Creating software that achieves product-market fit requires business strategy, no doubt. While you might be familiar with Porter’s Five Forces as a tool to analyze competitive landscapes, its connection to successfully building an MVP might not be immediately clear. With this framework — and a little guidance from someone who’s helped launch their fair share of products (that’s me) you can shape software design and app development to maximize your product’s success. But first, let’s set the stage with a classic lesson in supply and demand.
Porter 101
Back in 1979, Michael E. Porter basically went viral in the business world with a framework that redefined how companies contend with competition. His approach helps businesses assess industries and opportunities to pinpoint the factors shaping profitability and market dynamics. His framework breaks down into five forces: Competitive Rivalry, Threat of New Entrants, Supplier Power, Buyer Power, and Threat of Substitutes.
Porter’s Five Forces offers the theory; an MVP lets you put that theory into practice with controlled risks and actionable insights. Ever run a lemonade stand as a kid? The first day, you might have used too much sugar. Day two, you watered it down to save costs, only to hear complaints that it barely tasted like lemonade. That iterative process of testing, learning, and adjusting is exactly what a minimum viable product embodies. An MVP channels that same entrepreneurial spirit and scales it up for your bigger, bolder ideas. Here’s how.

Competitive Rivalry and the CEO in You
Take it as given, mixing sugar and water and slinging cups for quarters did something else — it gave you your first insight into creating value and selling it. Fast forward, and now you’re thinking bigger; something just as focused as your lemonade stand, scaled up for the modern world. But what, and how? That’s where competitive rivalry comes in.
With this force, we think about global threats and the finer details: Can we stand out? Are there niche markets competitors are ignoring? Can we keep up with market changes? While these are great questions to ask, the answers can be elusive. To see how this plays out in real life, let’s explore a grown-up example that didn’t go so well.
A case study in misalignment
Quibi, the defunct platform that tried to revolutionize mobile video with “quick bites” of original content, was backed by Hollywood bigwigs and billions in funding. But, it completely missed the mark with users. In a widely reported moment, Quibi’s CEO was asked to name a favorite show on the platform, and struggled to name even one. That misstep alone scratches at a deeper issue.
The execution, timing, and goals of the app’s creators were out of sync with the audience they were looking for. YouTube (well-established) and TikTok (gaining traction) already offered tons of short-form content, for free. And the price tag for Quibi’s misalignment? Almost $1.75 billion in funding, spent in just six months.
Quibi’s downfall highlights the dangers of ignoring Porter’s forces, particularly competitive rivalry and buyer power (which we’ll get into later.) An MVP approach could have tested whether audiences were willing to pay for short-form content before pouring billions into the app. Turns out, asking people to pay for something they’re already getting for free is a hard sell.
Ideas that hold on, and take off
Ideas ripe for the picking, even when you’re not totally familiar with the market, aren’t impossible. While the best ideas usually come from firsthand challenges — What problems do you face regularly? What products or services do you wish existed? — they don’t have to. When nothing obvious comes to mind, there’s a smart way to uncover problems others want solved.
Dig into industry conversations
This approach is almost like being a professional snoop. Grab your notebook, it’s clue-finding time! To take advantage of it, look in places where people naturally vent about the difficulties or questions they face in their daily lives. Think forums, blogs, help sections of websites or products, and video comments. These spaces can reveal what frustrations are out there. For example, a comment with lots of likes or activity might signal a problem worth exploring.
Some products even have dedicated sections where users vote on problems or features they want addressed. A word of caution, though: building a product entirely on the back of another has its risks (more on that later too). Instead, create a competing product that solves the problem differently. Or, try this next approach.
Competitive analysis, with a twist
There’s this saying “the riches are in the niches.” Yes, it rhymes. No, that doesn’t make it any less true. Focusing on a niche is one of the most effective ways to create an offering that resonates with others and has staying power. And, believe it or not, there are tools designed to help you uncover specific problems worth solving.
Take Reddit for example. It’s basically a huge collection of forums. Imagine this grown-up take on our citrus storyline. You dive into subreddits focused on cooking and gardening and stumble on a thread full of backyard growers sharing their surplus harvests. One user posts about having too many lemons and not enough takers. The comments explode — some offering advice, others echoing the same frustrations. And then it clicks. There’s a gap here waiting to be filled!

How will you thrive when the Threat of New Entrants is coming for your slice?
We’ve done the digging, and it seems like we’ve landed on a promising direction. So let’s focus on the software we’ll actually create, and the forces new entrants like you must face.
To illustrate these forces, let’s say our citrus-sharing software will link enthusiasts with backyard growers. The threat of new entrants examines how easy or difficult it is for new companies to break into a market. High barriers to entry mean a less competitive and more profitable landscape. While niche markets present unique considerations, establishing market fit and building credibility are universal challenges. The following techniques help overcome these hurdles, niche or not.
The power of network effects
Relying on SEO or paid advertising alone isn’t a winning strategy these days. The way people search and find information is changing. Many people look to direct answers from AI tools rather than browsing traditional search results. And this shift is speeding up. Elsewhere, advertisers are noticing their costs increase year-over-year. Experts agree, of all the strategies new entrants can leverage, this next approach might just be the most important.
Many products add social sharing as an afterthought — a few buttons here and there. But to truly leverage the power of network effects, social interaction must be foundational to your offering. Encourage users to connect, collaborate, or share to unlock the full benefits of your product.
You don’t have to build an entire social network into your MVP, but identifying the core interactions that will drive engagement and growth is key. This transforms your user base into your biggest defense against competitors and can yield bounties long into the future.
The price you’ll pay for bad features
Software development costs can quickly escalate from tens of thousands to six figures. The 1:10:100 rule illustrates this perfectly. It’s widely held that preventing an issue early costs $1, correcting it later costs $10, and ignoring it entirely could cost $100 in failures or lost opportunities.1 To make matters worse, too often founders burn through cash building features no one asked for. An MVP fixes this by focusing on core features essential to your Unique Selling Proposition (USP).
Let’s take our citrus example further. Say it’s a platform for growers to list their available citrus and buyers to browse and purchase. Lyft for Lemons? Citrus City? Whatever we call it, the focus is what matters. Now, think about trying to launch that idea with machine learning algorithms, NFT lemon skins, and every other feature under the sun. That bloated approach delays launch and drives up costs. Starting lean keeps you agile and focused on features users will actually use. Here’s a clever way to uncover those answers quickly, affordably, and with minimal risk.
The “Wizard of Oz” technique
You’re not on the yellow brick road here. You’re the Wizard, working your magic behind the curtain to make it all seem seamless. Dorothy, the Tin Man, and the rest of the crew (a.k.a. your users) don’t need to know you’re pulling the strings manually. This approach is designed to help you test ideas that would otherwise require complex integrations, where viability can be hard to gauge even with MVP best practices. Here’s how that might look in action.
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Example 1: Use a Content Management System (CMS) like WordPress to quickly build a basic platform with user accounts, listings, search, and filtering. This gets you up and running without a lot of custom coding and gives buyers a way to find what they need.
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Example 2: You could manually verify growers through background checks or other means (e.g., phone) instead of investing in an expensive third-party service upfront. This keeps costs down while you validate the idea and ensures quality listings for buyers.
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Example 3: Instead of building a complex delivery system from scratch, you could use email templates or simple automation tools to send personalized messages and confirmations to both buyers and sellers when purchases come through. This lets you act as the “logistics coordinator” for now and test the entire purchase flow.
Your users won’t hold it against you if you’re scrappy. After all, they forgave the Wizard, right? What matters is that you’re building something that helps them solve their problems, no matter what’s going on behind the curtain. When you’re ready to move past your minimum viable product, you can streamline the process and make your citrus supply chain tool a little bit sweeter.

They’ve got the goods, and the Supplier Bargaining Power to prove it.
The bargaining power of suppliers determines how much control they have in their relationship to your business. If a supplier offers something unique or hard to get, they can charge higher prices or set stricter terms. On the flip side, if there are plenty of alternatives, it’s easier to switch and keep costs low. To see this force in action, consider what happened with X-Twitter.
A case study in sticker shock
Apologies for stating the obvious, but writing rules say that I must. An API is the bridge that lets apps talk and share data. APIs are everywhere, quietly powering the apps and tools we use every day. X-Twitter randomly started charging $42,000 per month for access to its API. Many startups that depended on it suddenly found themselves cut off, scrambling to adapt or pivot entirely. Others, whose products relied heavily on it and could afford the price, ended up paying the higher costs. Now, let’s bring this back to our app.
Limo-nade? (Look, it’s a placeholder)
This platform helps backyard growers share their citrus harvests with the world. Just as X-Twitter’s API pricing change created a power shift, the same dynamic can occur within our app’s ecosystem.
From day one, suppliers might not be on your radar, but eventually, they will be. Picture the future: things are going great until a few of the most popular growers decide your app is favoring other sellers. They pull their listings, leaving you scrambling to attract new growers to keep the platform thriving. That’s a supplier relationship gone wrong. Here’s how to mitigate them.
Know what, or who, you’re relying on
In the citrus scenario, that was a fictitious case of a physical supplier relationship gone wrong. But these days, supplier relationships don’t always look that tangible. Artificial intelligence is usually at the core of software offerings, creating a whole new set of dependencies you’ll need to navigate.
If your product uses AI, it’s worth identifying major providers you can rely on directly. For example, plenty of synthetic speech APIs spend big to grab your attention, but they’re usually built on bigger APIs like Amazon Polly or Google Text-to-Speech. Understanding the layers of dependency helps you plan smarter. More broadly, you should:
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Choose open-source providers over proprietary options where feasible.
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Make sure alternatives exist to avoid depending on a single supplier.
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Check service status pages to reveal patterns in outages or disruptions.
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Select platforms with export-friendly data policies in case you need to switch.
One final tip: Reading software reviews, watching product videos, and other research has its place for gauging if a tool is reliable. But, there’s also search completion, something you’ve probably seen in your everyday Google activities. It’s actually a powerful strategy for evaluating options. For example, typing a query like ‘Twitter API versus…’ can bring up alternatives you hadn’t even considered.
When suppliers do enter the picture, keeping them from becoming your biggest headache is the real MVP (most valuable player) move. That said, powering your minimum viable product requires reliability on both sides. Just as you depend on suppliers, buyers will be sizing up your dependability too. That brings us to Porter’s next force.

The Bargaining Power of Buyers is here. Are they signing up, or signing off?
This force examines how much influence customers have over a business’s success by rationalizing their options. Buyers evaluate whether a product meets their needs, offers value for its price, or outshines alternatives. Let’s bring this back to our app — will users find the platform’s selection worth their time, or will they head to the store instead? When determining the feasibility of your product’s success, you’ll have to consider what makes a buyer’s wallet snap shut, and what makes them happily pull it open?
The shift to streaming
Think of the demise of linear television. Its contrived selection of packages included countless channels many people didn’t care to watch, paired with a poor user experience and famously high (and hidden) costs. Compare that to streaming services like Netflix offering compelling fresh options, a great user experience, and transparent lower costs. The switch practically sold itself. Here are a few ways to avoid that fate and harness this force effectively.
Find a business model that works
Having a clear direction with tools like a product roadmap helps determine which features should make it into your MVP by prioritizing when and how they’ll solve key user pain points and align with your goals. This also ties directly into your business model — whether that’s ad-based, freemium, subscription-based, or something else. Compare these diverse yet proven approaches:
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Open-source, commercial hybrid: The core software is free and open-source, but companies make money offering support, premium features, or extra services. It’s a smart way to tap into community-driven development while still generating revenue.
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Free with advertising: This model makes money primarily or entirely through ads. For example, this citrus-sharing software could feature ads from juice bars promoting their fresh blends or businesses selling garden tools to help growers expand their harvest. Done well (with relevant, limited ads), it balances user satisfaction with profitability. Done poorly, it drives users to ad blockers, or off your platform entirely.
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Freemium: This approach gives users basic features for free with paid upgrades. Customers love the ability to try a product without commitment, and it’s great for gaining traction quickly. But users will be quick to lose interest if the free version feels too limited or the premium features don’t seem worth it.
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Subscription: This model is all the rage for businesses because recurring revenue ensures steady cash flow. From the customer’s perspective, they expect consistent updates and improvements in exchange for ongoing payments.
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Decentralized: This approach offers customers flexibility and convenience over traditional services. Revenue typically comes from transaction fees or service charges, with platforms being the intermediary (think Airbnb.) Though, buyers are sensitive to rising fees over time.
Find a business model that aligns with your goals and resonates with your users. You can use buyer power to nurture growers, or to shake them down like a tree in a windstorm. Your choice. For “Lemon Link”, a decentralized model could be ideal, connecting buyers directly with growers while keeping the platform thriving.
Equally important to your business model (how you operate) is your value proposition (why you do it). How you visually communicate both plays a huge role in shaping how customers perceive your offering. High-value, intuitive designs can reduce price sensitivity, and boost adoption. How exactly? Read on.

Design thinking delivers up to 107% ROI2 to counter the Threat of Substitutes.
Yep, design actually makes money. Forrester Research finds that design thinking — a holistic approach to integrating design across your company, from service design to engineering — delivers between 71% and 107% ROI.
Let’s explore how this intersects with the threat of substitutes, which examines the risk of customers abandoning your offering altogether for alternatives. This force connects with each of Porter’s other four forces because factors like price, quality, ease of switching, and brand loyalty all play a role.
While the focus here starts with your MVP, the insights extend well beyond. So let’s put all the pieces together and talk about the remaining questions this force asks, how to answer them, and who can help if you need a little.
Are tech, culture, and trends your edge, or your excuse?
Returning to our core example, a major online retailer, let’s call them “A-zon”, decides to make citrus their main focus and starts offering ultra-fast delivery for lemons, leveraging their existing infrastructure. Suddenly, our app is up against a company that can deliver a single lemon via drone before we can even finish designing our next feature. How do we keep up?
Service Designers can help. These technologists specialize in leveraging trends to create forward-thinking solutions. They’ll be able to help identify gaps in the market, perform competitive audits, data analysis, and make recommendations to inform product direction.
If substitutes fix what your offering misses, users will notice.
Users expect to get from point A to point B intuitively. It’s your responsibility to consider where and how users interact with your offering. For example, enterprise software primarily used on large screens may only require desktop design. Meanwhile, most consumer-facing tools, like our citrus solution, need mobile-friendly design alongside desktop design, because it’ll often be accessed on-the-go.
User Experience Designers won’t miss this distinction. In addition to UX design, a UX Engineer can use their technical expertise to bridge gaps between design and development.
Do customers perceive your offering as superior?
Your design should shut down any perception that substitutes are better. Off-the-shelf UI kits like Material Design and AWS’s Cloudscape can work to jump-start things, but run the risk of looking generic. Your typography should impress, your color schemes should harmonize, and the overall experience should leave users wanting (not needing) more.
User Interface Designers, and Visual Designers can help. In addition, Interaction Designers can add an extra layer of polish to every click, swipe, or gesture, including adding more advanced animation when more wow-factor is needed.
Are substitutes delivering better convenience for users?
While perception matters, this question is about reality. Are substitutes actually better? Our trusty fruit logistics app promises seamless citrus delivery, but an update introduces a confusing interface and missing features for longtime users. A competitor’s reliable design soon becomes the go-to option. Role misalignment may have been the contributing factor.
Frontend Engineers and Backend Engineers bring distinct skills. Frontend engineers focus on the visual side of engineering, using tools like HTML, CSS, and JavaScript. Backend engineers handle server architecture, databases, and system performance. No one’s impressed by a pretty app that doesn’t work, so choose the right engineer for the job.
Skip quality assurance, get juiced by the competition.
Imagine this citrus network encourages buyer reviews to build trust for growers, but a glitch deletes positive reviews while leaving negative ones untouched. Growers assume it’s user bias, meanwhile buyers see poorly rated options and take their business elsewhere. By the time you notice, the damage is already done.
Quality Assurance Testers help discover defects. They collaborate with stakeholders across the tech stack, to make sure your app works, every time. Defects can spell doom for your product, whether in beta, or some later stage, so always make sure the juice is worth the squeeze.
Pro tip: a Product Design Generalist is versatile across many areas like service design, UX design, and UI design.
What the Lemonade Stand Taught Us.
Maybe you were that kid with the lemonade stand, figuring out supply and demand, while defending your turf from rival stands. That same entrepreneurial mindset is alive and well, it’s just evolved. Your citrus app (or whatever your idea may be) is the digital version of that lemonade stand.
An MVP is your chance to test the waters, learn what works, and refine before scaling up. By applying Porter’s Five Forces, you’ve tackled the big questions: nailing the idea, building what matters, and winning over buyers. The strategy’s in your hands. Now, go make it happen, just like you did back then. This time on a much bigger stage.
Footnotes:
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Based on principles discussed in Interaction Design Foundation’s article Improve Customer Experience with UX Investments that Increase ROI.
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Noted on Design Thinking Can Deliver An ROI of 85% Or Greater, by Forrester Research.