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Design and Porter's Five Forces Analysis

the competitive market

How competitive is the market  in which your design must live? Does it matter?  In this post, I will unpack five factors that help you measure how aggressive or competitive your design needs to be in order to help achieve effectiveness in the marketplace.

Before we go into the five factors, I would like to explain why your design work might need to consider competitive factors. 

No design lives in a vacuum

While maybe products may feel born in a vacuum, they do not go on to live in a vacuum. Even if you happen to be first to market, it is unlikely you will remain the only product like you in the market. So your design needs to take into consideration the type of marketplace where your product will likely live, or better yet thrive, going forward.

The marketplace is an ecosystem

Every product is born, lives and then dies within the marketplace. Some products seem to live eternally, but most of the time you are really looking at the ancestor of an earlier product. That is part of the ecosystem experience. In the LEAN business approach, products will often take a "shift" to retarget or repurpose the product. In this sense, they die and make way for a new product that has a greater chance of surviving longer in the ecosystem. In some instances, your product will thrive in a collaborative competitive environment where competition breeds growth and further innovation. And in other instances, your product may be destroyed by intense and aggressive business models. You need to know the difference from the earliest stages of design. 

Symbiotic versus Hostile environments

Not all environments are hostile. In some environments, and even sometimes in young markets, the entire ecosystem inspires healthy growth within competitors, growing a helpful symbiotic relationship where there is room for everyone.  But even in those environments, you need to know what differentiates your design from the design of other similar work. Whether you are advertising an event where your advertisement is competing with other events in the same timeframe targeting the same audience segment, or if you are launching a new product or service with a lot of competition, hostile or otherwise, you will want to know what makes you uniquely you and how aggressively the market presents those opportunities.

Porter's Five Forces

Michael Porter, an economist from the Midwest and professor at the Harvard Business School, wrote about these five forces that help you estimate the nature of the market for your design's competition. The analysis results in an understand for how intense or attractive an industry is in terms of how symbiotic or hostile the competition approaches new products entering that industry.

Again - you might just be promoting or advertising an event or a product, vs launching a new product, event or service. But your tone should match the scale of symbiotic vs hostile approaches, or risk being ostracized or annihilated in the marketplace. If you are too aggressive, you risk being rejected by your target audience. But if you are not aggressive enough, you risk being overtaken by your competition.

Here are the five factors to analyze:

Threats of new entrants

Is there a lot of competition? Will your design get lost in a huge selection of alternatives? How much do you need to understand in order to appropriately differentiate yourself? How many new competitors are there in a year?

Threats of substitutes

Substitutes are different from alternatives in that alternatives are substitutes, but not all substitutes are considered alternatives. For example, Kleenex facial tissue may have to take into consideration the alternative Puffs. But they also need to measure the possibility that buyers might consider Charmin toilet tissue or Bounty Paper Towel to be an aggressive substitute.

Bargaining power of buyers

Substitutes and alternatives, as well as the nature of the product itself, can be factors in giving buyers bargaining power. Is the product essential in sustaining human life? Is the market already variable in terms of pricing (e.g. negotiating the price of cars vs fixed-prices on small electronics.) For non-consumable designs, an alternative way to consider "bargaining power" is the ability for a "buyer" to avoid being presented with your design or presentation. If your advert sits above all urinals or across from toilet seats, then, unless the "buyer" is blind, you have a captive audience. If you are only advertising in a newspaper once on a Wednesday, then the opportunity to avoid your design altogether puts the power in the hands of the buyer.

Bargaining power of suppliers

Continuing the toilet advertisement scenario, if the toilet advertising market is saturated, do the business that own high traffic toilets set the prices for their toilets? The more traditional example would be to do with automobiles. Do the suppliers of metals and plastics have a high degree of supplier power in that designed car product might have a difficult time thriving in the market or maintain a predictable price?

Industry rivalry

Above we discussed knowing the count and rate of new alternatives and substitutes entering your target market segment. What about known hostile rivals? Are there known aggressive and hostile rivals that exist? What level of aggressiveness and hostility exists?

Summary - are you sharing and do people want what you are presenting

Inevitably - it all comes down to two factors: are the competition sharing data in the industry and does the target market segment really want what you are presenting? The more data is being shared and the more people want you, the more opportune it will be to enter the market. Alternatively, the less transparent and closed the competition is, and if your positive market segment is very small, then it will be riskier to enter the market.

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