smaller and more powerful customer base.
● Bargaining power of suppliers
One of most pressures that an organization feels in the market is the bargaining power of supplier and buyer. Suppliers increase the price without affecting their volume of sales if there is less number of suppliers in the market in the industry. If there are more suppliers with the same products it results in a decrease in the power of suppliers. The fifth force model’s next component examines how quickly suppliers may raise input costs. The number of suppliers of a product’s or service’s primary inputs, the uniqueness of these inputs, and the cost of switching to a new source all influence it. The greater a company’s reliance on its suppliers, the more dependent it is on them.
- To counteract competing factors, the marketing strategy should emphasize product quality. The operational management of the company should tailor the items in response to client demand. It will assist them in gaining consumer loyalty as well as contributing to a competitive edge.
- To handle competitive factors, the firm marketing plan should also include a price The best method to do this is to do a thorough market research and development study. According to client demand, the corporation may provide discounts during the event.
- Consumer opinion has a significant impact on marketing strategy. As a result, marketing teams must use market research and surveys to measure client sentiment while designing a Price reductions or the launch of new items can affect people’s opinions. As a result, the corporation must continually re-evaluate marketing efforts in order to maintain a good client perception.
- As a marketing strategy, the corporation should concentrate on the breakeven analysis. It will assist them in addressing the company’s promotional tactics and contribute to a competitive edge. The company’s social media material aids in the company’s participation in the consumer feedback system. As a result, the marketing channels will assist the business in gaining a competitive edge.
- The physical retail locations and internet presence should be prioritized in the
marketing plan. It will assist them in addressing their competitive edge in both the domestic and global markets. Walmart, for example, has actual stores in a variety of locations so that customers may access them from any location.