The five forces measure the competitiveness of the market. The current rivalry opportunities and threats of the pet industry would mostly affect the top two stores PetSmart and Petco. The pet stores industries are traditionally small and are owned independently, whereas PetSmart and Petco have become the industry giants in retail locations. The opportunities for PetSmart and Petco are to maintain market share by continuing to attract current and new pet owners to their stores. A threat to PetSmart and Petco would be any other giant retailer to intrude on territory or one of the smaller pet stores working toward expansion to become a bigger competitor. Another threat would be big box stores like Costco and Wal-Mart who exert higher buying power.
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In the pet industry the more powerful the seller is relative to the consumer, the more influence the seller has ("Bargaining Suppliers," n.d.). The sellers like PetSmart and Petco or online store have bargaining power over the pet owners, because the pet owners need the suppliers in order to provide for their pet. Influence can be used to decrease the revenues of the purchaser through more profitable pricing, restricting quality of the product or service, or fluctuating costs onto the buyer (e.g. shipping costs) ("Bargaining Suppliers," n.d.). The threat can be losing the consumer to a competitor in order to get a better pricing, which can decrease profits if mismanaged. Consumer need to feel the value in their …show more content…
A substitute or otherwise known as generic is a product that achieves the same or similar function as the name brand product. The pet industry experiences generic forms of products or services as any other industry does. “Microeconomics teaches that the more substitutes a product has, the demand for the product becomes more elastic” ("Threat of Substitute," n.d., p. 1). Elastic means an amplified consumer price sensitivity, which equates to less certainty of profits. In some cases in the industry, a generic product can be better than the name brand item, which causes an increase burdens for the name brand to be superior ("Threat of Substitute," n.d.). The pet industry is no different than any other industry. PetSmart provides an instore brand, which is considered generic. PetSmart generic brand is a threat to the name brand items like Purina, Kong, etc. As Purina and Kong are threats to PetSmart. Overall, the pet industry increased it revenue by having options of substitute product as well as name brand
In the pet industry the more powerful the seller is relative to the consumer, the more influence the seller has ("Bargaining Suppliers," n.d.). The sellers like PetSmart and Petco or online store have bargaining power over the pet owners, because the pet owners need the suppliers in order to provide for their pet. Influence can be used to decrease the revenues of the purchaser through more profitable pricing, restricting quality of the product or service, or fluctuating costs onto the buyer (e.g. shipping costs) ("Bargaining Suppliers," n.d.). The threat can be losing the consumer to a competitor in order to get a better pricing, which can decrease profits if mismanaged. Consumer need to feel the value in their …show more content…
A substitute or otherwise known as generic is a product that achieves the same or similar function as the name brand product. The pet industry experiences generic forms of products or services as any other industry does. “Microeconomics teaches that the more substitutes a product has, the demand for the product becomes more elastic” ("Threat of Substitute," n.d., p. 1). Elastic means an amplified consumer price sensitivity, which equates to less certainty of profits. In some cases in the industry, a generic product can be better than the name brand item, which causes an increase burdens for the name brand to be superior ("Threat of Substitute," n.d.). The pet industry is no different than any other industry. PetSmart provides an instore brand, which is considered generic. PetSmart generic brand is a threat to the name brand items like Purina, Kong, etc. As Purina and Kong are threats to PetSmart. Overall, the pet industry increased it revenue by having options of substitute product as well as name brand