Porter's Five Forces (Overview)
Part of the Product Management Roadmap
In short
Some industries make money easily, others fight over every rupee. Porter's Five Forces explains why, by looking at the pressures around a business, not just its rivals.
A framework for assessing industry attractiveness through competitive rivalry, supplier power, buyer power, threat of substitutes, and threat of new entrants.
Think of it like this
The auto-rickshaw stand
An auto driver at the station faces other autos fighting for riders, a new metro line, passengers who bargain hard, the CNG pump setting fuel prices, and new drivers joining every month. Five pressures, one driver's earnings.
Watch it happen
Five forces on a food delivery business
1/6Each force squeezes profit. Let's see them for a food delivery app.
The big ideas
What you need to know
Rivalry
How fiercely current players fight. Many similar rivals usually means price wars and thin margins.
Threat of new entrants
How easy it is to start. High costs, licences and network effects keep newcomers out.
Substitutes
Different ways to solve the same need. A metro is a substitute for an auto ride.
Buyer and supplier power
Who can push prices around. Few suppliers or easy-switching buyers squeeze your profit.
Save yourself the pain
Common mistakes
Oops
Using Five Forces to analyse a single feature.
Do this instead
It's for an industry or market. Use it when judging whether a market is worth entering.
Oops
Forgetting substitutes because they're not in your category.
Do this instead
Ask how else users get the job done. Substitutes often cap what you can charge.
Your mission
Five forces for an industry you know
Quick check
Customers can switch between three almost identical apps with one tap. Which force is strong?
Go deeper
- 1Apply the five forces to an industry you're interested in joining.
- 2Identify which force is the biggest threat to a product you use.
- 3Treat this as background context, not something you'll use weekly as a PM.
More topics at this stop
Mission, Vision & Strategy vs Tactics
OKRs (Objectives & Key Results)
Prioritization Frameworks (RICE, MoSCoW, Kano)
Value vs Effort Matrix
Business Model Canvas
Competitive Analysis
SWOT Analysis
Market Sizing (TAM / SAM / SOM)
Positioning & Messaging
Product Roadmapping (Now-Next-Later)
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