Introduction to Strategic Management

Week 2

Buyer Power

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 Introduction to Strategic Management
Bargaining Week 2

power of Will increase if...

Buyers

Intrinsic leverage increases

High buyer concentration vis-a-vis firm concentration

Buyer purchases in high volumes

Low switching costs for buyer relative to firm’s switching costs

High levels of buyer information/ expertise

Buyer has high ability to integrate backward

Several substitute products exist

© All Rights Reserved, Indian Institute of Management Bangalore

 Introduction to Strategic Management
Bargaining Week 2

power of Will increase if... (contd)

Buyers

Price sensitivity increases

Price / Total purchases is high for buyer

Product differences are small
Brand identity is weak
Impact on quality / performance is low
Buyer profitability is low

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