Thursday, November 26, 2015

Porter’s Five Forces Analysis of Anti Ageing Industry in UAE


  Bargaining Power of Suppliers
In the anti-aging market the bargaining power of suppliers/distributor’s is very high as the company/brands depend upon their reliable and robust distribution network to make sure that their product is available at the right place at the right time. In Dubai with the increasing number of mom and pop shops it is important for the companies to make their product visible and available at the nearby stores for their customers. Since at the price level almost all products are similar, hence the availability and positioning of your product at eye-level is a very important factor in influencing the buying decision of any customer. If the product is not available it is very likely that the customer will buy the next available substitute. 
Bargaining Power of Buyers
The increasing presence of social media in the society has played a very important role in increasing the knowledge and awareness of the consumer. Hence the consumer of today is much more aware and knowledgeable than ever before, which has also increased its bargaining power. Today's consumer wants to maximize its surplus hence they follow global brands and compare the prices, availability and differentiating factors amongst all competing brands before making any decision. Consumers choose those products that add more value to their money spent. Also the reason that all the products offered in the anti-aging market at same price are relatively same in terms of quality and effect, which gives more bargaining power to the consumers as now they can make their purchasing/rejection decisions instantaneously.
 Threat of New Entrants
The threat of new entrant in Dubai market is low because all the important brands are already present in the city. The barriers to entry into this industry are also high as huge amount of investment is required in terms of time and money to set-up a robust network effectively. In FMCG industry trade relations are very important which is built over time which adds another layer to the complexity to entry for a new player. Since this industry works at very low margins, hence economies of scale is imperative to survive and compete which is again difficult for a new entrant, as it won't be able to displace the current players on the Dubai market instantaneously.
 Threat of Substitutes
In Dubai residents have high disposable income due to which the substitutes available is the market are also larger in number which results in competitive anti-aging market in Dubai. With time surgical and non- surgical technology has also improved resulting in effective and affordable anti-aging treatment. Also the number of anti-aging treatments and clinics providing these treatments has mushroomed. Most of the competitor's product in skin care market is either substitutes or offer identical benefit’s to consumers. Hence this has also created stiff competition for Anti-aging cream market.
Threat of existing competition
The anti-aging market in Dubai is very competitive. Since undifferentiated products are available at same price points hence the switching cost for a customer is very less. To add to this, most of the brands have same reputation in the eyes of customer hence the companies can't bet on exclusive customer loyalty for their brand. Also the companies operating in Dubai in this segment of the market have well established distribution network which ensure that their product are readily available at majority of retail outlets across city which eliminates the possibility of any competitive advantage. 

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