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                        Porter Five Forces - Competitive Analysis

                        And the Threat of Substitute Products

                        Content rich web pages, including free porters five forces template available in PDF or MS Word. Plus handy hints and tips for leaders. Quick link to porters five forces template

                         

                         

                        Introduction to the Threat of Substitute Products

                        An analysis of the threat of substitute products will identify the likelihood that customers to your industry will switch to purchasing an alternative product from outside your industry.

                        You will find that the impact on your industry will vary depending on the take up rate of the substitute products. A substitute product can decimate an industry overnight or may have little to no long term impact.

                         

                        Analyzing the threat of Substitute Products

                        To analyze the threat of Substitute Products, you will need to consider the following factors,


                        Or Click here to view and download a free Porter Five Forces Template

                         


                        Analysis Criteria

                        Description

                        The relative price performance of substitutes
                         

                        Refers to the cost effectiveness of the substitute products, (Total supply chain costs)

                        Alternative products that provide overall savings to your customers, without impacting the quality of your customer’s products or services are more likely to be viewed favorably for adoption.

                        Switching costs

                        Refers to any cost incurred by your customers to switch to an alternative product

                        Does your customer incur any costs to switch to a substitute product?

                        These costs could be legal review of new contracts, change in spare parts and change in ordering systems. These may also be intangible costs such as risk.

                        Buyer propensity to substitute

                        Refers to your customers loyalty to your product or service

                        How do your customers react to substitutes, do they trial them or are they loyal to your industry?

                        It would also pay to identify the things that need to change for your customers to change their propensity to trial substitute products.

                         

                        Sample Porter Five Forces Template, Analysis of the Threat of Substitute Products

                         

                        Analysis Criteria

                        Risk Rating

                        High

                        Medium

                        Low

                        The relative price performance of substitutes

                         

                         

                         

                        Switching Costs

                         

                         

                         

                        Buyer propensity to substitute

                         

                         

                         

                        Overall Risk Rating

                         

                         

                         

                         

                        Scroll down for another sample porter five forces template

                         

                        Alternative Template for the Threat of substitute products

                        The following free strategic planning template can be used to determine if each of the factors that affect the threat of substitute products has a positive or negative risk.

                        You can then give an overall rating for this force.

                         

                        The threat of substitute products

                        Comments on the threat of substitute products

                        Rating

                        The relative price performance of substitutes

                         

                         

                        Switching Costs

                         

                         

                        Buyer propensity to substitute

                         

                         

                        The threat of new entrants overall rating

                         

                         

                        Porter Model Templates from What Makes a Good Leader, View and download our Porters Five Forces Template Here

                         

                        After completing your Analysis

                        After completing your analysis you should transfer the key highlights to your SWOT analysis. Generally, you only need to add high level commentary to your SWOT.

                        Given that Porters five forces is an industry analysis technique you will only need to update the opportunities and threats in your SWOT analysis.

                        Why not take 5 minutes to learn how to use all five forces in the porter model to ensure you can analyze and understand the nature of competition in your industry.

                         

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