The modern social and economic tendencies determine the main criteria required by the society and according to which many companies grow and develop. Today, there is a trend to live a healthy life and go in for sports to improve not only the whole physical state but also gain exact results. Moreover, the meaning of sport in our life is still very significant and continuously growing.
The emergence of the industry the main task of which is to offer a great number of different sports supplements which can be helpful for professional athletes and general consumers is also conditioned by these modern social requirements. Sportsmen incline to improve their physical properties, and many other people are also interested in developing their strength and endurance. Many of them are interested in fat loss and the others are interested in gaining weight. There are also many other specific factors.
The Edge faces the reality and offers a great variety of nutritional products which can provide not only general health benefits but also assist in muscle gain, weight loss, weight gain, and increased energy during training. Moreover, the company offers different bodybuilding proteins which are available in many forms for their easy usage. However, there are many problems that the industry faces in its development. The most common of them are a great number of competitors and not perfectly developed systems of controlling the progress and effectiveness.
The proper analysis of the industry gives the details that sports supplements are greatly discussed now and the question of their usefulness is rather controversial. The industry is developed in a close connection with the health, fitness industry, and the dietary supplement industry, and their growth implement greatly to the marketing efforts which are rather low now. Nevertheless, the industry experiences high levels of requirements.
The characteristics of main competitors
The major players in this industry can be divided into several groups according to their role in its development. The first group presents those supermarkets which are the leaders in this sphere. However, their influence on the industry is arguable because they started providing vitamins and sports supplements not many years ago and they are just beginners in this field. The most influential among them are Coles and Woolworths which take the leading position in Australia.
The next group includes gymnasiums, sports clubs, and fitness centers. There is a widening tendency to sell ready-to-drink products (“Protein Revival”) as well as the different types of protein powders. They can be considered as strong competitors because of the peculiarities in their organization and constant interacting processes. Moreover, their locations are very often preferable for the consumers and contribute to their goals.
A special group is formed by a great number of vitamin shops. Their advantages depend on the fact that the products from most of such vitamin shops are available online. The most popular ones which can be considered as rather powerful competitors for the Edge Sports Nutrition Centre are GNC, Mr. Vitamins, Vitamin King, Body Shop, and Health Shop.
The group of Discount Pharmacies also provides a challenge as a competitor because there are a growing number of products which they offer for selling. We can also define such organizations as Chemist Warehouse and United Discount Chemists.
Nevertheless, the most influential group of competitors includes several sports supplement stores. They specialize in providing different kinds of sports supplements for athletes and bodybuilders. The advantages of these stores are in that fact they have a well-organized structure and a strict system of functioning. They are especially experienced in this industry.
We can determine Mike’s Discount Vitamins and Supplements, Knockout Nutrition, Adrenaline HQ, Supplements Warehouse, Australian Sports Nutrition among them. The popularity of this branch of industry is constantly increasing which is why it is almost impossible to provide the names of all the companies from this group.
Moreover, there are many online stores such as aussiemuscle.com, mrsupplement.com.au, vitamincafe.com.au, and supplementplanet.com.au. which provide these supplements. These stores develop their marketing strategy depending on the constant availability of supplements and vitamins for consumers. The most important advantage of such a system is a great level of convenience for consumers which is provided along with an immense choice of the offered products.
Porter’s 5 forces analysis of the industry and SWOT
Porter’s Five Forces Analysis. The proper analysis of the industry according to Porter’s criteria gave the following results:
Rivalry amongst existing competitors. There can be observed a high level of competition which is primarily based on the fact that today a high percentage of online competitors offer the same products and, as a result, can lead in this sphere.
Besides, supermarket distribution is extremely increasing and depends on a growing variety of products which are offered by Coles and Woolworths.
The Threat of Substitutes. The level is rather high. The fact of increased regulation by the TGA (Therapeutic Goods Administration) may result in the prevention of the growth of the company because of the changing of the required standards and criteria.
A definite level of threat is also the result of the activity of direct and indirect competitors. Moreover, the industry and co-industries are constantly developing and the advancement of science may lead to the emergence of alternatives of appropriately high quality. The process of continually evolving in different spheres of science and technology creates challenges for the companies of a definite industry (Scott).
Power of Suppliers. The power of suppliers is limited by such aspects as the work of sole distributors for specific brands and the fact that in most cases wholesale price varies with an exact quantity. Furthermore, there is a great range of different benefits provided by the bigger players in this field.
Power of Buyers. This point of the analysis is mostly conditioned by the whole level of competition, and that is why the power of buyers is considered to be high. Nevertheless, the situation is complicated because many buyers are inclined to match and analyze the competitors’ greatly various prices. Besides, we can notice that store loyalty is rather low due to cheaper online and ‘warehouse’ retailers.
The threat of New Entrants. This aspect is characterized by a high changeability because there are rather low barriers to entering the markets. Moreover, there is a lack of differentiation in the industry. This fact complicates the progress greatly.
Location gaps are also filled by online superstores which negatively results in the development of the company. Besides, large industry growth can contribute to leading the company to the decreasing processes (Porter).
If we analyze the strengths, weaknesses, opportunities, and threats of the industry, we can conclude that among the strengths it is necessary to define the increase of consumption and a great diversity of offers which are provided by the company. The weaknesses are in the low level of the organization of the industry which results in poor regulation of the supplement industry. Moreover, it creates the situation of misinformation or lack of information about the advantages and benefits which can be arising from the use of supplements and other products of this type (Kerin).
The opportunities of the industry provide a constantly increasing interest in products of that kind. There is consumer demand for different kinds of supplements including supplements for sportsmen and athletes and supplements for diet. Besides, threats are mostly in intense competition in the industry and possible further ability of the frequent emergence of new companies (Taking a New Look at Competitive Advantage).
Environmental Impacts on Supply
The industry is rapidly growing, but it is greatly conditioned through numerous socio-cultural and economic factors. We can determine such socio-cultural factors as an increase of social understanding and consciousness of the necessity of a healthy way of living which is resulted in well-being and a good satisfying fit. Moreover, there is also a question of time convenience. As a result, online providers can have many advantages according to the factor of convenience and quick and effective distribution (Kotler).
The problem of convenience is closely connected with the problem of the price which is influenced by many social and economic factors. Today, people have to lack knowledge as for the question of the appropriate price for the various types of sports and diet supplements. Their views of the question are the results of studying the Internet and media resources. This fact emphasizes the problem of effective advertising in the industry.
Nevertheless, it is a fact that very often upfront product price cannot be appropriate to its supposed value. There is always the problem of the low-cost alternatives which can be offered by any competitor. As it was mentioned before, there is a strong tendency which performs the thought that the popularity of low-cost alternatives is often dependant on the lack of information about the definite products (Scott).
Nevertheless, there is a controversial question about the possibility of functioning companies in the fields where there are no competitors. Is it possible according to the tendencies in the progress of modern society? “The reality is that industries never stand still. They continuously evolve. Operations improve, markets expand, and players come and go” (Chan Kim, Mauborgne, p. 6).
W. Chan Kim and Renee Mauborgne during their research analyzed a lot of economic and marketing strategies and developed the idea of ‘blue oceans’ which represents “untapped market space” and the “opportunity for a highly profitable growth”. Moreover, they worked out the principles of “value innovation” that focuses on “utility, price, and cost positions” (Chan Kim, Mauborgne).
However, it is quite difficult to choose an appropriate strategy that could face all the challenges of the market processes successfully. That is why this idea is rather arguable and requires further discussions to cover all the controversial issues of the fact of the providing ‘red oceans’ and ‘blue oceans’ (Chan Kim, Mauborgne).
In conclusion, the industry is growing fast and requires proper development of special criteria of the quality of the product and they should be worked out according to the needs of consumers and consumers should be provided with necessary information.
- Chan Kim, W., and Renee Mauborgne. Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant. Harvard: Harvard Business Press, 2005. Print.
- Kerin, Roger. Marketing. Boston: McGraw-Hill. 2010. Print.
- Kotler, Philip, and Gary Armstrong. Principles of Marketing. New Jersey: Prentice Hall, 2009. Print.
- Porter, Michael E. (Porter’s strategy) On Competition. Harvard: Harvard Business School Press, 1998. Print.
- Scott, David M. The New Rules of Marketing and PR: How to Use Social Media, Blogs, News Releases, Online Video, and Viral Marketing to Reach Buyers Directly. Hoboken, N.J: John Wiley & Sons, 2010. Print.
- Taking a New Look at Competitive Advantage. Strategic Factors.com., n.d. Web. 2011.