1 minute read
PORTERS 5 FORCES
Threat of New Entrants
TT&WH are under threat from new entrants. New skincare brands or extension lines from other brands are regularly entering the market. New entrants could encourage TT&WH’s current customers away from the brand. To ensure this does not happen the brand needs to develop a loyal consumer base. Therefore this will be high risk.
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Threat of Substitute Products
The skincare market is highly saturated. Due to the fact that TT&WH focus on two key ingredients, the threat of substitute products is high. Other tea tree lines are available from Superdrug, Kiehl’s, The Body Shop and Dr Organic, to name a few. Therefore TT&WH have minimal power in this section due to the large risk of substitution. TT&WH need to stay on top of the game with innovations to create and maintain customer loyalty. Therefore this will be high risk.
Competitive Power/Rivalry
TT&WH face competition regarding price and product amongst consumers. Consumers are likely to shop around and choose a product to suit their price point. For many consumers, TT&WH’s relatively low price point will suit their need. This gives TT&WH power in this section as most other tea tree lines are at a higher price point. Therefore this will be low risk.
Bargaining Power of Supplier
Due to the nature of ingredients used being natural, there will not be a vast amount of suppliers, meaning TT&WH cannot switch suppliers quickly or easily giving the supplier great power. This could be an issue as the supplier could increase prices meaning TT&WH would have to push their product prices higher which would have a negative impact on the consumer. Therefore this will be high risk.
Bargaining Power of Buyer
Due to the nature of skin care products being used daily, a regular user of TT&WH’s products will regularly be purchasing which means they can easily substitute for other products. There will be no switching cost to the consumer as they would merely buy elsewhere making switching brands even more attainable. Due to the ease for the consumer to switch products or use other brands gives the buyer huge power over the brand. TT&WH need to create a strong, loyal customer base to prevent customers from turning to other brands. Therefore this will be high risk.
