Imagine you want to open a burger shop in your area. Before you start, you ask yourself five questions. These five questions are Porter’s Five Forces. It basically lets you know how tough the market is.
Before entering any business, you must know how tough the game is. That is where Porter’s Five Forces become important. It shows the hidden pressures around a business. It also explains why some industries grow fast and others feel like a constant struggle.
This model gives a clear picture of how strong competitors are, how easy it is for new players to enter, and how much control customers or suppliers have. When you understand these forces, you make decisions with clarity instead of guesswork.
What are Porter’s Five Forces?
1. Competitive Rivalry: How Tough Is the Fight?
Go to a mall, and you will find 10-15 options of clothing stores. Wonder how all the stores are surviving if there is such tough competition? Well, the first force out of Porter’s Five Forces simply informs you about the competition. When many brands try to win the same customers, the fight gets harder.
What to do if a market is crowded? In crowded industries, you must work more on visibility, innovation, and customer experience. There is a constant effort to win over new entrants and retain loyal customers.
Intense rivalry usually means price wars, constant marketing pressure, and faster product changes. Brands cannot relax because someone is always ready to take their spot. Low rivalry, on the other hand, gives more breathing room to grow.
Think about India’s smartphone market. Brands like Samsung, Xiaomi, Vivo, Oppo, and Realme release new models almost every few months. Each tries to offer better cameras, cleaner UI, or lower prices to grab attention. The rivalry is so intense that even a small feature can shift customer preference. This is a perfect example of how competitive rivalry shapes an entire industry.
2. Threat of New Entrants
This force explains how easy or difficult it is for new businesses to enter an industry. If entering the market requires very little money, no special skills, and no strict rules, new players will keep coming. This increases competition for everyone.
If entering the market requires high investment, strong technology, licenses, or a well-known brand name, then fewer people can enter. This reduces the pressure on existing businesses and makes the industry more stable.
Opening a small café is easy. You need limited money, basic equipment, and a good location. That is why new cafés pop up everywhere, increasing competition for existing ones. But entering the airline industry is almost impossible without massive investment, trained staff, and government approvals. This clear difference shows how the threat of new entrants changes from industry to industry.
Does that mean that airline giants relax and take no effort to improve their service? No!
Does that mean that existing cafe owners should worry about new competitors? No! Every city has those few cafes happily serving their customers for ages.
3. Threat of Substitutes
Did you know that Tata Play, Dish TV, and Sun Direct saw their revenues dip in FY25? Since 2021, the pay-DTH market has lost over 7 million subscribers as audiences increasingly prefer OTT services. (Source: Livemint) OTT is a substitute for TV.
The 3rd force of Porter’s Five Forces looks at how easily customers can switch to a different product that solves the same problem. When substitutes are plentiful, customer loyalty drops. People shift quickly if they find something cheaper, healthier, or more convenient.
A high threat of substitutes pushes brands to offer better value, stronger differentiation, or unique benefits. A low threat means customers have fewer alternatives, so they stay longer.
Tea and coffee are perfect substitutes. If coffee prices rise, many people simply switch to tea. In the same way, taxis and metro trains compete as substitutes for daily travel. When the metro becomes faster or cheaper, people reduce taxi rides. This switching behaviour directly shows how substitutes influence customer decisions.
Let me give you an example. I used to use Blinkit for grocery shopping. That was my go-to app. But then came Zepto. They had some really attractive offers, and I happily switched to Zepto. But soon I realized that Blinkit has better brands, so I jumped back here.
4. Bargaining Power of Buyers
We live in India. And all Indians have a superpower: bargaining skills!
This force explains how much control customers have over a business. When customers have many options, they demand lower prices, better service, or extra features. Brands must give more to win them.
Buyer power increases when switching is easy. It decreases when the product is unique, high quality, or not easily replaceable. The more choices people have, the more pressure a business feels.
In the hotel booking space, platforms like Booking.com, MakeMyTrip, and Airbnb list hundreds of options. Customers compare prices, check reviews, and pick the best deal in minutes. Because buyers have so many choices, hotels must offer discounts, free breakfast, or flexible cancellations. This shows how strong buyer power shapes business decisions.
5. Bargaining Power of Suppliers
This force looks at how much control suppliers have over a business. If only a few suppliers exist, they can raise prices or set strict terms. Businesses must accept because they have limited alternatives.
Supplier power becomes weaker when companies can switch vendors easily or when many suppliers offer the same material. Strong supplier power increases business risk, while weak supplier power gives a company more stability.
The semiconductor shortage showed how powerful suppliers can be. Only a few global manufacturers produce chips, and when demand increased, they controlled pricing and delivery timelines. Smartphone and car companies had no choice but to wait or reduce production. This is a direct example of strong supplier power affecting an entire industry.
5 Ways to Beat Porter’s Five Forces
Once you understand Porter’s Five Forces, the next step is learning how to protect your business from these pressures. These simple, practical actions help any brand stay strong even when competition increases or customer behavior changes. The best part is that you can apply them to almost any industry.
1. Build a Brand People Actually Remember
A strong brand reduces half your problems. When customers feel connected to you, they don’t switch easily, even if someone else offers a discount. Branding builds trust, creates familiarity, and gives your business a personality. This makes rivalry feel less scary because people prefer what they know and love.
You can rely on Go To Clan for any branding requirements. We have helped multiple companies turn into strong brands with our unique design thinking.
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2. Keep Improving Before Someone Else Does
Innovation doesn’t always mean launching something huge. Sometimes, a cleaner UI, faster delivery, or better customer support is enough. When you keep improving, new entrants find it hard to copy you. Customers also notice small upgrades and stick around because they see value growing over time.
3. Make Switching Feel Like a Loss
The easiest way to beat substitutes and buyer power is to make your experience too good to leave. Offer loyalty rewards, consistent quality, and a smooth journey from start to finish. When customers enjoy the complete experience, switching apps or brands feels like starting from zero. That keeps them with you for the long run. Remember my Blinkit experience? That’s exactly how you can beat this force.
4. Don’t Depend on Only One Supplier
Relying on a single vendor is risky. If they increase prices or face shortages, your entire business suffers. When you diversify your suppliers, you gain more control. You can negotiate better, manage your costs, and avoid sudden disruptions. This reduces supplier power and keeps operations stable.
5. Study Your Market Like a Habit
Markets change fast. New trends pop up overnight. Customer preferences shift without warning. When you track these changes regularly, you stay prepared. You understand threats early, spot new opportunities, and make better decisions. This clarity helps you handle all five forces with confidence.
Conclusion
Understanding what are Porter’s Five Forces helps you see the real picture of the industry. It shows where competition comes from, how customers behave, and how external pressures shape growth. When these forces are clear, businesses make smarter decisions, choose better strategies, and avoid costly mistakes. This model turns guesswork into clarity and helps brands stay confident, prepared, and future-ready. Contact Go To Clan for any branding or marketing requirements. A good website, strong branding, and smart marketing can help you beat the competition.