Threat of substitute products or services Inside of industry, the major competitive advantages belong to the brand creation and the customer acceptance by consumer behavior and loyalty. In reality, most of major multinational consumer product maker setting new product to against existing product in the market to alternative the private or competing company product. Outside of industry, there almost no substitute product at all. As Jamie Generate (Deutsche bank) announced “Internet killed the CD, but it is difficult to imagine what hinges can kill the consumer goods as food and beverage”.
Bargaining power of customers (buyers) Without monopoly condition, the customer has weaken power to against Product Company in both price and quality, however, the agreement of population could improve the debate to government allocate new price or quality to company if some emergency happened or product unacceptable. The easier of information acquire, the greater power individual to change another brand. On another hand, another major player, retailer has a great power to negotiate price and quality. The huge emend and sell quantity increase their power differ to individuals.
Bargaining power of suppliers Most strong company control large demand in material to suppliers, the suppliers hold a power to change price and support quantity. Such as P&G parts the supplier into company supply chain, which will incur a switching cost when consider a little increase of material price. In summary, the power in both side is limit because the player is limit. Intensity of competitive rivalry The industry is in highly rivalry market. The profit ratio modify a competition power among different companies.
The customer switch cost almost zero verse millions of brand advertising cost. Big company creating hundreds different bands in the market in different income segment with huge marking investment. Key Factors Impact & Change Consumer Goods Industry When chosen daily product, customers will find that there always be a little difference on a similar product in quality and price. What will be the key to impact the consumer goods industry? Changing of Consumer Demand: The consumer demand has a rapidly change in recent years, tends from price elastic to health preference and sustainable options.
Consequently, the economic Latinity affect customer behavior with unique and unquenchable data to historical condition. Traditional market research is limit to solving the change in simple ways. Profit Pressure and Globalization Economy: With global competition, companies confront the material price increase, customer information acquiring and global price limit. The increase the quality increase speed slower than both the price increase and the R&D invest, the logistics cost as oil price increase, which all challenge and most affect the industry (Benson, Creak, Keller, 2011).
Moreover, the global network suppliers will reduce cost but increase risk in reduce safety. In 2011, U. S. FSML (food safety modernization act) emphasis on upstream visibility to change the U. S. Food processing. Compliance and Regulatory Pressures: The developing countries as the most attractive market are changing the regulations more strict. The government could identify a higher price as major company alliance. As the improvement of quality level in China and EX. market regulators announced 315. 2 million euros antitrust fine to P&G and Milliner.