Factors That Influence the Bargaining Strength and Leverage of Buyers

Question

Examlex · Accepted Answer

The Answer is Competitive pressures from buyers increase when they have strong bargaining power and are price sensitive. Buyer bargaining power is stronger when:
•Buyer demand is weak in relation to industry supply.
•The industry's products are standardized or undifferentiated.
•Buyer costs of switching to competing products are low.
•Buyers are large and few in number relative to the number of industry sellers.
•Buyers pose a credible threat of integrating backward into the business of sellers.
•Buyers are well informed about the quality, prices, and costs of sellers.
•Buyers have the ability to postpone purchases.
Buyers are price sensitive and increase competitive pressures when:
•Buyers earn low profits or low income.
•The product represents a significant fraction of their purchases.
Competitive pressures from buyers decrease and become a weaker force under the opposite conditions.

Factors That Influence the Bargaining Strength and Leverage of Buyers

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