The second force is the bargaining power of buyers

[mimakte]

Another of Porter's 5 competitive forces is consumer influence. In essence, the market exists due to the interest of buyers in a particular product. That is, the product is sold while the consumer is trying to solve some of his problems with its help. The competitiveness of both the product and the company itself ultimately depends on this. The best buyers for any company are those who have the least influence on the market. This should be remembered when forming a development strategy.

When the consumer puts forward increasingly stringent demands for the quality of goods or services, tries to influence pricing policy, competition begins to grow.

Bargaining power of buyers

The manufacturer is ready austria email list to spend more on production (buy more expensive raw materials, improve the level of service, introduce additional services, etc.) only when it sees that the consumer is dissatisfied with the quality of the finished product. As a result, its own profit decreases.

When buyer power increases:

Concentrated groups of buyers make large, large-scale purchases. Then the company will follow the buyers' lead in order to maintain consumer interest, so as not to lose the profits they bring.

The market is filled with non-unique, interchangeable goods. That is, buyers, without infringing on their own interests, can freely switch from one product to another, a third, etc.

Buyers are very sensitive to price changes and demonstrate a clear desire to save money and reduce expenses as much as possible.

The industry produces and sells a product, which in turn is a raw material for another production. Of course, the buyer, in an effort to reduce costs, will look for the most profitable supplier in order to spend as little money as possible on the production of their own goods.

The quality of the product available on the market does not satisfy the consumer, which means that he will look for an alternative with higher characteristics.

[yadaysrdone]

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