Porter's Five Forces in the Tea Industry

Differentiation:
The company’s product will be perceived as unique and new. Providing a premium price status; brand loyal customers will be enticed to come back as the price will not be premium at any point. Furthermore, our focus on quality, sanity and friendliness will make customer to remain loyal. Also, the salary is higher among the locally owned coffee shop competitors, therefore, there will be a “word-of-mouth” effect in the student community, wanting to work for us and promote the drinks with their friends.

Risks of Using a Differentiation Strategy:

➢ Imitators lower the value and the uniqueness of the product for new customers against coffee and other known beverages.

8. 2 Porter’s Five Forces Analysis Model

Porter's Five Forces Model – Effective differentiators can remain

 In the beverage market there are no dominant players.
 The fixed cost does not represent a barrier.

Bargaining Power of Supplier:

 Many suppliers in the industry. Although the tea industry is not big in El Salvador, there are local and international suppliers from which the tea can be imported.
 A small group of well recognized supply businesses.
 The switching costs are low but customers want to want to keep quality.

Bargaining Power of Buyer:

 According to “Euromonitor.com”, the beverage industry is increasing in El Salvador. Therefore, it is a growing sector. Thus, there is no teashop in the San Salvador vicinity at the moment.
 The highest demand is located in the San Salvador, with more than 2.5 millions.
 Buy in small portions and individually.

Substitutes:

The beverage industry in El Salvador has different substitutes starting from:
 Locally owned coffee shops and cafes.
 Fast food chains.
 Convenience Stores.
 Drink vendors.
 International chains such as Starbucks and Dunkin Donuts are few and do not dominate the beverage