If an increase in price leads to a large decrease in demand for a product, which of Porter's 5 forces is illustrated?

The situation described illustrates the bargaining power of customers. When an increase in price results in a significant decrease in demand for a product, it indicates that customers have the ability to influence pricing and demand based on their preferences and alternatives available in the market. High customer bargaining power typically means that they can easily switch to substitute products if they perceive that the price of a particular good has risen too high, demonstrating their sensitivity to price changes.

This scenario highlights the importance of understanding customer behavior and preferences. If they are willing to reduce their purchases significantly due to higher prices, it confirms their strong position in negotiations with suppliers or businesses, who must then consider lowering prices or enhancing their value propositions to retain customers.

In contrast, the other forces, such as the threat of new entrants, rivalry among existing competitors, or the bargaining power of suppliers, do not directly focus on the influence of customers on pricing and demand elasticity in the same way this situation does.