Which condition makes buyers powerful?

Which condition makes buyers powerful?

• A. Suppliers are many and offer similar products
• B. Buy a large portion of an industry's total output
• C. Industry products are undifferentiated
• D. Switching costs are high

Answer: (B)

Powerful buyers push for better prices and terms when they can influence a large portion of an industry's sales. When a buyer accounts for a big share of total output, suppliers stand to lose a lot if that customer defected, so they’re more willing to negotiate on price, delivery, and service. That volume-based leverage is the strongest driver of buyer power. Other factors matter too, but less decisively in this context. High switching costs keep buyers locked in, which actually reduces their power. If products are undifferentiated, buyers can switch suppliers easily, increasing power, and having many suppliers can ease buyer choice as well, but the most impactful lever is the buyer’s large purchase share.

Powerful buyers push for better prices and terms when they can influence a large portion of an industry's sales. When a buyer accounts for a big share of total output, suppliers stand to lose a lot if that customer defected, so they’re more willing to negotiate on price, delivery, and service. That volume-based leverage is the strongest driver of buyer power.

Other factors matter too, but less decisively in this context. High switching costs keep buyers locked in, which actually reduces their power. If products are undifferentiated, buyers can switch suppliers easily, increasing power, and having many suppliers can ease buyer choice as well, but the most impactful lever is the buyer’s large purchase share.