What does the term 'new entrants' refer to in market analysis?

In market analysis, the term 'new entrants' specifically refers to the threat of new competitors entering the market. This concept is crucial in understanding the competitive dynamics within an industry. New entrants can disrupt existing market conditions by introducing additional competition, which can lead to price reductions, increased innovation, and changes in customer preferences.

Evaluating the threat of new entrants is an essential aspect of assessing industry attractiveness and determining how easily potential competitors could join the market. Factors such as barriers to entry, capital requirements, access to distribution channels, and brand loyalty all play significant roles in this analysis.

Understanding this concept prepares businesses to strategize effectively and respond to potential challenges posed by new competitors looking to capture market share.