Porter's Five Forces Analysis

The Power of Buyers. What is it?

Power of Buyers

Buyers have the power to influence price and the quantity of products sold. Powerful buyers can bargain on volume or switching costs or they can simply find substitute products. Price sensitivity also impacts the buyer/seller relationship.

Questions to Ask

Can buyers impact the company's bottom line?

Who is the buyer? Are there many buyers or few? Are buyers concentrated?

What are the demographics of the consumer?

Are buyers price sensitive? What is the relationship of price to consumption?

What is your product? How does it differentiate itself from others (brand/quality/cost)? Can buyers substitute? Are customers brand loyal?

How does your product get to the market? What are the common distribution channels? Can buyers vertically integrate?

How to Search for Buyer Power

You can search newspapers and trade journals for articles about a company's products or brands. In databases like Business Source and ABI/Inform, be sure to use the All Text field when searching by brand name.

When researching buyer power, search by company name or product combined with words like customer, consumer, or distribution channel. You can also search by company name and the subjects brand loyalty, brand choice, or consumer attitudes.

Use these databases:

Identify the Buyers

Research Consumer Demographics and Lifestyle

Research Consumer Attitudes and Spending

Research Corporate Brand Value and Rankings