According to numerous business experts, appropriate market analysis is a crucial component of a successful business. If you don't adequately assess your competition or sector before starting your business, you run the risk of not properly understanding the best ways to establish your business effectively. One such form of assessment is known as Porter's Five Forces model.
We're going to teach you exactly what Porter's Five Forces are, and how they are best implemented. Then, we'll provide you with a handy template so that you can conduct your own analysis for your business.
What Are Porter's Five Forces?
As the name suggests, Porter's Five Forces are five separate threat factors that can impact business growth. The theory is credited to senior Harvard Business School academic Michael E. Porter.
The Five Forces, or Porter structure, are as follows:
- The intensity of the competitive landscape;
- Level of supplier power;
- Buyer’s entry/exit costs;
- The threat of substitute products;
- Access to the market for new entrants.
The objective of Porter's Five Forces model is to assess the overall competitive landscape of a particular business sector. Each of these five forces corresponds to a key component of market intensity.
When all five of Porter's Five Forces are assessed, a business owner can assess the overall competitiveness of a particular market.
If these forces are particularly strong, they contribute towards an unattractive sector overall. This is because the strength of each negatively affects the overall likelihood of profitability.
The ideal sector is one where “pure competition” exists, allowing all those within it to make respectable profit margins.
Porter’s Five Forces Analysis
Let’s take a look at each of Porter’s Five Forces—using SpaceX as an example.
This framework helps you understand the structure of your market so you can make smarter strategic decisions. In some of the steps, we’ll use data from the Semrush Traffic & Market Toolkit to guide our analysis.
The intensity of the competitive landscape
The first thing to look into is how intense the competition is within your niche. The key insights you should gather at this stage are:
- The competition level within the marketplace
- Key competitors
- A clear understanding of your competitive strategy
The Market Summary in the Market Overview dashboard provides a great starting place. Taking a data-driven approach, let’s get an overview of the competitive landscape for SpaceX.
This dashboard shows whether the market is fragmented (with traffic spread across many players) or concentrated (dominated by a few). For a company like SpaceX, this helps reveal whether it's competing in a wide-open field or fighting for share in a tight race.
From there, scroll to the Growth Quadrant section to identify key competitors and see how they compare in terms of traffic volume and recent growth.
After examining the market as a whole, we can zoom into the competitive landscape specifically using the Growth Quadrant.
You can always go deeper and take a look at more rivals, However, for an in-depth look, it’s always a good idea to narrow down the scope of research.
With space, SpaceX won’t have too many direct competitors — just because the entry bar is very high, with high fixed costs, government regulations, and more. For most industries, however, looking at the range of competition and its intensity is a starting point for solid market analysis.
Next, it’s important to check whether you and your competitors are actually reaching the same audience. You might offer similar products but attract entirely different customer groups.
For example, after identifying nasa.gov as a key competitor for web traffic, we ran SpaceX and NASA through the Audience Overlap dashboard to compare their audiences.
Surprisingly, the overlap was minimal. One possible reason? NASA’s traffic likely includes a large share of students, educators, and space enthusiasts consuming public science content—while SpaceX’s audience may skew more toward industry professionals, investors, and private-sector partners.
This kind of audience insight adds depth to your competitive analysis. If you’re attracting different types of users, you’re not competing for the same attention. But you might spot untapped opportunities to reach new segments or tailor your messaging more effectively.
This post will walk you through the ways to shape a stronger marketing strategy to attract competitor audiences.
Level of supplier power
Online or offline, businesses are heavily reliant on other businesses in their operations. This factor examines the power a supplier might hold over your business.
Your procurement, security, and other departments will have information about the following factors you should consider when it comes to assessing the threat of overdependence on suppliers:
- The number of suppliers within the market (from your anti-DDoS software to steel mills);
- The range of existing suppliers — the more backup suppliers you manage to secure, the more bargaining power your business will have;
- The costs of switching to other suppliers — from rewiring all the hardware to establishing new supply chains, you should consider all the factors and expenditures.
Buyer’s entry/exit costs
Now, with consumers, they can also have some bargaining power over your business. While this may seem like a customer-centric factor, you should be looking at your competitive landscape once again to determine the costs of the buyer’s entry and exit.
The overall audience size, the number of competitors, their pricing, and quality factors will matter when you are shaping or reshaping your business and marketing strategies.
This post will help you find the right tactics that enable you to:
- Analyze your competitors’ overall online performance;
- Get a glimpse at their online advertising strategies;
- Pinpoint your rivals’ SEO, content and PR strategies;
- Reveal their activity across social media channels.
The threat of substitute products
In addition to keeping an eye on your direct competitors, you also need to consider substitute products—alternatives that solve the same problem in a different way.
Substitutes can quietly chip away at your market share. A product or service becomes a threat if:
- It offers a lower price but delivers a similar function or quality
- It’s priced similarly but offers higher quality, better performance, or added value
For example, if you sell software for remote collaboration, your substitute might not be another software company—it could be a new AI productivity tool or even a completely different workflow model. Even if it’s not marketed as a direct competitor, it could be drawing your users away.
The Top Pages dashboard can help you spot these shifts. Look at which pages are generating the most traffic for competitors or related domains. If you start seeing high-traffic pages focused on alternative solutions—especially ones that aren’t part of your current offering—that’s a signal worth investigating.
This kind of insight helps you stay ahead of changing customer preferences and reevaluate where threats might come from. It’s not always the competitor you expect.
Access to the market for new entrants
This factor considers how easy or difficult it is to enter the market for upcoming brands. While you may be all set with your market analysis, this factor requires ongoing market monitoring.
While SpaceX’s position is fairly stable, Asian competitors like Interstellar Technologies may pose a threat in years to come.
However, if you’re not in Aerospace or another niche that is difficult to enter, you should consider the market entry barriers and establish the frequency of your market monitoring accordingly — the lower the entry bar, the higher the monitoring frequency.
Here is a live example of Porter’s Five Forces analysis:
Porter's Five Forces Template
A template for Porter's Five Forces provides you with the layout of the model and how each force impacts the others.
Remember, the objective of Porter's Five Forces model is to review the competitiveness of a market. If you're already operational, this can give you a significant advantage over your competition.
Used properly, the model can be adapted to create comprehensive competitive strategies. These can then help you carve out an even more significant portion of the overall market for your business.
Take a look at our comprehensive Porter's Five Forces template here.
[ Download the Porter's Five Forces Template ]
Where Can I Find Out More About Marketing Strategies?
Porter's competitive model is one of the most well-recognized marketing strategies available today. But relying solely on Porter's Five Forces means you won't be taking advantage of other significant strategies.
The best way to get ahead in your sector is by contributing as much as possible to competitive assessment and business growth. Luckily, that's where Semrush can help.
Semrush provides over 40 digital marketing tools to help you thrive in your sector. This includes tools for Competitor Analysis and Competitor SEO Analysis, among many more.
