Five porter’s model was a concept explained by Michael Porter which aims at explaining the relationship which occurs between competitors in a particular industry, potential competitors, suppliers, buyers and possible solutions to available at the moment (Kurtz, 2011). Cell phone market is one which is faced with a lot of competition as the there are so many new entrants in the market. The market is very much concentrated. The market segment chosen for this paper is that of the Apple’s iPhone. Potential entrants are those competitors who are making the same products who are likely to enter the market (Kurtz, 2011). The potential new entrants include Verizon Wireless, Cingular Wireless, AT&T Wireless, Sprint Wireless, Nextel Wireless, T-Mobile Wireless, Nokia, Motorola, Alcatel, LG, Samsung, and BlackBerry among others. These can be new entrants in the market where they were not initially there. These will only depend on their power as iPhone has established its market.
Suppliers in the cell phone market are those who provide raw materials, raw materials and other components for sale. If the supplier is powerful, they can try to capture some of the profit. Due to reliance on the suppliers, there is a buyer-supplier relationship between Apple and those industries which provide the raw materials (Kurtz, 2011). The powerful suppliers extract profit by selling raw materials at higher prices. For Apple, the raw materials used to make iPhone, that is the software, and hardware are developed and owned by Apple hence it is not affected by the powerful suppliers.
Buyers are important for a cell phone market and their power depend on how many they are. One buyer and many suppliers sets price at the desired level (Kurtz, 2011). The price of Apple’s iPhone is high compared to models offered by other companies which make buyers go for other cheaper models. Therefore Apple’s iPhone buyers are more powerful due to availability of cheaper alternatives.
Substitutes are available if there are cheaper products and of higher quality (Kurtz, 2011). Though iPhone is different due to its multi-touch screen, there is a threat of substitutes as other companies may be able to provide similar products.
The market size of the cell phone industry is growing extensively since every body is using cell phones globally (Kurtz, 2011). With the innovations in the technology, the market is increasing. The Apple’s iPhone have a high market segment due to its features.
Kurtz, D. (2011). Contemporary Marketing 2011. Boulevard, South-Western Cengage Learning.