Blog

Applying Micheal Porter's Five Forces Model to the Web Design Industry
4th February 2013

Micheal Porter's Five Forces industry analysis and strategy development is a staple in most business schools. Having come across it again in book I was reading I decided to apply it to our web design industry to see what kind of analysis we get. The result was not promising.

Here are the five forces in a nutshell.

fiveforces

Now putting these forces in the web design industry perspective we get the following.

Bargaining Power of Customers - High

In our industry I would have to say that bargaining power of customers is very high. We are frequently pitted against each other for pricing and delivery concessions. Most customers have the luxury of interviewing over a dozen web designers for a single project. They also have access to freelance websites where literally thousands of designers can bid for projects.

Bargaining Power of Suppliers - Moderate

Suppliers to our industry including web hosting companies, software companies, subscription service providers etc. Since its a fragmented industry and most web designers rarely band together to demand a better price, so suppliers usually exert moderate pressure.

However the good news is that our suppliers are themselves in a competitive market hence web designers still do retain some clout. There are of course exceptions such as Google Apps who have refused to lower prices or provide flexibility.

Threat of New Entrants - Very High

The barriers to entry in our business is very very low. Any person with a laptop and a little knowledge of html can promote themselves as web designers. Everyday, hundreds of new companies, tiny and small, jump into the fray.

This usually leads to two problems - they drive down prices and they drive down industry reputation. This hurts the long term players like us.

 Threat of Substitute Products - High

The threat per se is not to websites themselves but comes from an internal source. Ready-to-use off-the-shelf do-it-your-self cheap websites are the threat. A great web designer can add tremendous value to a website and the client's business but this is now being seriously undermined by quick fix solution providers.

Of course these providers are filling a need for low cost, fast solutions but they are also bottoming out the market in terms of cost and quality. You can compare them to fast food like McDonald's whereas we are the fine dine gourmet restaurants. I suppose there will be place for both in this industry but for high value solution providers like us, its a constant threat.

Competitive Rivalry within an industry - Very High

This is a highly competitive industry. It is not common for web designers to be pitted against 5-10 other rivals. Web designers are notorious for under cutting each other. In this scenario no one wins, not even the client. This is a very tough industry to survive in, let alone thrive.

Conclusion - Stick to your value proposition.

Surviving in an industry where the 5 forces are so strong and prevalent is about choosing a strong value proposition and sticking to it. Changing often or trying different positions will kill you. The survivors will be the ones who successfully build and defend a value position. This is a marathon not a sprint. Stick to your knitting, try and build a unique position and you might be one of the winners when the dust settles.

Cheers,
Ron

Related Posts
Why some clients thrived during lock down and some did not.
8th August 2020   |   

As a part of a business that interacts with other businesses across industries, on a daily basis, we have a bird’s eye view on how our clients are handling the lockdown. The good news is most of them handled it quite well. It is heartening to s...


Continue Reading
A career as a web design professional in India. List of web design courses and institutes in India.
2nd January 2020   |   

As a web design professional and owner of a web designing firm, I have to be consistent with the ever-changing Web Design Industry. Out of curiosity, I researched about the available Web Designing and Development courses in India. Here is the list...


Continue Reading
The Personal Data Protection Bill 2019 – Implications for online business
18th December 2019   |   

The Personal Data Protection Bill, 2019 was introduced in Lok Sabha by the Minister of Electronics and Information Technology, Mr. Ravi Shankar Prasad, on December 11, 2019. The Bill seeks to provide for protection of personal data of individuals, ...


Continue Reading
Technology is easy. Changing mindsets is difficult.
17th November 2019   |   

We are often caught in the middle of a silent battle happening within our client’s businesses. The battle is between an older generation clinging to a fixed way of doing things and a new generation eager to implement the latest technology, impati...


Continue Reading
Book Reco – What It Takes - Lessons in the Pursuit of Excellence by Stephen A. Schwarzman
24th April 2019   |   

Most autobiographies tend to be written to portray the subject in the best light, glossing over the bad parts and highlighting the good ones and this one is no different. However what makes this such an interesting read is simply the author’s ext...


Continue Reading
The best at website design in India
Connect with us on      
HOME    ABOUT    SERVICES    CLIENTS    PORTFOLIO    ARTICLES    BLOG    CONTACT   
© 2021 Miracleworx Web Design Mumbai. All Rights Reserved.
Quick Enquiry