The first aspect I am going to focus on is the rivalry between existing sellers in the market. The important issue here is the number of competitors that Carphone Warehouse has. If the company has a large amount of competitors who offer equal or better products and services to them in the same market then customers will more than likely stay clear from Car Phone Warehouse and go elsewhere, where the needs are more effectively met. In comparison, if there are few competitors who offer then standard of goods and services in which the Car Phone Warehouse does then it is likely that they will have the biggest customer’s base as a result of meeting customer needs more effectively than their competitors. The 12 main competitors of Carphone Warehouse are:
- 3 mobile.
- Virgin Mobile.
- Vodaphone.
- Phones4You.
- Tesco.
- Orange.
- The Link.
- Dixons.
- Comet.
- Apple.
- T-Mobile.
- O2.
The next aspect I am going to look at is the power from the customer in the market. The important factor here is how easy it is for buyers to decrease prices for a product or service from the Car Phone Warehouse. This is linked again to the number of buyers, the importance for the buyer to the company, and the cost of those buyers changing to a competitor of the Car Phone Warehouse. The more buyers who have control over these situations, for example if a customer could go to a competitor of the Car Phone Warehouse for a cheaper price and still have their needs met then they have more power over decreasing the price they pay for the products and services from the company. The Car Phone Warehouse could market the fact that they goods and services are of higher quality to combat the fact that their prices may be higher than their competitors. For example, if a member of the public wants to purchase a Sony Ericson 5310c mobile phone then the individual can see that it costs £249 at Carphone Warehouse and costs £209 at O2. Therefore this individual would have more power over Carphone Warehouse because their needs could be met by a rival competitor so in order for Carphone Warehouse ensure this individual purchases the item from our company, then the customer would demand it to be lower than £209 and then Carphone Warehouse would have to except this demand if they want the individual to use our company.
The third aspect I am going to investigate is the impact of suppliers on the sellers. The important factor here is how easy it for the suppliers of Car Phone Warehouse to increase their prices. The price the suppliers charge Car Phone Warehouse can increase depending on the number of supplier they have, the uniqueness of their product or service, their strength and control over you, and the cost of switching from one supplier to another. The fewer supplier choices you have, and the more you need suppliers help, then it means the less control Car Phone Warehouse has over the prices that these suppliers charge. For example, the Car Phone Warehouse have many suppliers so it then means that the company has more control over these suppliers have with regards to their price, as Car Phone Warehouse has many alternatives that can offer them a better deal than their competitor. For example, the cost of 50 Sony Ericson 5310c phones from Sony Ericson would cost the company £600 but from Tesco it would cost them £500 meaning they have more power over Sony Ericson as they could use their rival competitor and still have their needs satisfied. Sony Ericson would then have to lower their price for the customer to use their company to purchase the product, which shows the power Carphone Warehouse has over their suppliers. The 7 main suppliers of the Carphone Warehouse are:
- Vodaphone.
- 3 mobile.
- O2.
- Orange.
- Sony Ericson.
- T-Mobile.
- Tesco.
The next aspect I am going to focus on is the potential threat of new sellers entering the market. The important factor here is how important it is for people to enter the same market at Car Phone Warehouse. If it costs little in money and time to enter the same market as Car Phone Warehouse and compete effectively then it is likely that they will do so and therefore would weaken the position of Car Phone Warehouse in this market. For example, there are often strong barriers on entering this market such as an important piece of technology being patented whereby it can't be copied, then it is highly likely that the competition Car Phone Warehouse face will be low due to competitors not being able to compete effectively. However, I have found from researching supermarkets such as Tesco that several supermarkets have thinking about expanding their product range into the mobile phone market. These supermarkets turn over significant amounts more money in comparison to smaller retailers such as Carphone Warehouse and therefore can afford to offer lower prices for products such as mobile phones. This means that customers would be more likely to use these supermarkets for purchasing mobile phones as their prices are lower than other mobile phone retailers. These supermarkets that could possibly enter the market and become a threat to Carephone Warehouse are:
- Sainsbury.
- Morrison’s.
- Asda.
The final aspect that I am going to look into is the threat of substitute products becoming available in the market. The important factor here is the ability of your customers to find a different way of doing what Car Phone Warehouse currently does. For example, if Car Phone Warehouse supplies goods and services that are unique which is created automatically, and then it could be substituted by doing the process manually or by outsourcing it. If competitors can substitute the goods and service that Car Phone Warehouse produce then it will weaken the position of the company and they will have less power due to the fact that their customers have an alternative service for their goods and services, and still have their needs met as it is a substitute of the goods and services from the Car Phone Warehouse. However, I have found no evidence of the mobile phone being replaced by a substitute product meaning this off no threat to Carphone Warehouse.
In summary, I believe that the reason there has been a drop in sales in stores in my area is because these five aspects described above have been affected in a negative way for the Car Phone Warehouse. For example, I believe there is currently a substantial amount of rivalry between existing sellers in the market, such as T-Mobile using celebrity endorsement to advertise their products which could mean that some of our customers have changed to T-Mobile because of this. Furthermore, I believe that there is a high threat of new sellers entering the market. There is nothing stopping further companies entering the same market as the Car Phone Warehouse, meaning that their competition can be at threat and it would be likely that this would have be a cause of the drop in sales in stores in my area.
