Bargaining Power of Buyers
Buyers of an industry’s products or services can sometimes exert considerable pressure on existing firms to secure lower prices or better services. This leverage is particularly evident when
(i) Buyers have full knowledge of the sources of products and their substitutes.
(ii) They spend a lot of money on the industry’s products i.e. they are big buyers.
(iii) The industry’s product is not perceived as critical to the buyer’s needs and buyers are more concentrated than firms supplying the product. They can easily switch to the substitutes available.
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