Competitive Forces Faced by Estee Lauder

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This kind of industry, especially who produce the skin care, make up, perfume, and any other similar products for personal care generally perform greater effort on doing research and development. Estee Lauder doesn’t really rely completely on supplier for the core and value-added composition, because it’s about making brand image and personality of Estee Lauder, so they provide their own with that kind of things. To be more specific, there are five factors to extinguish what kind of competitive forces that Estee Lauder faced based on Porter’s five forces analysis. Rivalry The products have a very intensive level of rivalry, because the competitor in the same industry, such as L’Oreal, Avon, and others has built sustainable competitive advantages through innovation. We think, the competition is on the price, since they all have varieties of product which means they also have many different price ranges, and even though Estee Lauder is targeting the high-end market they have to innovate constantly to survive. Potential entry of new competitors New firms in the same market, the same industry, automatically decrease the profit of the entire industry. Estee Lauder is a company who produces luxurious products, so they might face competition with any other beauty products branded by famous celebrities. This is qualified as a profitable industry, so it might be attractive for new firms to join the other to compete. Though, we consider it as a low potential, because Estee Lauder already built a fair product positioning. Potential development of substitute products Products that could be substitutes of Estee Lauder are might be products with lower price. But we think there are no real substitute products, since this company is more interested on targeting high-end market, buyers who are less price-sensitive so they are unlikely to change product from another

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