Source: http://www.managementparadise.com/balajiv.ganesh/documents/5977/dabur-porter-five-forces/

Threat of CompetitorsThe competitors of Dabur are a highly diversified business (say HUL currently in personal care, health care, toiletries, food, perfumes and deodorants, Soaps and detergents) hence it leads its competitors to a less risky profile.

Dabur spends around 13 to 15% of its sales in advertising, they have tie ups with many serials and movies and adopt for celebrity endorsements, like Mr. Amitabh Bachchan as it is easy for them to cater to the lower segments of the market.

It achieves a sustainable competitive advantage through improvisation.

Threat of New EntrantsBrand equity of Dabur can be judged by the BRAND ASSET VALUATOR model. The four key components are: Differentiation, Relevance, Esteem and Knowledge. As Dabur is a well-established brand all the four components are high. Herbal has been Dabur’s brand equity since centuries. A slowdown in rural demand due to lower government spending could impact Dabur revenues significantly. The company’s products such as Dabur Chyawanprash and Dabur Lal tel are prominently sold in the rural areas, and hence, depend on growth in rural demand.

It has a network of 1.5 million retail outlets in urban and semi-urban areas.

Threat of Substitute ProductsBrand loyalty of customers: The pricing of the Dabur products is very competitive without compromising on the quality hence the relative price performance of substitutes is low as compared to Dabur. For instance Dabur Amla hair oil has been the largest selling hair oil brand in India for more than 2 decades.

Perceived level of product differentiation: Dabur products have generally strong Herbal and Natural profile, also second by a more than 100 years of experience in Ayurveda which leads to a high product differentiation.

Dabur has an esteemed performance in the Herbal digestives sector acquiring a market share of 95%.

Threat of Buyer’s Bargaining PowerDue to high consciousness of consumers in for health, the Ayurvedic and Natural products have gained more requirements, but it has a strong dependency on its existing channels of distribution which makes it easy for penetration in the rural market.

Buyers switching cost relative to firm switching costs.

Buyer information availability is large.

The substitute products are kept right next to the Dabur products depending upon the strategies that the category captain decides for a particular segment. Since market share of Dabur is high in hair care and herbal digestives hence it has a strong bargaining power.

Threat of Supplier’s Bargaining PowerSupplier switching costs relative to firm switching costs.

Degree of differentiation of inputs.

Presence of substitute inputs.

Threat of forward integration by suppliers relative to the threat of backward integration by firms has been taken care of. Production facilities to increase in-house production and to get maximum benefits. The company believe in cost and quality leadership through technology.

Cost of inputs relative to selling price of the product.