Five Forces & Attractiveness

Five Forces & Attractiveness:

Rivalry among companies:

The education industry is an attractive industry to enter. Universities and schools produce similar degrees of education and pricing across the industry, which in combination with an inability to dictate market price creates monopolistic competition.

Monopolistic competition allows consumers to differentiate between competitors because of secondary factors, other than price. Brand ethos and location are examples. Monopolistic competition decreases competition; no universities' success is dependant on the pricing of another school, decreasing competition due to similarity. In addition, the universities and schools have unequal shares of the market, allowing for competition to be decreased, because of distribution of market space in the industry. Unfortunately, the education industry has slow growth as an established industry, an unattractive factor, which increases competition, because consumer-switching costs are low.

The low amount of rivalry in the education industry allows Tech Fresh, to easily enter the market. Tech Fresh can enter without fearing retaliation from competitors, due to unequal market shares and lack of independence between competitors.

Bargaining Power of Suppliers:

Suppliers for Tech Fresh are employers and advertisers, whose influence can direct consumers to Tech Fresh. Suppliers have a degree of bargaining power, because employers and advertisers provide a direct connection to Tech Fresh's target market.

Overall, the majority of bargaining power remains with Tech Fresh. America's free market capitalism, promotes markets' growth. The number of available advertisers and employers, who can provide influence negates suppliers' integral role in Tech Fresh's value chain. The industry is attractive because Tech Fresh has powerful leverage over its suppliers.

Bargaining Power of Buyers:

Tech Fresh's buyers have no bargaining power. Tech Fresh is a differentiated service, contrary to the standard university system, offering a flexible system with zero commitment required. The courses improve consumers' specific skills with a single program. Differentiation creates price elasticity in the target market, because of unique and otherwise unavailable features, decreasing buyers bargaining power. Switching from Tech Fresh would require self-teaching or enrolling in university classes, which don't offer a similar curriculum, creating a high switching cost. Target consumers lack information about courses' content, eliminating their ability to backwards integrate and personally produce Tech Fresh's curriculum.

Threat of New Entrants:

The education industry is unattractive, because there is a high potential for new entrants in the market. There are no difficult barriers to surpass, in order to enter the industry. The only barrier is required capital. The education industry employs monopolistic competition, making organizational scale irrelevant, allowing small schools to compete at an equal rate to established schools. In addition, monopolistic competition creates low brand loyalty, because consumers perceive competitors as similar. Low brand loyalty allows new entrants to attain market space, because of low switching costs. The risk of new entrants increases competition and decreases profitability, because the education industry is growing slowly. Universities and schools utilize similar suppliers, allowing new entrants similar access to demand, which increases the likelihood of new entrants success.

The threat of new entrants is unattractive, because of Tech Fresh's concentrated target market. New entrants, whose capability to grow is roughly equal to Tech Fresh's ability is discouraging, due to the education industries restricted ability to attain growth. New entrants can steal market space easily, because of the education industries' overall business similarities. Because Tech Fresh occupies a niche, the company utilizes a restricted amount of market space. The high amount of new entrants decreases the likelihood Tech Fresh will maintain market space, due to low brand loyalty caused by low switching costs.

Threat of Substitute Products/Services:

The education industry is a highly standardized market with Tech Fresh's competitors, pricing and producing similar business models. The similarity between schools allows a differentiated service to be extremely disruptive, which in combination with low brand loyalty and low switching costs creates a threat.

A prominent threat to the education industry is the Internet. Internet classes offer similar education but eliminate traditional expenses, like campus housing and travel costs. In addition, Internet classes and programs provide incentives, including schedule flexibility; students can complete homework at their leisure, or earn a degree at their own pace. Internet classes' provide differentiated values that traditional education cannot easily replicate, creating a competitive advantage.

The threat allows Tech Fresh to create a defined market space, utilizing the competitive advantage, to remain profitable sustainably, due to alternative and irreplaceable features of the business model. The opportunity is attractive to Tech Fresh. The education industry's high fixed costs like tuition, allow a substitute product with lower cost, to garner market space at higher rate, because of lessened cost and similar learning opportunities.

Market Information:

2012 Target market:

College graduates: age 35 - 54

Target Market Size

36,157,000 (Attainment 2012)

Total Relevant Market:

2012: 258,370,000 (Attainment 2012)

2011: 249,947,000 (Educational 2011)

2010: 242,652,000 (United States 2010)

Tech Fresh is an internet-based education service. The service is dedicated to modernizing consumers' knowledge within a specific field. Tech Fresh occupies a niche within the education market. Tech Fresh's education is taught solely through the Internet, differentiating Tech Fresh from colleges and university, whose