Why the Five Forces Still Rule in a $160B Insights Industry

Why does industry analysis still matter in an AI-driven market?

You're a strategist or analyst, and you're staring at a market that just crossed $150 billion in 2024, projected to hit $160 billion by 2025 (ESOMAR via Research World). You've got AI tools that can crunch data in seconds, but you still need to answer the fundamental question: is this industry attractive, and how do we win? That's where industry analysis comes in. And despite the hype, the most reliable tool remains Porter's Five Forces.

The thesis: Five Forces is still the best lens, even in a digital world

Here's my argument: while new frameworks and data sources are valuable, Porter's Five Forces is the only framework that forces you to think about profit pool dynamics, not just growth. It's easy to get distracted by shiny metrics like CAGR or market size, but those don't tell you who captures the value. The five forces determine how the economic value an industry creates is apportioned—whether it's drained by rivalry, bargained away by suppliers or customers, or constrained by entrants or substitutes (Harvard Business Review). In an industry that's growing 8% globally, you need to know if you're in a value-creating or value-destroying segment.

Counter-argument: 'But the industry is different now'

Some will say that the insights industry is so dynamic, with AI adoption at 47% and 83% planning to invest in AI (Similarweb / Research and Markets), that old frameworks can't capture the speed of change. They're right that the tools are changing, but the underlying competitive forces are not. For example, the rise of research software—growing at 11.5% in 2024—has shifted supplier power and altered rivalry, but it hasn't eliminated them. In fact, the shift to software is a classic example of how technology can change the balance of forces, making some forces stronger and others weaker. The framework still applies; you just have to apply it rigorously.

How to apply Five Forces in the insights industry

Let me walk you through a practical example. Consider the market research sector, which in 2024 was about $56 billion (ESOMAR via Research World). The threat of new entrants is moderate: capital requirements are lower than in other industries, but customer switching costs can be high because changing suppliers means retraining teams and re-specifying processes (Harvard Business Review). Buyer power is significant, especially with large clients like pharmaceutical companies, which account for 16.6% of spending (Similarweb / Research and Markets). Supplier power is also rising, as specialized software providers become essential. And rivalry? It's intense, with the US holding 53% of the market (Similarweb / Research and Markets). Each of these forces can be analyzed, and the framework gives you a systematic way to assess them.

The sixth force? Complements deserve a seat at the table

One thing I've come to appreciate is the argument for treating complements as a sixth force. Brandenburger and Nalebuff make a compelling case that complements are as important as substitutes, and that including them makes the framework more logically complete (Brandenburger & Nalebuff). In the insights industry, software and data are complements that raise the value of research services. Ignoring them would be a mistake. But even if you stick to the traditional five, you can still analyze the dynamics by considering how complements affect the five forces—for instance, how software raises switching costs or increases buyer power.

What I'd actually do

If you're doing industry analysis in 2025, don't abandon Porter. Use it as your backbone. But add a PESTLE layer to capture external trends like regulation—the ICC/ESOMAR Code, updated with new principles, is a key legal factor (ICC/ESOMAR). And don't forget to map strategic groups to see where the real competition is (Mastering Strategic Management). My recommendation: start with a five-forces analysis, then layer in PESTLE, then use strategic group mapping to identify untapped niches. That combination will give you a clear, actionable view of the industry—and it won't cost you a fortune in fancy software.

Sources

• ESOMAR via Research World (GMR 2025) - https://researchworld.com/articles/inside-the-153bn-insights-industry
• Harvard Business Review (Porter 2008) - https://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy
• Similarweb / Research and Markets - https://www.similarweb.com/blog/research/market-research/market-research-stats/
• Brandenburger & Nalebuff (Yale SOM paper) - https://som.yale.edu/sites/default/files/2024-12/1-SYMMETRY-AND-THE-SIXTH-FORCE-THE-ESSENTIAL-ROLE-OF-COMPLEMENTS-Adam-Brandenburger-Barry-Nalebuff%202.pdf