Piano Industry, Prp

Porter Five Forces: The piano industry. Threat of substitute products or services: LOW A portable keyboard can be regarded as a substitute but those interested in buying a piano are interested in superior sound, better performance, good looks and elegance. The keyboard has none of these. It is complicated to sell a piano and move it in order to put a keyboard. Threat of new competition: MEDIUM-LOW The capital investment in a piano factory is very high. The market already is filled with competitors that dominate the global market. Brand recognition is also a hard asset to aquire in the piano industry. Pianos are a luxury product that could make an entrant suffer a lot in the even of an economic downturn. Other local Chinese piano manufacturers could potentially become significant competition. Bargaining power of customers: HIGH A piano is a high end product with many different brand offerings. Customers have a large bargaining power driving the margins down. PRP has made this clear by driving prices down by offering a good product at a better price. Bargaining power of suppliers: LOW The suppliers hold no proprietary materials that the piano makers require. Most of the materials are commodity products such as wood and those that are more developed like keys are becoming easier to manufacture in house due to the drop in ease and cost of the machinery required to do so. Intensity of competitive rivalry: HIGH The entrance of companies such as PRP is evidence of the incredibly competitive market the piano industry is. New drastic tactics and strategies like sponsored players that can only use their products in their performances or manufacturing outside their usual territories into asian sites also shows the competitive nature of the business.