POTER'S FIVE FORCES ANALYSIS

Industry’s Attractiveness

It’s important to do a through analysis about the attractiveness and yield of this industry. The industry to analyze is the Tourism Industry. It was decided that, for this enunciated analysis, Porter’s Five Forces Analysis was going to be used; this Five Forces are the bargaining power of suppliers, the intensity of competitive rivalry, the threat of substitute products or services, the bargaining power of customers (buyers), the threat of the entry of new competitors and the bargaining power of suppliers.

Porter’s Five Forces Analysis

The intensity of competitive rivalry

The competitive rivalry of the industry refers to the intensity of the competition and it is measured by the number of competitors, their diversity and their competitive advantage.

Although this will vary according to the city, we will analyze the intensity of competitive rivalry in the two cities were DINOS is currently being tested: Valletta and Rome.

Firstly, in Malta there is only one competitor which is the Tourism Authority Visit Malta. They have the advantage of comprising the entire island of Malta and also Gozo and Comino, whereas DINOS is restricted to Valletta. However, DINOS has the support of the local municipality, which has been considered a valuable asset in the marketing research made by the DINOS team.  However, ‘Visit Malta app’ does not offer support for the city councils, neither does it adapt to the needs of users, being more of an adaptation of a paper guide. This app can be downloaded for free by iPhone and iPad users.

The other city that DINOS has already a contract to operate in is Rome. In this city there are fourteen apps. Regarding their features, most of them are merely adaptations of a paper guide or are focused on specific tours of the city (the Vatican tour, the Saint Peter's Basilica tour). Moreover, none of them has any agreement or support of the local municipality or any tourism authority. Also, we believe that none of them adapt to the needs of the user. Regarding the prices of the applications (see appendix-figure X), none of the applications is free. Although these prices refer only to applications of Rome, we assume that similar applications in different cities follow the same price pattern. It is worth to mention that these applications are only available for the iPhone platform.

Therefore, there are no exactly similar competitors, because DINOS’ service is significantly differentiated from its competitors. Furthermore, although there are several similar apps available on online stores for smart phones, we believe that these are not customized like DINOS. Also, there are currently no similar services that sell to city councils like DINOS does. For all the reasons aforementioned, we would classify this force as medium/low.

The threat of substitute products or services

The threat of substitute products or services is another force that determines the yield of an industry, and this can be one of the most prejudicial forces for the industry. This threat happens when there are products that substitute typical industry products, and this is not for an equal product, but for one that satisfies the same consumers’ necessities, having the same utility. It is considered a high threat of a substitute product of there is a gain in the relationship cost/benefit to the typical product, if the revenue of these products is superior and if the products are high quality products. This force, as it is going to be explained below, is medium.

In this case, the substitute products can be distinguished for its finality: the products that are based on paper and that have a “physical existence” and the virtual products. The first category can represent a big threat. This is because there are some people that are not used to work with virtual and electronic products, and so they see in the paper and physical products a better alternative. Examples of such substitute products are paper maps and paper routes. Moreover, tour guides are also a competition to DINOS, maybe to an even greater extent than paper guides. Although we can assume that they not necessarily help people to “navigate” in the city, they make suggestions and can adapt the tour to the needs and wants of the consumers. In addition, special sightseeing services, like bus or walking tours can serve also as a substitute to the product.