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Types of Competitors Add to toolbox

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In order to start tracking what your competitors are up to you first need to identify who you are. 

One such tool, which helps to have a very clear view of who your competitors are is Porters Five Forces model:

You need to consider five types of competitors you could potentially have and identify just how strong the competition is in order to better understand how to best allocate your time.

Five types of competitors:

  • Rivalry amongst existing competitors – competitors who operate in the same industry as you, selling a very similar type of product, for example an iPhone 6  and a Samsung Galary S5 

 

  • Threat from new entrants – potential competitors if a new business were to open up, providing a very similar product or service

 

  • Bargaining power of buyers – the number and therefore the power of the amount and buying behaviour of your customers can have a direct effect on your prices and thus profitability 

 

  • Threat of substitutes – companies that provide a similar product/service, but different, that could potentially compete with yours. Examples include a restaurant competing with a cinema, a book competing with an Amazon kindle, where you could read books, or chocolate and crisps. The choice is between two completely different products/service or sometimes between a product or a service but they serve the same purpose

 

  • Bargaining power of suppliers – the number and therefore the power of suppliers can have a direct effect on the profitability of a business and therefore force it to take extreme measures such as close down or collaborate with direct/substitute businesses

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