Week 5
The threat of substitute products
Neopets.com is a pretty unique business. It would be viewed as the dominant business of its kind, so the threat of other websites/businesses coming and stealing the limelight is minimal. However, the fact that Neopets.com is an internet based business, the difficulty in designing a similar type web business would be relatively simple. Neopets.com has itself established and really is the dominant business of its type.
The threat of the entry of new competitors
Like when mentioning the threat of substitute competitors, a new competitor would have to establish itself first to be of any competition at all, and thankfully for Neopets.com, being so dominant ensures little competition will arise. If a new web business similar to Neopets.com came along, the question is, ‘why would users change to this ‘new website”
The intensity of competitive rivalry
Due to the nature of Neopets.com, trying to compete with rivals by offering cheaper and cheaper products is not practical. Neopets.com is a free website to be part of, as are Neopets.com competitors. The only kind of competitive rivalry that would exsist, would be offering more and more for the users of each website. Neopets offers thousands of games, activities among other things. Again here, they are dominant at this.
The bargaining power of customers
Neopets.com is a free to join website. Those who operate the business, know to well, that if Neopets.com was to change to a paid website, numbers would drastically fall, (as how many 8-18 year olds would want to pay a monthly or yearly fee). Neopets.com know this, hence why it is a free website. They also take advantage of how customers want everything for free, or lots for nothing. Neopets can invest not through money, but by offering a free service, knowing that customers will definatly come to, and use the service. They incorporate advertising within the free service that they provide, and in comes the money.
The bargaining power of suppliers
Neopets.com’s only resource needed to operate the website and business would primarily be, man hours, and servers. The entire business operates from the servers they own and operate. They do not require a constant source of raw materials, this has Neopets.com at a real advantage
