The initial cost to enter the market is very costly to purchase all of the necessary equipment, licensing and the property. Franchising is also an easy way to enter the market. It is very likely that consumers will not go out of their way to get to you when they can settle for something closer or with easier accessibility. Threat of Substitute Products or Services: Limited. The primary threat was dairy co-ops transitioning from selling groups to processors. A perishability moat protected incumbents from geographic expansion. Such things to look for are your target markets characteristics and how they match up with the demographics. Threat of New Entrants: Milk processing was a capital-intensive industry with high production and distribution costs. You must pay attention to not only the demographics in your area as well as in surrounding areas. Most fast food options are easily accessible and usually in the middle of town or where ever there is lots of traffic and it’s in a convenient location. Demographics play a large role in the success of your firm. This is a cutthroat industry in the sense that all firms are trying to steal each other’s customers. The competition in the retail industry is quite fierce and intense. The new entrants can offer low-cost offerings with improved features for luring the customers. If a firm wants to be successful in this industry, large amounts of capital must be spent on advertising and marketing, simply because if people don’t know you exist in an industry you don’t stand a chance. New entrants will be able to learn from the mistakes of the existing players and may join the industry with improved strategies or corrective measures. New entrants in Processed & Packaged Goods brings innovation, new ways of doing things and put pressure on Kellogg Company through lower pricing strategy, reducing costs, and providing new value propositions to the customers. In order to capture the market they have spend tremendous amount of money on advertising and marketing. Kellogg Company Porter Five (5) Forces Analysis for Consumer Goods Industry Threats of New Entrants. The major barriers a firm faces in this industry are the economies of scale and the access to distribution.
All you need is a little capital and a good cook, and you’re in business. The reasoning behind this is that there are no set barriers or loops that could legally prevent a company from entering the industry. Threat of new entrants: If we decide to enter the market, then what is to stop others from doing the same In China’s fast food market, the threat from new entrants is fairly high. The threat of new entrants in the fast food industry are noted to be a strong summary assessment characteristic.