Bargaining Power of Buyers

Bargaining power of buyers refers to the influence customers have on a business's pricing and quality. When buyers have many options, they can demand lower prices or better quality since businesses want to attract and retain them. Factors affecting this power include the number of available alternatives, the importance of the buyer's purchase, and how easy it is for them to switch to another supplier. High bargaining power can lead to lower profits for businesses, while low bargaining power allows companies to set higher prices and maintain margins. Understanding this concept helps businesses strategize effectively.