What is buyer power example?

Buyer power refers to a customer’s ability to reduce prices, improve quality, or “generally play industry participants off one another.” Buyer power examples include larger and influential customers demanding higher-quality products for lower prices. What factors might impact buyer power?

What is buyer power?

Buyer power refers to a customer’s ability to reduce prices, improve quality, or generally play industry participants off one another. This potent force can offer insight into existing operational tactics and strategies that directly drive industry revenue such as pricing or consumer targeting, to name two.

How do you analyze the bargaining power of buyers?

When analyzing the bargaining power of buyers, conduct the industry analysis from the perspective of the seller. According to Porter’s 5 forces industry analysis framework, buyer power is one of the forces that shape the competitive structure of an industry. (See the other Porter’s 5 forces of competition .)