You are on page 1of 3

Course Name: Academic Semester: Course Facilitator: Presented by:

Strategic Management Spring 2013 Sir Shahnawaz Adil Rizwan Iqbal

It refers to the pressure consumers can exert on businesses to get them to provide higher quality products, better customer service, and lower prices.

The more powerful a buyer is relative to the seller, the more influence the buyer has. This influence can be used reduce the profits of the seller through a reduction of prices, increased favor in customer service or order delivery, or influence over who the seller supplies to

Buyer/Customer Power is Low/Weak if:


Buyers are less concentrated than sellers Buyer switching costs are high Threat of backward integration is low Buyers have low margins and are price-sensitive, and is not price sensitive

Buyer is uneducated regarding the product


Buyer purchases product in low volume Buyer purchases comprise small portion of seller sales Product is highly differentiated If there are Few Suppliers but Number of Buyers in Market Producers threaten downstream integration - Producer can take over own distribution/retailing Buyer switching costs is High- Products not standardized and buyer cannot easily switch to another product