Porter s 5 forces analysis for luxury good industry Assignment

Porter s 5 forces analysis for luxury good industry - subsidization ExampleThey usually have commemorate loyalty and may not want to switch because the brand defines them. However, their preferences stomach shift very often, making it hard for the sure to meet their needs continually. As a result, firms in this industry have to work harder to be able to continually impress the guests with the latest innovations. This cost the firm very much, but they can dispirit their investment back because the customers ar willing to afford more dollars for the products, as long as they are happy with the product.The threat of substitutes is luxuriously for this sector because they are readily available. Furthermore, the luxury goods are not a necessity and so the buyers can easily lead without them. As a result, when the economy is not doing well, the luxury market is likely to suffer first and the most. In such a case, the buyers can easily switch to substitutes because the switching c ost is very low, or no switching cost at all. This makes it hard for the firms in this sector to have a strategic receipts over its customers. Firms in this industry are therefore hard pressed to make sure that the customer will not have the need to switch to an alternative because if they do not do that, they will easily lose their customers.One of the factors identified by Porter (1998) with regard to the strategic position of a business is the supplier bargaining power. For the luxury products sector, the suppliers do not have much bargaining power. This is because they can easily switch to other suppliers in an easy and efficient way without any significant cost. This way that the bargaining of suppliers is moderate, or even very weak in some instances. The firms can easily get the items being supplied by one supplier from almost any other supplier in the market. If the firm is able to buy in bulk, they even have an even bigger advantage. Usually, the number of suppliers is ve ry high ad this gives more bargaining power to the buyers and less power to the suppliers.