THE BARGAINING POWER OF BUYERS

1. A buyer purchases the large portion of the seller’s product or

services.
2. A buyer has the potential to integrate backward by producing the
product itself.
3. Alternative suppliers are plentiful because the product is standard
or undifferentiated.
4. Changing suppliers cost very little.
5. The purchased product represents a high percentage of a buyer’s
costs, thus providing an incentive to shop around for a lower price.
6. A buyer earns low profits and is thus very sensitive to costs and
service differences.
7. The purchased product is unimportant to the final quality or price of a
buyer’s products and service sand thus can be easily substituted without
affecting the final product adversely.
8. By building a large base of customers. This will be helpful in two ways.
It will reduce the bargaining power of the buyers plus it will provide an
opportunity to the firm to streamline its sales and production process.
9. By rapidly innovating new products. Customers often seek discounts
and offerings on established products so if JSW steel industry keep on
coming up with new products then it can limit the bargaining power of
the buyer.
10. New products will also reduce the defection of existing customers of
JSW steel industry to its competitors.