What are the levels of bargaining leverage

Question

What are the levels of bargaining leverage?

Answer 1

When buyers do not buy in large quantities or present a seller important market exposure or prestige, they gain a level of bargaining leverage in the following conditions:

a. If the buyers’ costs of switching to competing brands or the substitutes are relatively small – Buyers who can voluntarily switch brands or source from many sellers have more negotiating leverage than consumers who have high switching prices.

b. If the number of buyers is small or if a consumer is mostly important to a seller – The smaller the number of the buyers, the fewer simple it is for sellers to find substitute buyers when a consumer is lost to a competitor.

c. If buyer requirement is feeble and sellers are scrambling to safe additional sales of their products – Weak or declining requirement makes a “buyers market” and shifts bargaining power to buyers.

d. If buyers are well-informed about the sellers’ prices, products, and costs – The more information buyers have, the improved bargaining position they are in.

e. If buyers pretense a convincing threat of integrating backward into the business of sellers – Companies like Coors, Anheuser-Busch, and Heinz have mixed backward into metal-can manufacturing to increase bargaining power in obtaining the balance of their can needs from or else strong metal-can manufacturers.

f. If buyers have carefulness in whether and when they purchase the item – If customers are sad with the present deals obtained on main appliances, home entertainment centers, hot tubs, or other goods for which time is not a serious purchase factor, they may be in a situation to delay purchase until costs and financing terms get better.