What is the most important benefit of the E-I-F, Industry Life-Cycle, Customer Life-Cycle, and Porter 5-Factor Models?
All of the items listed in this question are essential analytical models used by business owners and entrepreneurs to get a clear picture of where their brand or business stands in relation to other similar brands and products in the market.
The Porter 5 is an extremely important analytical tool. If not used, a lot of important dimensions of a business venture may go amiss. Porter examines
- Supplier Power: How easy can my suppliers increase the price of my products. How much control does the brand actually have?
- Buyer Power: Can I dictate the price of my item or can the buyer do that for me? How much power does the buyer's influence have over my product?
- Competition: Who is my Nemesis in the market?
- Threat of being replaced: What is the closest substitute to my brand?
- Threat of being obsolete: What new things are being made to take over my brand?
Think about what could happen if these factors were NOT taken into consideration during market analysis .
Industry and Customer Life Cycle are directly connected to Porter's 5. The Industry Life Cycle is essential to predict because it is the only way to know if a brand or product stand any chance of market survival. It entails analyzing the present, past, and future trends in shopping and selling to create milestones as to what is needed to be offered...or not.
Similarly, the Customer Life Cycle is essential. Despite of the name of this model, it has nothing to do with lifetime but with the participation of the client within the market. For instance, Christmas trees aren't sold year round, whether the trees are fresh or artificial, because the clientele of this type of product "comes to life" during a specific time of the year. Black Friday sales occur now from the night of Thanksgiving Day all the way to the Monday after that holiday. There is a clear trend, predicted and proven, that this is when this clientele prefers to shop for big ticket items.
Mega retailers, who have an upper hand in supply control, can afford to offer a whole week worth of Black Friday prices because their generated profits allow them to do so.
The EIF is yet another analytical model that offers the benefit of identifying when the prime moment is to enter a product into the "force," or competitive market, to generate top profits for the brand.