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The eye care industry has various market segments, including frames, contact lenses and refractive surgery. The eye care industry is highly competitive and structured in various forms of business models such as independent optical outlets, optical chain retailers, mass merchandisers and online. Porter's Five Forces model can be used for a broader and rigorous competitive analysis of a contact lens market in the eye care industry to determine the competitive intensity and to build a well-rounded business strategy. The model has three horizontal components - intensity of existing rivalry, threat of substitutes and threat of new competitors - and two vertical components - bargaining power of suppliers and bargaining power of customers. The vertical components or forces are a direct result of a company's decisions.
Horizontal competition
The three horizontal components or forces are listed below:
Intensity of existing rivalry (external) : Many factors determine the intensity of rivalry, including the number and capability of the manufacturer's competitors in the same market segment - contact lenses. High rivalry is usually accompanied by low profitability. If a manufacturer has a unique value proposition offering a unique marketing mix, then the manufacturer has more power than competitors to hold the buyers. This force measures the level of competition between traditional rivals that compete directly on price, quality, marketing, product or service. Strong players such as J&J, Bausch + Lomb, Novartis and CooperVision exist in the industry with strong rivalry. Large acquisitions and mega deals have been recorded recently by significant players in an effort to consolidate market. Contact lens and related lens care products are core competencies of these players, so exit barriers are high. And because growth is stagnant, competition is intensified to steal share from each other.
Threat of substitutes (external) : Easy substitution weakens...