Don't just end it with 'competition has increased.' 5 perspectives to break down why things aren't selling.

Hello, this is Iguchi.

As a sole proprietor, I spend my days forming and testing hypotheses while exploring methods for web attraction and sales promotion that can be practiced even with small capital.

In this note, I focus on marketing terms that you might have heard of, but are often used in a vague way. Based on my own research and practical experience, I have summarized them in the simplest language possible.

I would be happy if even those who are not good with technical terms could think, 'I see, so that's what it means.'

When you continue in business, don't you sometimes feel, 'Lately, rivals have been increasing...' or 'I feel like sales are just hard to grow'?

I was the same.
I spent a long time fumbling around without knowing where the problem lay.

That was when I encountered 'Porter's Five Forces'.

At first, I thought it sounded like a difficult term, but when I looked it up, it was like a map for visualizing the power dynamics happening in an industry.

In this article, while breaking down the technical terms, I will talk about how the 'Five Forces' can become an ally for us sole proprietors and freelancers, along with familiar examples.

By the time you finish reading this article, the 'position' of your own business should become a little clearer.

It was about the 'five factors of competition'!

When I looked up 'Porter's Five Forces,' I found out that it is a 'competitive strategy framework' proposed by Professor Michael E. Porter of Harvard University.

It is a tool for analyzing 'the five competitive factors that determine the profitability of an industry'

.Simply put, I understood it as a way of thinking to determine 'how easy it is to make a profit in an industry you are about to enter or are already active in, and how intense the competition is'

.These 'five competitive factors' specifically refer to the following elements.

• Threat of new entrants: The degree to which existing companies are exposed to competition as new companies enter the market.

• Bargaining power of buyers: The power of customers (buyers) to negotiate on price, quality, and service. If this is strong, it becomes difficult for companies to make a profit.

• Bargaining power of suppliers: The power of suppliers (sellers) to set high prices for raw materials or services, or to control quality against companies. If this is strong, the company's costs increase.

• Threat of substitutes: The possibility that the company's competitiveness will decline due to the emergence of 'substitutes' that are different from the company's products or services but can satisfy similar needs.

• Intensity of competitive rivalry: The intensity of competition among companies already operating within the same industry. This includes price competition and advertising competition.

By thoroughly analyzing these five factors, it seems you can discover the threats your business will face, or conversely, find opportunities.

I see, doesn't this seem like it could be a very strong ally for us sole proprietors?

Let's replace it with a familiar convenience store!

To understand these five factors more intuitively, let's think about them with a familiar example.
For example, imagine a 'neighborhood convenience store'.

1. Threat of new entrants: 'A new convenience store suddenly opened right nearby!' This is the threat of new entry. You might have customers stolen, and price competition might become intense.

2. Buyer power: This refers to the power of customers to say, 'This bento is a bit expensive,' and go to another shop, or to negotiate by saying, 'I'm buying a lot, so give me a discount.' If we are the ones selling, it becomes harder to make a profit when customers are strong.

3. Supplier power: This is the case when a manufacturer supplying products to a convenience store says, 'This is a popular product, so we'll be in trouble if you don't buy it at a higher price.' For the purchasing side (the convenience store), costs go up, don't they?

4. Threat of substitutes: This is the case where you thought about buying lunch at a convenience store, but went to a bakery or supermarket instead because they are cheaper and have more variety. This is a state where 'substitutes' are threatening our business.

5. Competitive rivalry: This is a situation like, 'We are always in a price war over rice balls with the convenience store next door.' It's about how intensely you are competing with rivals in the same industry.

What do you think?

Looking at it this way, don't you feel that 'there are many 5 Forces around us too'?

How do we as freelancers use the '5 Forces'?

Now, let's think about how we, as sole proprietors and freelancers, can specifically apply these '5 Forces' to our own businesses.

For example, suppose I am thinking about specializing in a new field as a Web writer.

1. Threat of new entrants: 'This field is popular lately, so it seems like rivals will increase from now on. How should I differentiate myself?'

2. Buyer power (clients): 'Clients might say, 'Other writers are cheaper.' What is my unique strength?'

3. Supplier power (if I am the one hiring): 'If I ask an expert to structure an article, and that expert is very popular, they might not accept my offer price.'

4. Threat of substitutes: 'Instead of outsourcing articles, clients might use AI tools or have internal staff write them. How can I provide added value that AI cannot?'

5. Competitive rivalry: 'How can I make my presence felt among many veteran writers in the same specialized field?'

In this way, you can objectively analyze the situation you are in or the market you are about to enter.

This is a much smarter choice than charging ahead blindly, isn't it?
It should bring not only your weaknesses but also your strengths and opportunities to the surface.

Summary: What I realized by learning this

What I felt after learning 'Porter's 5 Forces' was 'the importance of stopping for a moment and looking around before starting your own business.' It's not bad to just run ahead thinking 'I can do it!', but I realized that grasping risks and opportunities in advance using frameworks like this is a shortcut to success.

Especially for us sole proprietors and freelancers, we don't have the resources that large companies do.

That is precisely why I want to use this wisdom to conduct business as efficiently and advantageously as possible.

Why don't you try applying 'Porter's 5 Forces' to your own business as well?

You will surely have new discoveries!

Thank you for reading until the end.

I would be happy if this article led to a small realization like 'I see, that's what it was!' or a hint for your ideas.

Following me would be a great encouragement.
I will follow back as well ^^