Buyers price sensitivity
Relative bargaining power
- cost of purchases as % of buyers total costs.
- The less differentiated the item the more likely the buyer will switch supplier based on price. More competition in the industry leads to suppliers pressured 2 decrease prices
- Smaller no of buyers & bigger their purchases the greater the cost of loosing one. The better informed buyers are about suppliers and the prices and costs, the better able they are to bargain.
- A firms ability 2 vertically integrate reduces their dependance on suppliers