The Porters Five Force Analysis

High school
Research Paper
Pages 8 (2008 words)
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As the premium car segment caters to the elite and the fortunate few who can afford this luxury, pricing has not yet become the source of competition. Top brands such as Audi, BMW and Mercedes Benz are more immune than their economy counterparts to price wars as they draw interest from the upper crust.


Product innovation and wider range of products is another platform for competition. Companies need to expand their reach to cater to more and more customers, both geographically and demographically. Competition will intensify in relation to environmental measures and energy use, as customers' attitudes to the environment become gradually more important. In this scenario, basic technological trends will lead to a variety of technical vehicle-related innovations.
With the shift in focus to customer retention and loyalty, companies now have to invest in better customer service to ensure customer satisfaction. Better service also includes better geographical advantage to serve where the customers are located.
There is little bargaining power for buyers in the luxury car segment as there are numerous buyers scattered all around the globe. There is better transparency and huge amounts of information available to buyers regarding the pricing and cost of manufacture of cars and hence they have some leverage in negotiating the purchasing price. This advantage is mostly over-ridden by the fact that buyers for this segment are mostly individuals and are not grouped together for a collective advantage. Since luxury cars are sold typically by the company or direct dealers, there are few players in the distribution channel at present. ...
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