Porters Five Forces Model Analysis On Toothpaste

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Porters Five Forces Model Analysis on Toothpaste

Threats of New Entrants
• Define: the threat new competitors constitute on preexisting competitors in an industry
• By increasing successful and ideal operations and strengthening relationships with their customers, companies existing in this market diminish the significance of threat over newly accepted competitors. Toothpaste companies are still growing strongly, therefore additional firms are trying to enter the market to benefit from the increasing profits. However, most toothpaste companies have already made their name and their customers stay loyal to their brand, therefore it is hard to get into this market. With toothpaste being such a popular item and an essential in households,
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Bargaining Power of Suppliers
• Define: Pressure suppliers can put onto their customers by increasing prices, decreasing the quality of items, and minimizing availability
• Toothpaste manufacturers depend on outside sources for their caps, tubs, and ingredients to produce toothpaste. If for some reason one of these items are not available it may affect production of the item. Because of this, supplies depend heavily on their outside sources and have a huge impact on the production of the product. There is a high level of competition amongst suppliers which aids in reducing the prices to producers. Reducing the prices to producers also reduces the price to consumers. There are many suppliers in this market which allows multiple firms to prosper without stealing market from another business. As a consumer in this market, if one company has issues collecting materials, increases prices, or alters the quality of the item, I am always able to switch over to another brand.
• Environment in this force is medium to low competitive wise.

Bargaining Power of Buyers
• Define: Pressure consumers can put on businesses to get them to supply better quality products, superior customer service, and decreased prices.
• The buyers in this sector are individual households. People use toothpaste for their own personal use. “The customer power is magnified when the market has many sellers and fewer customers. The switching cost from one seller to another is another

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