One of the key pieces of the marketing plan for an organization is the examination of competitors in the market. It allows the company to set effective strategies, implementation plan, and reassessing the company’s position afterwards. The competitive analysis for SoundApp was completed through primarily Porter’s Five Competitive Forces – a framework that evaluates the competitive severity or volume in the market. Porter’s Five Competitive forces includes: the bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threat of substitute products, and the competitive rivalry within the industry. Through this analysis, it helps determine the attractiveness and profitability of the industry.
Bargaining Power of Suppliers
Suppliers that have significant power can attain more value for their work by commanding higher fees, restricting quality or services, or transferring costs to other participants in the industry. Thus, the power of the supplier depends on their ability extract greater wealth from their customers for less. The power of the supplier also depends on the concentration of the supplier market. This means the number of suppliers that are available in the industry. In the case of SoundApp, the supplier would be developer of the app. The developer would not only be creating the app, but would also be assisting with the debugging throughout the life cycle of our app. In this case, the bargaining power of app developer seems to be fairly small. Firstly, there are many app developers available to create and perpetually debug the app. According to a study done by AppStoreHQ, there are 43,185 registered iOS (Apple) developers and 10,199 Android app developers. Based on this study, it is evident that there are numerous app developers available to help create our product as well as help the constant debugging of the application. Seeing that there are copious developers offering services, it is reasonably apparent that the bargaining power of a single supplier is negligible. Additionally, the lack of bargaining power of the supplier is also evident through the fees charged by the various developers. Based on research done, the fees for app developers range from $50 an hour to $200 an hour. Seeing that there are an abundant amount of developers charging various rates for their services, it can be said that there will be not only very little bargaining power for suppliers, but also more bargaining power for our company SoundApp. Based on these points, it is apparent that the bargaining power of the supplier is trivial.
Bargaining Power of Buyers
On the opposite side of the spectrum to suppliers is the bargaining power of buyers. Customers that are influential and powerful can obtain more value by attaining lower prices and insisting on better quality products. Thus, powerful buyers or customers add value for themselves at the expense of the company. The bargaining power of buyers can vary depending on the number of buyers in the market and buyers’ sensitivity to the price of the product. In the case of SoundApp, there is very little to no bargaining power for buyers/customers. First of all, one factor in determining the bargaining power of buyers/customers is the number of buyers/customers there are for the product. With more than 100 million users for iPhone and Blackberry and Android leading the Smartphone market, there is large number of buyers in app markets associated with each of these Smartphones. With many of these Smartphone users also use these devices to listen to music, there is a large potential market for our product, SoundApp. In addition, these buyers are individual, distinct customers and not large, volume customers who will try to bargain or negotiate for lower prices. The second factor that affects the bargaining power of the buyer is the price sensitivity of the buyer which is dependent upon the price of the product. The price of SoundApp is very...
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