Threat of new entrants
Porter said that if the barriers to entry are low then new entrants will be attracted by any rise in industry profitability (Gordon Pearson, 1999). Applied to the Company, it has been created and developed a niche market sector for naturally inspired skin and hair care products by introducing the benefits of natural ingredients to personal care products. But the natural ingredients seem to be not the only core technology of the Company, concept was copied by other competitors in the years to come like Bath & Body. However, the Company still has retained high brand recognition and gained competitive advantages on the good relationship with the long-term suppliers of raw materials in the third world countries under the project of “Trade Not Aid” and “the Soapworks Project” and on the unique ethic values it promoted.
According to Body Shop, firstly, through 28 years hardship, body shop established a strong image with good reputation by the customers, so for the new entrant it is not easy to build up a strong brand loyalty in short time. Besides, through advocating fair community trade, body shop formed good relationship with the long-term suppliers of raw materials in the 3rd word countries, which is more like a friendship than a partner in business environment and cannot be imitated by new entrants. In addition, body shop share a developed Distribution channel through its own franchise system and appropriate technology of natural ingredients against animal test, all of above set big barriers for new entrants.
On the contrary, the existing products of body shop are becoming more and more homogenous. For the reason that the natural ingredients seem to be not the only core technology of body shop, for instance the big competitors Bath & Body works with huge resource had entered the cosmetic market in the middle of 90th with similar natural cosmetic products. Because of lack of innovation in new product, designing, packing,...