Market Descriptions 2. The extent of the threat depends upon The extent to which the price and performance of the substitute can match the industry's product The willingness of customers to switch Customer loyalty and switching costs If there is a threat from a rival product the firm will have to improve the performance of their products by reducing costs and therefore prices and by differentiation.
The amount of box office ticket sales in was lower than ticket sales. However, the cinema halls have not been able to harness loyalty from customers who make the choice primarily based on the location.
Lower price means lower revenues for the producer, while higher quality products usually raise production costs. For example, iTunes was created to complement iPod and added value for both products.
In competitive industry, firms have to compete aggressively for a market share, which results in low profits. Customer Analysis 2.
The switching costs for the customers are almost negligible. This force determines how easy or not it is to enter a particular industry. Additionally each movie to be screened must be purchased. Since Switching costs are low people will go to theatre which screen movies of their choice or theatres that are easily accessible to them there by reducing the no of people who watch a show.
Rs 1 lakh, which is permanent solution for in house entertainment. Since the number of substitutes are less the cost of purchasing movies increases 3 Switching High Movie screening rights can only be obtained from the Cost producers or the distributors.
The establishment cost goes up with the increase in quality of location.