(I) Introduction to Porter’s Five Forces Model
In meso-level research, the theoretical framework we can refer to is Porter’s Five Forces Model, also known as Porter’s Competitiveness Model. This model was proposed by Michael Porter in the early 1980s for competitive strategy analysis, which can effectively analyze the customer competition environment. The five forces are: the bargaining power of suppliers, the bargaining power of buyers, the ability of potential competitors to enter, the substitution ability of substitutes, and the current competitiveness of competitors in the industry. We can use this model to analyze the competitive pressure of the target object, and in the process of cross-border e-commerce marketing, we can also refer to the indicators of this model to scientifically and systematically understand the overall situation of the industry.
We will find that the bargaining power of suppliers, the ability of potential competitors to enter, the substitution ability of substitutes, and the current competitiveness of competitors in the industry all belong to industry research, while the bargaining power of buyers belongs to consumer research. Consumer research involves macro, meso and micro levels. Macro research focuses on the structural and trend data of consumers, such as the total population, the number of each age group and the development trend; meso research focuses on the number and intention of a certain group of consumers; micro research focuses on individual consumer behavior patterns and preferences.
(II) Contents of Porter’s Five Forces Model Analysis
Referring to the five indicators of Porter’s Five Forces Analysis Model, we can start from the following aspects when conducting meso research:
1. Analyze suppliers
For cross-border e-commerce sellers, suppliers refer to companies and individuals that provide products or raw materials to enterprises and their competitors, mainly selling products. For some companies, they also provide raw materials, equipment, energy, labor, funds, etc. The price and supply of resources provided by suppliers directly affect the price, sales volume and profit of enterprise products. The main contents of supplier research include: the number of suppliers, brand awareness and status of suppliers, product features, production capacity and sales scope, supplier industry chain, supply stability, price trends, willingness to participate in supply chain integration, etc.
2. Analyze new entrants
Enterprises that have newly entered the industry may compete with existing enterprises for raw materials and market share, which may eventually lead to a decrease in the profitability of existing enterprises in the industry. In serious cases, it may even endanger the survival of these enterprises. The main contents of the research on new entrants include industry entry barriers, the reaction patterns of existing enterprises to new entrants, etc.
3. Analyze substitutes
Two enterprises in different industries may compete with each other because the products they produce are substitutes for each other. The lower the price of the substitute, the better the quality, and the lower the user conversion cost, the stronger the competitive pressure it can generate. The main contents of the research on substitutes include sales growth rate, production capacity of substitute manufacturers and profit expansion.
4. Analyze competitors
(1) Identify competitors. First, you need to understand the profile of competitors, including who is the biggest competitor, how many competitors there are, and what are the main advantages and disadvantages of competitors. Then determine your main competitors from different levels and find your own positioning. Generally speaking, there are four levels of competitors:
1) Brand competitors. When other companies provide similar products and services to the same consumers at similar prices, the company regards them as competitors.
2) Industry competitors. Companies that manufacture the same or similar products can be broadly regarded as competitors.
3) Form competitors. All companies that manufacture and provide the same services can be more broadly regarded as competitors.
4) General competitors. All people who compete for the same consumers can be more broadly regarded as competitors.
(2) Identify competitors. Competitor analysis should follow a path from broad to specific, gradually clarifying the competitive relationship. The most important thing is to identify competitors that affect the survival of the company. Specifically, you can use the data reports automatically generated by the background of each platform, as well as the paid tools that can provide the platform’s historical sales, to understand the sales data, shopping cart data, favorites data, etc. of competitors, so as to finally identify competitors.
(3) Analyze the goals and strategies of competitors. Competitors usually have the following goals: market share growth, traffic leadership, technology leadership, and service leadership. To understand whether competitors are satisfied with their current “position”, such as the current profit level, market share, degree of technological or service innovation, and competitors’ goals for different product market segments.
(4) Analyze competitors’ strengths and weaknesses. Enterprises should fully consider and evaluate the strengths and weaknesses of each competitor. They can collect key information about competitors in the past few years, such as sales, market share, profit margin, cash flow, brand awareness, technology patents, etc. Among them, three variables must be focused on:
1) Market share. Measure the sales share of competitors in the relevant market.
2) Psychological share. This is the percentage of customers who nominate competitors among all customers when answering the question “Please name a company that you think of first in this industry.”
3) Emotional share. This is the percentage of customers who nominate competitors among all customers when answering the question “Please name a company whose products you like to buy.”
(5) Evaluate competitors’ response patterns. Each competitor will respond to the opponent’s actions such as price cuts, increased promotions or new product launches based on its own business philosophy, and the company needs to adjust its strategy at any time according to the competitor’s reaction pattern.
(6) Select competitor strategy. After analyzing the competition, formulate a corresponding competition strategy. Generally, find areas where competitors are weak and the company can improve itself, and take effective actions to obtain more returns.
5. Analyze the idea of buyer strategy
Buyers are customers, that is, target markets. Focus on the number of consumer groups, overall intentions and trends, and match their purchasing power.