What Is Bargaining Power?
The buyer's bargaining ability refers to the buyer's ability to profit from the state of confrontation between the seller and the bidder by using competitive means such as lowering prices, requiring higher product quality, or requesting more service items.
Buyer bargaining power
Right!
- Chinese name
- Buyer bargaining power
- Foreign name
- Bargaining power of customers
- Basic factor
- Price sensitivity and relative bargaining power
- Influencing factors
- Number of suppliers, number of buyers, etc.
- Definition
- Buyer's ability to profit from sellers and competitors
- Buyer bargaining power
- Buyers use drive down prices
- The buyer's bargaining ability refers to the buyer's ability to profit from the state of confrontation between the seller and the bidder by using competitive means such as lowering prices, requiring higher product quality, or requesting more service items.
- determining factors
- There are two basic factors that determine the buyer's bargaining power: price sensitivity and relative bargaining power. The price sensitivity determines how much the buyer wants to bargain; the relative bargaining power determines how much the buyer can successfully lower the price.
- 1. Price sensitivity. Whether the buyer is price sensitive depends on whether the product is important to the buyer's cost structure. When the product accounts for most of the buyer's cost, the buyer will be more concerned about whether there are lower cost alternatives; of course, the importance of the product to the buyer's product quality also determines whether the price can become an important factor affecting the purchase decision.
- 2. Relative bargaining power, even if buyers are sensitive to price, if they have no more choice-"have to buy", their relative bargaining power is weak.
- The buyer's bargaining power is affected by the number of buyers relative to the number of suppliers, the purchase amount of a single buyer, the number of alternative products available to the buyer, the cost of the buyer's choice of alternative products, the threat of the buyer's reverse merger, and the buyer's Degree of information. For example, in the automotive industry, car manufacturers have strong bargaining power over component manufacturers because auto companies are big buyers, and usually there are many suppliers to choose from, and their replacement costs are relatively low. In the personal computer industry, due to higher replacement costs, computer manufacturers have lower bargaining power over operating system software maker Microsoft.