2. Analysis of Germany’s Market Lingerie Industry
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Table of Contents
INTRODUCTION ............................................................................................................................................ 2
PORTER’S FIVE FORCE MODEL ..................................................................................................................... 2
THREAT OF NEW ENTRANT....................................................................................................................... 2
THREAT OF SUBSTITUTE PRODUCTS......................................................................................................... 2
BARGAINING POWER OF BUYERS ..........................................................................................................2-3
BARGAINING POWER OF SUPPLIERS......................................................................................................... 3
INTENSITY OF COMPETITVE RIVALRY........................................................................................................ 3
CONCLUSION ................................................................................................................................................ 3
REFERENCES.................................................................................................................................................. 4
3. Analysis of Germany’s Market Lingerie Industry
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INTRODUCTION
The lingerie industry has experienced a tremendous change over the years, owing to the
development of modern technologies which has improved the designing of innovative products,
changing customer behavior, availability of more brands and increased awareness. Thereby
resulting in a highly competitive landscape (research & markets, 2013). The German lingerie
market has seen a constant annual growth of 0.4% over the period of 2009-2013 and it’s been
forecasted to reach a %1.9 by 2018 (Mintel, 2014).
To sustain a long term profitability and maintain competitive advantage, companies have to
respond strategically by analyzing success factors based on the market demands (Porter, 2008).
The porter’s five model is an analytic tool used by industries to assess and influence profitability
by examining the industry’s underlying structure in terms of five competitive forces (Porter, 1985).
PORTER’S FIVE FORCE MODEL
THREAT OF NEW ENTRANT
The German lingerie industry is dominated by indigenous brands which have established
themselves and have a good but highly competitive market shares hence competition is extremely
fierce within the existing brands but relatively easy for new brands to enter into the market as the
“retail German market is the third largest economic sector” (HDE 2001). It has however reduced
the risk of an unstable economy and with the government laws considered relaxed, it aids an easy
entry for brands into the industry (Slininger, 2012). Also, due to the various growth of investors
and bank offers, capital required to lunch a brand can be easily obtained. Consequently, threat of
new entrants is low.
THREAT OF SUBSTITUTE PRODUCTS OR SERVICES
Lingerie comprises a wide range of products. However, there’s almost no substitute for its
products, except a customer inclines to go without them. Thus, the threat of substitute product is
very low
BARGAINING POWER OF BUYERS
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The bargaining power of buyers is relatively high due to the fact that the industry is evolving with
both local and international brands. Prior to now, much importance to brands were not given by
customers but with the evolution new brands, customers have become brand conscious. However,
“businesses are always seeking to maximize returns on investment while the buyers want to use
the lowest price to purchase products or services” (Porter, 1985). Generally, larger percentage of
customers are less concerned about brand names as regard to price.
BARGAINING POWER OF SUPPLIERS
Kotler and Keller (2009) argued that supplied products being a company’s greatest assets gives
leverage to the supplier to have some form of bargaining power. As stated earlier, customers have
become brand conscious which puts pressures on brands to ensure high quality products are
supplied. Also, the evolving industry requires the availability of more manufacturers which are not
relatively few. Though the industry is flushed with manufacturing outsourcing companies so
suppliers have little or low bargaining power in the industry.
INTENSITY OF COMPETITIVE RIVALRY
The intensity of competitive rivalry in the German lingerie is highly competitive. Research shows
that the leading brand Triumph Global Sales AG holds a market share of just 12.4% as at 2013 and
the other brands with a different of 2% market share (Mintel, 2014) which may be factored to
price, new products, service improvements or numerous competitors .
CONCLUSION
Through the application of the porter’s analysis, this report sought to reveal the significant aspects
of the industry’s competitive environment. Thereby noting where a company stands versus the
customers, suppliers, competitors, entrants and substitutes (Porter, 2008). More so, understanding
the structure of the industry enlightens the managers as to what strategic actions to employ in order
to maintain a competitive advantage (Ward & Peppard, 2002).
5. Analysis of Germany’s Market Lingerie Industry
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REFERENCES
HDE, (2001). German Retail Federation. [online] Available at: <
http://www.einzelhandel.de/servlet/PB/ -
s/1yd948d1296z7j1jph53svwuzig1855uw7/menu/1063765/index.html> [Accessed 1 Apr. 2015].
Kotler, P., Keller, L.K. (2009). How Can Education Policy Improve Income Distribution?: An
Empirical Analysis of Education Stages and Measures on Income Inequality. The Journal of
Developing Areas, 43(2), pp.51-77.
Lingerie Market: Focus on Design & Fashion Trends. (2013). 1st ed. [ebook] USA: Research and
Markets, p.1. Available at: http://www.researchandmarkets.com/reports/591022/ [Accessed 1 Apr.
2015].
Lingerie-Germany. (2014). Mintel Market Sizes. Mintel Group Ltd, p.12.
Slininger, R. (2012). Moving Victoria Secret to Germany. [online]
http://rachelslininger.weebly.com. Available at:
http://rachelslininger.weebly.com/uploads/1/2/3/6/12365811/victoria_secret_germany_recomme
ndation.pdf [Accessed 1 Apr. 2015].
Porter, M. (2008). The Five Competitive Forces that Shape Strategy. 1st ed. [ebook] Havard
Business Review. Available at: http://www.exed.hbs.edu/assets/documents/hbr-shape-
strategy.pdf [Accessed 1 Apr. 2015].
Porter, M. (1985). Competitive Strategy: Techniques for Analyzing Industries and Competitors.
Free Press.
Ward, John., & Peppard, Joe. (2002). Strategic Planning for Information Systems. Wiley.
