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Five Porter Forces of Singapore

Essay by   •  December 1, 2012  •  Essay  •  537 Words (3 Pages)  •  2,856 Views

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⇒ THE BUYER POWER

The most important distribution channel for spirits in Singapore are the supermarkets and hypermarkets indeed they represent 41% of total market volume.

Bars and clubs are also an important actor in this sector, they are significant buyers.

In this market the leading products are the same in all the segment however the principal actors still spending important amounts for marketing campaigns. However the supply contracts give a competitive advantage to chain store over independent retailers, therefore there is a competitive decrease. Those supply problems had often generate the creation of a stock for the most popular brands.

There isn't any price leverage because buyers have brand loyalty to the major actor of the sector globally. Overall we can consider the buyer power as moderate.

⇒ SUPPLIER POWER

The cereal grains, vegetables and fruits are the major raw materials used during the distillation. Given the availability of numerous suppliers and the undifferentiation of raw materials the supplier power is quietly low. For certain spirit the raw materials used may differ depending to the product, indeed some manufacturer prefer make their own.

However the manufacturers can't change a lot the different materials used in the distillation process in order to keep the quality and taste characteristics for the end consumer. Overall, supplier power in Singaporean spirit market is assessed as low.

⇒ NEW ENTRANTS

It does not require an important capital to enter the spirit market however the customer brand loyalty doesn't allow a battle of price in the market. Furthermore the alcohol consumption is considered as a lifestyle so the consumer choose very rarely the cheaper product. The brands strength in this sector is so high that the only way to enter the market is targeting expensive niche product. Despite the entry barriers for the market due to high cost and the important power of established actors, the continued growth of the sector encourages the arrival of new competitors.

⇒ THREAT OF SUBSTITUTES

The substitutes in this sector are the other alcoholic beverages like beer, wines or other hard like vodka or whiskies but many of those are produced

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