Market Forces
What are the primary forces that impact human behaviour?
The future already exists we just don't know how to sell it.
Social Glue
- Environment : Love of nature, sacred spaces |
- Fashion : Self expression and alignment with a movement, #prettymint |
- Food : The best way to make someone feel at home #food-trucks |
- Music : Soundtrack of your life |
- Sport : Connection with purpose and spirit #better-practice |
- Travel : Follow curiosity to broaden horizons and insights |
Hidden Psychological Forces
When planning for future market positions, consider psychological forces that shape adoption, perception, and value.
Perception-Based Forces
- The Undiscovered Value Principle: The future often exists today but lacks proper marketing or positioning. Don't simply focus on inventing new products - identify existing technologies that could succeed with different framing, packaging, or context.
- The Experience Revelation Effect: Many innovations are only appreciated after experiencing them. Test incremental adoption pathways instead of requiring full commitment upfront (like the Dutch solar panel approach vs. whole-roof installation).
- The Packaging Value Multiplier: Product containers/packaging can create value far exceeding their cost difference. Consumers pay premiums for identical contents in different formats (like drinks in aluminum cans vs. plastic bottles).
Decision-Making Forces
- The Post-Rationalization Bias: Humans justify decisions after making them rather than evaluating options rationally beforehand. This makes adoption patterns non-linear and impossible to predict through purely logical models.
- The Unconscious Preference Reality: People rarely know what they want until experiencing it. The gap between stated preferences (the map) and actual behavior (the territory) is substantial and often exploitable.
- The Value Transformation Dynamic: Using certain products fundamentally changes user preferences and perception of value. The process of adoption itself reshapes what consumers prioritize.
Porters Five Forces
How will AI and Crypto impact Porter's Five Forces for identifying potential threats and opportunities to make strategic decisions.
Competitive Rivalry
This force examines the intensity of competition within an industry. Factors that influence competitive rivalry include:
- Number of competitors
- Industry growth rate
- Product differentiation
- Exit barriers
For example, in the fast food industry, there is intense rivalry among established players like McDonald's and Burger King, leading to constant innovation and price competition[5].
Threat of New Entrants
This force assesses how easy or difficult it is for new competitors to enter the market. Factors affecting this threat include:
- Entry barriers (e.g., capital requirements, regulations)
- Economies of scale
- Brand loyalty
- Access to distribution channels
Industries with high entry barriers, such as pharmaceuticals or petroleum, have a lower threat of new entrants.
Bargaining Power of Suppliers
This force evaluates the influence suppliers have over the industry. Factors affecting supplier power include:
- Number of suppliers
- Uniqueness of supplier's product
- Cost of switching suppliers
For instance, in industries with few suppliers, such as certain raw materials, suppliers may have significant bargaining power.
Bargaining Power of Buyers
This force examines the influence customers have over the industry. Factors affecting buyer power include:
- Number of customers
- Size of each order
- Differences between competitors
- Price sensitivity
In the electronics industry, consumers have strong bargaining power due to easy access to price comparisons and numerous options.
Threat of Substitution
This force assesses the likelihood of customers switching to alternative products or services. Factors affecting this threat include:
- Buyer's willingness to substitute
- Relative price performance of substitutes
- Switching costs
For example, the airline industry faces competition from substitutes like cars, trains, and cruise ships.
Application
To apply this framework:
- Define the area of interest (industry or business model)
- Collect and analyze relevant data, nowcasting
- Extrapolate trends to make predictions of future conditions and adjust strategic position
By understanding these forces, business leaders can:
- Identify opportunities and threats in their industry
- Develop strategies to strengthen their competitive position
- Make informed decisions about entering new markets or industries