Bargaining Power
of Buyers
The ability of the buyer to negotiate the terms of sale
significantly affects pricing and profits. As the customer becomes more
powerful, downward pressure is exerted on pricing and profitability. Customer
service begins to improve as industry participants find different ways to
compete. Improved service has been observed in the banking industry as
deregulation and overcapacity has pushed
banks to compress product delivery times. Banks have dropped loan approval time
from one week to one day on many types of commercial loans.