3. PESTEL-DG
Political
• 1. Possible changes in foreign trade regulations since stainless
steel is imported from China
• 2. Taxation policy
• 3. Entrance to WTO
Economical
• 1. US Dollar rate
• 2. Disposable income of customers (more people are moving to
private houses)
4. PESTEL-DG
Sociocultural
• Seasonal repairing of heating system (May-October)
• Russian habit to postpone till the last moment
Technological
• Development of alternative technologies for heating water
5. PESTEL-DG
Environmental
• Dirty water, allergies
• Energy consumption
Legal
• Prohibition of gas water heaters in old houses, which might take
place, would lower the competition and might help to increase
the market share
7. Five Forces Analysis
Threat of Entry
• Possible entrants:
• Barriers: huge initial costs, limited access to distribution channels
occupied by strong players, strong competitors (Thermex,
Ariston), high differentiation
Threat of Substitutes
• Substitutes:
Product for product substitution:
central water heating (new blocks of flats and private houses have
no central water heating)
gas water heaters
running water heaters
solar water heaters
Generic substitution: doing without hot water
8. Five Forces Analysis
Bargaining Power of Buyers
• Buyers: final customers, retail chains (Leroy Merlin, OBI,
Castorama)
• Water heaters are a high percentage of cost to the final
customers, which leads to “shopping around”
• Retailers bargain big discounts
Bargaining Power of Suppliers
• Suppliers: suppliers of raw material (stainless steel, etc.),
suppliers of heating elements
There are a lot of suppliers and switching costs are low, so
manufacturers may avoid dependence
9. Five Forces Analysis
Competitive Rivalry
• Competitors: Thermex (45%), Ariston (35%), Real (5%), other
(Polaris, Atlantic, Oasis, Gorenje, Drazice) - 15%
• Slow market growth
• High fixed costs
Complementary goods
• Electricity
10. Competitive Strategies
‘no frills’
Low cost
Hybrid
Differentiation
Focused
Differentiation
‘no frills’
• Cut all costs
• No investments in
research
Low cost
• Use the advantage of own
distribution chain for
lowering prices
• Stop production in China
Hybrid
• Work on range
• Make prices lower
Differentiation
• Diverse range
• high margin thanks to the
own distribution chain
Focused Differentiation
• Choose one price
segment