Porter's Five Forces and Why You Shouldn't Be an Influencer / KOL (220)
Sep 6, 2024
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Michael Porter, a renowned strategist and creator of the Five Forces framework, discusses the nuances of influencer marketing. He breaks down the challenges influencers face in a competitive digital landscape, emphasizing sustainability. The conversation also highlights the importance of content and customer engagement in building loyalty. Furthermore, Porter shares a memorable encounter with whale sharks, drawing parallels between nature and the influencer industry, and suggests a Netflix series that explores these dynamics.
Becoming an influencer is highly challenging, with a 90-95% failure rate due to fierce competition and fleeting consumer attention.
The integration of influencer marketing within a broader business strategy is crucial for sustaining revenue amidst changing consumer engagement dynamics.
Deep dives
Challenges of Being an Influencer
Becoming an influencer is a difficult endeavor, often compared to landing a starring role in a hit television series. While many aspire to be influencers, most will struggle, with an estimated 90-95% failing to gain traction. The precarious nature of this career, akin to fleeting fame in acting, makes sustaining success even harder as most influencers have a short lifespan. This reality highlights the challenges of relying solely on influencer status, suggesting a more viable approach is to integrate influencing as a component of a broader business strategy.
Applying Michael Porter's Five Forces
Analyzing the influencer space using Michael Porter's Five Forces reveals significant challenges inherent to this business model. The bargaining power of buyers is particularly weak, as influencers do not control the platforms through which they connect with their audience, making them vulnerable to algorithm changes. Furthermore, competition within the influencer market is intense, creating an environment where many are vying for the same attention, leading to a relentless demand for innovative content strategies to sustain viewer engagement. This competitive landscape, combined with the ease of entry for new influencers, amplifies the difficulties of succeeding in this sector.
The Marketing Evolution and Strategy
The shift from traditional marketing to influencer marketing represents a profound change in how brands interact with consumers. Companies are now focusing on activating connections among consumers rather than establishing one-way communication. This shift necessitates engaging consumers through content that fosters interaction and community, often leading brands to leverage influencers who can effectively create this engagement. However, the challenge remains: while influencer marketing can significantly boost a brand's visibility, it should be strategically complemented with a robust business model, such as e-commerce, to create sustainable revenue streams.
Here are some factors to consider when assessing the bargaining power of buyers.
Concentration of buyers:
Purchase size:
Differentiation of products or services:
Switching costs
Price sensitivity:
Informed buyers:
Here are some factors to consider when assessing competitive rivalry.
Number of competitors:
Industry growth rate:
Fixed costs:
Exit barriers:
Undifferentiated products / services:
Here are some factors to consider for New Entrants.
Economies of scale:
Product differentiation:
Capital requirements:
Access to distribution channels.
Government regulations:
Switching costs:
Here are some factors to consider for assessing the Threat of Substitutes.
Availability of substitutes
Availability of close substitutes (i.e., “the sense that products are similar”):
Relative price performance:
Customer willingness to go elsewhere:
Here are some factors to consider for Supplier Power.
The number and concentration of suppliers:
Uniqueness and differentiation:
Switching costs:
Forward integration:
Industry importance:
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