This refers to the amount of influence the buyer has over the products or services sold, their price or distribution.
Where individual buyers have little power, for example a typical individual retail purchase, the supplier controls all aspects of the product and its price; the buyer has a simple choice to buy or not. Where individual buyers have great power, for example as the buyer for a major chain of retail outlet; they can demand price reductions, changes to the product specification or packaging, volume requirements which effectively prevent the supplier serving other customers.
Buyer power is greater when there is a wide choice of potential suppliers or similar products and services, or where the buyer represents a major part of the supplier’s turnover. Buyer power is a term normally found in business and strategic management; explore our learning zone to discover more.