Porters Five Forces in a Marketing Strategy


We will be looking at how we can implement Michael Porters Five Forces into a marketing strategy and use it effectively.

Porters Five Forces in Short

Michael Eugene Porter is an American Academic who is the Bishop William Lawrence University Professor at the University of Harvard.

Porter has, as of this article release date, released 19 books and 130 articles in total.

As Porters first article on the Harvard Business Review, he wrote an article that would change everything, titled “How Competitive Forces Shape Strategy”.

This article highlighted on Five Forces of Porters that shaped all industries in the capitalist world.

The Five Forces are as follows:

  1. Bargaining Power of Buyers - If opportunity to shift within providers for a product / service is easy. And, also if a service provider is too costly for the buyer to make use of.
  2. Rivalry Among Existing Competitors – If you’re looking to get into an industry and the existing ecosystem is quite hostile. Additionally, if the industry growth is slow and if the exit barriers are high, rivalry is also worst.
  3. Threat of New Entrants – Contrary to the previous force mentioned. This force looks at when new blood comes into an industry. Which you exist in and challenges the current players to bring down its prices and increase their marketing budget.
  4. Bargaining Power of Suppliers – Suppliers can demand a higher price of their product. If supply is low and demand is high.
  5. Threat of Substitute – Some industries face the immense pressure of external innovation. If a new product / invention comes that substitutes their existing services. Example the online video conferencing industry reducing the sales of the travel industry. This happens if the substitute delivers a better price performance.

So the Porters Five Forces cover a wide range of aspects for a business to look into, either before or after entering an industry.

So, let’s take a look at the integration part first, shall we.

Integrating Porters Five Forces into a Marketing Plan

First of all, we need to be able to segment the individual aspects of a marketing plan and look at how the impact of the five forces work on each.

We’ll be doing this using a Radar Chart, and assess the criticality of each force for each element.

Market Research

Radar Chart of Porters Five Forces on Market Research

The Chart above speaks for itself in showing which of porters five forces are strongest when considering market research for an industry.

Obviously the highest consideration in this is the Power of the Buyer, which signifies an importance on consumer power.

If your potential consumers in an industry have multiple substitutes and are capable of shifting away from provider to provider with ease.

Your marketing plan should take it into action as well, by conducting data gathering practices that reflect on what features are missing for your buyers, that could be introduced newly to satisfy them.

Rivalry and Threat of Substitution come in as second and third, due to the fact that a market research must heavily inquire into these aspects.

We can analyze the potential for our product to be out-maneuvered by another, and also the potential threat the competition might serve.

Key Performance Indicators

Radar Chart of Porters Five Forces on KPIs

Key Performance Indicators tell a great detail about how our progress is going.

KPI’s define the five forces in the sense that they can include every aspect of the five forces together.

How an organization includes porters five forces in their KPI tracking is left to them, especially given that there are many.

In the graph above I’ve given each force an average of 80%, with power of buyer as an exception.

Given that regardless of what industry you’re working on. It’s important to involve consumer interest tracking into your kpis.

For further reading, I have written an article on 7 defining kpis that can be used for performance tracking.

Promotional Activities

Radar Chart of Porters Five Forces on Promotional Activities

Substitution has no role to play with promotional activities such as digital and TV ads.

But, there are still some of the porters five forces that are strong in conducting promotions.

New Entries can pose a threat to the brand awareness of your organization. Making it essential to increase ad expenditure to overshadow the newcomer.

Rivalry can also determine which provider the buyer goes for making it affect both the force of rivalry and the power of the buyer.

And by taking these into condition, we can identify how to keep track of our brand awareness across platforms.

Lastly, Supplier can also trigger the expenditure of your promotional budget and cut down on marketing expenses.

In Conclusion

By analyzing the Five Forces written by Michael Porters Harvard Business Review Article. We were able to identify some defining aspects of what it takes to create our marketing plan.

Keep in mind that implementing Porters Five Forces to a marketing plan is only a suggestion. And not necessarily compulsory.

But by implementing the genius outlook of how competitive strategy works in the industrial business, into our marketing plan. We can draw out different perspectives and bring the best in our marketing strategy overall.

In this article i have mentioned only three elements of a marketing plan laid out on a Radar Chart, along with an explanation.

But I’d like you to try and figure out how you may be able to apply Porters Five Forces, into your marketing plan.

Our Recent Articles