5 Forces Analysis
Running head: TRADER JOE’S COMPANY ANALYSIS 1
TRADER JOE’S COMPANY ANALYSIS 4
Trader Joe’s Company Analysis.
· Trader Joe’s has been successful in business from the time the store was founded.
· The success is attributed to the business’s ability to differentiate itself from the rest of other company particularly their primary competitors (Sega, 2018).
· Joe’s company which is found across several parts of the United States, provides a wide range of distinct and unique private label products to esteemed customers (Investopedia, 2019).
Porter’s five forces.
1. Bargaining power of suppliers.
· Trader joe’s company has been among the best-known secretive companies that care to identify who, what, and where to receive their services and products.
· This uplifts the company’s bargaining power of the suppliers to higher levels.
· They have created their own unique and private-labeled products, further earning them high bargaining power (Investopedia, 2019).
· Their products are unique and can be fetched nor found elsewhere; this facilitates their low prices that offer the opportunity of high switching costs.
2. The threat of new entrants.
· In the joe’s company, the threat of new entrants is significantly low.
· Even if the switching costs are low with increased product distribution, channels are still there many challenges and barriers for new entrants’ entry (Ciment, 2019).
· The economies of scale are massive, especially when competing with superstores such as Walmart and Kroger.
· The threat of new entrants is also reduced due to the increased cost of buying stores that are large enough to start a business (Ciment, 2019).
3. The Bargaining Power of Buyers.
· Based on joe’s company business, its bargaining power is can be rated as moderate to low.
· Most of the target consumers for Joe’s company are educated individuals who perhaps are underpaid.
· Its product differentiation is significantly high (Ciment, 2019).
· Other buyers of Joe’s company include operated stores that have no bargaining power.
4. Rivalry among existing competitors.
· Joe’s company has a moderate level of rivalry.
· In 2013 the company’s overall growth doubled to nearly $ 10 billion.
· The company has steady growth in the industry due to less competition and creating a brand identity that other competitors could not match.
5. The threat of substitutes.
· Joe’s company’s level of threat of substitutes is significantly high because of the presence of many grocery products with small discounts.
· The existence of many grocery substitutes for Joe’s products increases price competition as well as high switching costs (Ciment, 2019).
· This forces the joe’s company to lower their product prices so as to retain a large customer base (Ciment, 2019).
Ciment, S. (2019, August 15). Why Trader Joe’s Is Loved by Customers: Theme, Price, Quality. Retrieved from https://www.businessinsider.com/why-customers-love-trader-joes-quality-price-2019-8?IR=T
Investopedia. (2019). Cost-Volume-Profit (CVP) Analysis Definition. Retrieved from https://www.investopedia.com/terms/c/cost-volume-profit-analysis.asp
Sega, B. (2018, June 22). These Are the Things You Should Never Buy at Trader Joe’s. Retrieved from https://www.cheatsheet.com/culture/these-are-the-things-you-should-never-buy-at-trader-joes.html/