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Porters five forces and the health club industry

Threat from Substitute Products Rivalry among the existing players. Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition.

Managers at Planet Fitness, Inc.

Porters five forces and the health club industry

How Planet Fitness, Inc. New products not only brings new customers to the fold but also give old customer a reason to buy Planet Fitness, Inc. By building economies of scale so that it can lower the fixed cost per unit. Building capacities and spending money on research and development. It significantly reduces the window of extraordinary profits for the new firms thus discourage new players in the industry.

Bargaining Power of Suppliers All most all the companies in the Sporting Activities industry buy their raw material from numerous suppliers. Suppliers in dominant position can decrease the margins Planet Fitness, Inc. Powerful suppliers in Services sector use their negotiating power to extract higher prices from the firms in Sporting Activities field.

The overall impact of higher supplier bargaining power is that it lowers the overall profitability of Sporting Activities. By experimenting with product designs using different materials so that if the prices go up of one raw material then company can shift to another. Developing dedicated suppliers whose business depends upon the firm. One of the lessons Planet Fitness, Inc.

Bargaining Power of Buyers Buyers are often a demanding lot. They want to buy the best offerings available by paying the minimum price as possible.

Planet Fitness, Inc. Porter Five Forces Analysis

This put pressure on Planet Fitness, Inc. The smaller and more powerful the customer base is of Planet Fitness, Inc. This will be helpful in two ways. It will reduce the bargaining power of the buyers plus it will provide an opportunity to the firm to streamline its sales and production process.

Brief overview of Planet Fitness, Inc.

By rapidly innovating new products. Customers often seek discounts and offerings on established products so if Planet Fitness, Inc.

New products will also reduce the defection of existing customers of Planet Fitness, Inc.

  • This will be helpful in two ways;
  • Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition;
  • Threat from Substitute Products Rivalry among the existing players;
  • This competition does take toll on the overall long term profitability of the organization;
  • Developing dedicated suppliers whose business depends upon the firm.

Threats of Substitute Products or Services When a new product or service meets a similar customer needs in different ways, industry profitability suffers. For example services like Dropbox and Google Drive are substitute to storage hardware drives.

The threat of a substitute product or service is high if it offers a value proposition that is uniquely different from present offerings of the industry.

Porters five forces and the health club industry

By understanding the core need of the customer rather than what the customer is buying. By increasing the switching cost for the customers. Rivalry among the Existing Competitors If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability of the industry. This competition does take toll on the overall long term profitability of the organization. By analyzing all the five competitive forces Planet Fitness, Inc. They can identify game changing trends early on and can swiftly respond to exploit the emerging opportunity.

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