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    Five Porters Forces Marketing Assignment

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    Masape Thomas
    The document analyzes Porter's Five Forces for Colgate's entry into the lotion market. It finds: (1) the threat of new entrants is low due to high barriers; (2) the threat of substitutes is moderate as lotion remains essential; (3) buyer bargaining power is low as lotion is essential; (4) supplier bargaining power is moderate due to specialized ingredients; and (5) competitive rivalry is high in the skincare industry. Overall, the market is deemed attractive for Colgate to enter.

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    Five Porters Forces Marketing Assignment

    Uploaded by

    Masape Thomas
    9 views2 pages
    The document analyzes Porter's Five Forces for Colgate's entry into the lotion market. It finds: (1) the threat of new entrants is low due to high barriers; (2) the threat of substitutes is moderate as lotion remains essential; (3) buyer bargaining power is low as lotion is essential; (4) supplier bargaining power is moderate due to specialized ingredients; and (5) competitive rivalry is high in the skincare industry. Overall, the market is deemed attractive for Colgate to enter.

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    The document analyzes Porter's Five Forces for Colgate's entry into the lotion market. It finds: (1) the threat of new entrants is low due to high barriers; (2) the threat of substitutes is moderate as lotion remains essential; (3) buyer bargaining power is low as lotion is essential; (4) supplier bargaining power is moderate due to specialized ingredients; and (5) competitive rivalry is high in the skincare industry. Overall, the market is deemed attractive for Colgate to enter.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    9 views2 pages

    Five Porters Forces Marketing Assignment

    Uploaded by

    Masape Thomas
    The document analyzes Porter's Five Forces for Colgate's entry into the lotion market. It finds: (1) the threat of new entrants is low due to high barriers; (2) the threat of substitutes is moderate as lotion remains essential; (3) buyer bargaining power is low as lotion is essential; (4) supplier bargaining power is moderate due to specialized ingredients; and (5) competitive rivalry is high in the skincare industry. Overall, the market is deemed attractive for Colgate to enter.

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    © All Rights Reserved
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    of 2

    Five Porter’s Forces:

    1. Threat to new entrants:


    - High capital requirement: cost of setting up a lotion production line and a
    sound supply chain is high.
    - Difficulty to access distribution channels
    - Cumulative experience requirement
    - Brand loyalty
    - Colgate is a giant in the industry with its toothpaste, this has allowed the
    company to accumulate market experience as well as build brand loyalty
    with its customers. Furthermore, the company has access to sound
    distribution channels and a resilient supply chain.
    - The threat of new entrants is low into this market, as the barriers to entry
    are high.
    2. Threat of Substitute products:
    - Moderate relative price difference
    - High level of differentiation
    - High number of substitute products are available: these include coconut
    oil, shea butter and cocoa butter, etc.
    - Moderate switching costs
    - The threat of substitute products is moderate, however the demand for
    lotion does not fluctuate as it remains an essential product.
    3. Bargaining power of Buyers:
    - High number of customers: big consumer pool
    - Highly differentiated
    - Moderate ability to substitute.
    - Low price sensitivity
    - The Bargaining power of buyers is low as it is an essential product.
    Colgate has an advantage over its competitors as the product has multiple
    benefits at an affordable price.
    4. Bargaining power of Suppliers:
    - Low availability of suppliers
    - High switching costs
    - Low ability to substitute ingredients used in the lotion production.
    - Essential specialised ingredients and raw materials required.
    - Economies of Scales
    - Colgate has a low economy of scale. Although the company has a cost
    advantage with the toothpaste because its production has become
    efficient. The lotion production line is only beginning, and the company has
    not yet established a cost advantage.
    5. Competitive Rivalry:
    - High quality differences
    - Wide diversity gap within the skincare industry
    - High Brand loyalty in the skincare industry
    - High number of competitors: these include both indirect and direct
    competitors for Colgate e.g., Epy Derm, Cetaphil, E45, Epimax
    - Barriers to entry are high.
    - Competitive rivalry is high. However, bringing in a new product line is
    Colgate’s way of innovating their brand, this will give them a competitive
    advantage and differentiate them from other toothpaste brands.
    Furthermore, while also focusing on customer satisfaction and experience.

    Force Rate
    Threat of new entrants LOW
    Threat of substitute products MODERATE
    Bargaining power of Buyers LOW
    Bargaining power of suppliers MODERATE
    Competitive Rivalry HIGH
    This market/industry is ATTRACTIVE

    Bibliography
    Magretta, J. (2012). Understanging Michael Porter: The essential guide to Competition and Strategy.
    Boston.

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