Marketing - 301

A: The industry I chose for Porters 5 forces model is the automotive industry. The threat of new competition: In the auto manufacturing industry, this is usually a pretty low threat. Factors to examine for this threat include all barriers to entry such as upfront capital requirements, because it costs a lot of money to set up the facility. Brand equity, legislation and government policy which has safety, EPA and emissions and having the ability to distribute the product. Certain auto manufacturers have been out of the US since the early 90s largely due to the inability to re-establish a dealer network.

The threat of substitute products: If buyers can look to the competition or other comparable products, and switch easily there may be a high threat of this force. With brand new cars, the switching cost is high because you can't sell a brand new car for the same price you paid for it. There is the threat of substitute products before the buyer makes the purchase. You need to know whether the market you are analyzing has some good alternatives to new cars. Used usually cars threaten the new market.

Auto Product differentiation is important as well. In the auto industry, there are many cars that are similar, however, if you are looking at specialty cars, there may be little threat of substitute products.

The bargaining power: Most people in the US can buy a car with bargaining. In recent years US dealers were giving great deals to buyers to get the industry moving. While quantity a buyer purchases is usually a good factor in determining this force, even in the automotive industry when buyers only usually purchase one car at a time. This may be different in other markets. In other countries it sure is lower than in the US, creating a more favorable situation for the industry but not the buyers. In general, it's safe to say the customers have some buying power, but it depends on the market.

Bargaining power the suppliers have: In the auto industry this refers to...