Discussing the Bargaining Power of Buyers (Essay Sample)

Bargaining Power of Buyers
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Bargaining Power of Buyers
In every business, customers can affect profitability through their purchasing power, demands, or predispositions. The concept implies that companies should anticipate the buyer’s sensitivity through internal measures such as loyalty programs. For instance, within Uber, customers have the prerogative to search for alternative companies that offer lower prices. Even then, consumer power is inversely proportional to their quantity. Indeed, factors that might influence the bargaining ability of buyers include concentration vis-а-vis the company size, information availability, price sensitivity, and differential advantage. Therefore, entrepreneurs and corporate executives should execute measures that minimize the bargaining power of buyers to shift their demands and predispositions.
While several factors affect the ability of consumers to bargain, monopolistic demands could hinder the ability of businesses to make a profit. In the case of Uber, multiple alternatives imply that that the company has to offer lower prices and consistently present new products (Yu, 2019). Indeed, a high customer bargaining power means that the client can easily switch vendors without incurring additional costs. Therefore, the concept illustrates that companies should minimize the substitutability of their products while controlling the supply chain. Otherwise, the bargaining power of buyers could threaten an entire supply chain if buyers have monopolistic powers.
Even then, sellers can subvert the problem by offering differentiated value and increasing the switching costs. In the case of Uber, customer retention and well-developed products might alleviate the problem. Nevertheless, social costs might be an appropriate alternative by ensuring that sel