Porter's Five Forces and Why You Shouldn't Be an Influencer / KOL (220)

Sep 6, 2024

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.

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ANECDOTE

Food Court Analogy For Influencer Businesses

Towson recounts running a mall where anchor tenants made the money while the food court struggled.
The food court added value but was a poor standalone business, similar to influencer-only models.

INSIGHT

Four Of Five Forces Work Against KOLs

Running a Five Forces checklist reveals four of five forces are unfavorable for influencers.
Bargaining power of buyers, rivalry, new entrants, and substitutes all make the space highly competitive.

INSIGHT

Platforms Own The Audience

Influencers do not own their audience; platforms like TikTok and Instagram control the connections.
Platforms can change algorithms and policies anytime, instantly destroying reach or commerce links.

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This week’s podcast is about Ruhnn Holding, KOLs / Influencers and Michael Porter's Five Forces.

You can listen to this podcast here, which has the slides and graphics mentioned. Also available at iTunes and Google Podcasts.

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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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