StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Porter's Five Forces Model for Luxury Goods Industry - Assignment Example

Cite this document
Summary
This paper "Porter's Five Forces Model for Luxury Goods Industry" examines the five forces that firms are likely to face in their industry. Due to the Internet, customers have become more demanding in regard to the information provided to them for the ‘quality and price of luxury products’…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.6% of users find it useful
Porters Five Forces Model for Luxury Goods Industry
Read Text Preview

Extract of sample "Porter's Five Forces Model for Luxury Goods Industry"

customers in the industry are likely to have ‘higher expectations’ (Deloitte 2014, p.10) as of the quality of the luxury products; this trend also has been related to the potential of customers to search online for the exact characteristics of the luxury products (Deloitte 2014) – H

Social Media has empowered consumers in all industries, including in the luxury goods industry; because of the feeling that they can secure the support of many other people in regard to their rights, as consumers, customers in the luxury brand industry have become more powerful to influence the industry’s strategies (Deloitte 2014) – H

Customers in the luxury brand industry seem to prefer ‘online purchase’ (Deloitte 2014), a fact that needs to be taken into consideration by the managers of the luxury brands (Deloitte 2014) - H

 

 

 

 

Slide 4

Bargaining power of Suppliers

The number of the industry’s suppliers tends to be continuously decreased due to the acquisition of the relevant firms by the most powerful luxury brands (Luxury Society, 2012) - H

Certain countries prefer to focus on luxury products based on local materials; India is an example (Luxury Society 2012) - L

Suppliers who have access to fine materials/ pieces have become quite valuable, as a result of the industry’s turn to timepieces (Luxury Society 2012) - H

 

Slide 5

Pressure from Substitute Products

Since 2012 an important trend has appeared in the luxury goods industry: the emphasis is given to ‘fine jewelry’ (Luxury Society 2012, par.13) and not on ‘seasonal accessories’ (Luxury Society 2012, par.13). Louis Vuitton has been the luxury brand that first supported this trend; Richemont Group, the owner of popular brands such as Cartier, had followed (Luxury Society 2012) - L

Popular luxury brands have taken action against those who try to develop cheap substitutes of their products; for example, in a relevant lawsuit the courts ordered the owners of a series of websites that have developed such activity to pay an amount of $100 million to Hermes (Luxury Society 2012) - L

In any case, luxury products are, by their nature, related to costly materials; the high cost of these products prevents those who would like to create substitute products of low price (Luxury Society 2012) - L

 

Slide 6

Competition

The industry’s competitors would have to face the following challenges:

  1. a) continuous turbulence in markets worldwide; downturns in the performance of markets have been proved as able to affect the buying power of the industry’s customers (Paton and Sanderson 2014); only the brands that can secure high quality, innovation, and uniqueness of their products are able to secure their market position - H
  2. b) exchange rates tend to change constantly; this phenomenon causes delays to the industry’s growth (D’Arpizio 2013) - L
  3. c) in 2012, a major part of the industry’s growth, about 28%, was achieved through ‘online sales’ (D’Arpizio 2013, par.11) - H
  4. d) the industry’s complexity has been increased (D’Arpizio 2013), a fact that has resulted in the increase of competition (D’Arpizio 2013) - H

 

Slide 7

New Entrants

The rate of development of the luxury goods industry is satisfactory but unstable; the strong turbulences in the international market are considered as the key reason for this phenomenon. The industry’s high instability would discourage new entrants to enter the luxury goods industry (Blog Euromonitor 2013) - L

Also, the increase in the popularity of timepieces, i.e. on luxury products that can have a long life, has led to the increase of luxury products based on costly materials; new entrants would find it difficult to compete in the industry since the capital available for responding to the industry’s manufacturing costs would be high (Paton and Sanderson 2014) - L

The industry is characterized by the dominance of specific brands; new entrants would have to invest high amounts in order to establish their position in their market (Paton and Sanderson 2014) - L

 

Slide 8 – Assessment of the industry’s attractiveness

For now: the industry seems to be quite attractive

In 2-3 years: the industry’s growth would be stable

In 10 years: the attractiveness of the industry would be assessed by checking the economic performance of markets worldwide at that period of time; in any case, risks are expected to be increased, especially due to high competition and the extremely high power of customers

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Porter's Five Forces Model for Luxury Goods Industry Assignment, n.d.)
Porter's Five Forces Model for Luxury Goods Industry Assignment. Retrieved from https://studentshare.org/marketing/1654958-luxury-goods-industry-porters-five-forces-model
(Porter'S Five Forces Model for Luxury Goods Industry Assignment)
Porter'S Five Forces Model for Luxury Goods Industry Assignment. https://studentshare.org/marketing/1654958-luxury-goods-industry-porters-five-forces-model.
“Porter'S Five Forces Model for Luxury Goods Industry Assignment”. https://studentshare.org/marketing/1654958-luxury-goods-industry-porters-five-forces-model.
  • Cited: 8 times

CHECK THESE SAMPLES OF Porter's Five Forces Model for Luxury Goods Industry

Michael Kors Business Strategy and Policy

In the analysis of Michael Kors's business strategy in the fashion industry through the Porters five forces model, we will consider the following competitive forces of the company: Threat of entry by emerging or new competitors Intensity of rivalry among the competitors Pressure from the available substitute products Supplier bargaining power Bargaining power of customers These five forces in the Porters Model taken together provide insight into the competitive position of Michael Kors Company in the fashion industry as well as its profitability Rivals in the fashion industry are the existing competitors in the market....
6 Pages (1500 words) Essay

A Marketing Analysis of Italian Wine in the Chinese Market

This middle income group in China makes very high demand for luxury goods in the international market (Zhou, 2010).... A Marketing analysis of Italian wine in the Chinese market Findings and discussion Table of Contents 1 Findings and analysis 3 PESTLE analysis 3 SWOT analysis 7 porter's five forces analysis 11 Marketing mix 4C analysis 16 Summary of findings 18 Reference List 19 Findings and analysis PESTLE analysis The PESTEL model would help to analyze the macro environment in China in which the liquor and wine industry operates....
15 Pages (3750 words) Dissertation

A critical assessment of marketing analysis tools

porter's five forces model The configuration of porter's five forces differs from industry to industry.... Companies are often challenged externally or internally to examine their positioning in the given marketplace, business or industry.... To complement this, a multitude of models and theories have been established … A Critical Assessment of Marketing Analysis Tools Background Companies are often challenged externally or internally to examine their positioning in the given marketplace, business or industry....
5 Pages (1250 words) Essay

Porters Analysis of the Chinese E-Commerce Industry

This paper focuses on the analysis of the Chinese E-Commerce industry with porter's five forces model.... Porter believed that it was possible to determine the attractiveness of the industry by looking at some of the external factors.... nbsp; The interaction is of great importance and critical when it comes to determining the competitive extent of a business in a given industry.... (Snier & Henk 1995)Any competition rivalry that exists among firms in an industry is the level by which the firm responds to various competitive moves of other firms that are in the industry....
10 Pages (2500 words) Coursework

Michael Porters Five Forces

There are 5 forces that always shape the competitive structure of an industry: Supplier Power, Barriers to Entry, The Threat of Substitutes, Buyer Power, and Industry Rivalry. In the following paper the example of online university as a part of a strategic group within the larger context of "universities" will be considered to research the porter's five forces model.... The theory of five forces model along with practical analysis is combined in each of Porter's discussion within the chosen industry....
6 Pages (1500 words) Essay

The Porters Five Forces Competition Model

The paper “The porter's five forces Competition Model” evaluates the porter's five forces Competition Model in the fine fragrance industry.... hellip; The author states that since the government is protecting the industry because of the high tax rate imposed on fine fragrances, it would be harder for the consumers to have a bargaining power over the price of related products.... Since the government is protecting the industry because of the high tax rate imposed on fine fragrances, it would be harder for the consumers to have a bargaining power over the price of related products....
5 Pages (1250 words) Essay

The Presence of the Airline Industry Infrastructure and the Status of Prime Importance

This report focuses on the universal Airline industry.... The analysis of the nature of the airline industry is done by using strategic management frameworks.... This report basically demonstrates the functionality of the airline industry and also affirms the rate of competition.... hellip; The purpose of this report is to analyze the airline industry using the strategic tools of Porter's 5 forces, PESTLE, and the SWOT analysis....
17 Pages (4250 words) Research Paper

Strategic Management

Italian Fashion industry features multi-brand firms that require a collaboration of competencies, style, and entrepreneurial strategies destined to impress the customers.... The strategy that a firm decides to implement will depend on the legitimacy and resources it has in the Italian Fashion industry.... Every firm gets to launch itself in the industry differently.... According to Capello & Ravasi (2009), Aeffe acquired Calzaturificio to acquire the market for shoes and leather goods....
8 Pages (2000 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us