The customer always have various types of needs related to the product like cost, quality and functions etc. To what extent an enterprise in an industry can sacrifice its profits to satisfy the customers demands depends upon the negotiation power relationships of the two. The conditions given below increase the negotiation power of the customer.
· The customers are concentrated at one place and they contribute a considerable amount of share of profits of the supplier.
· The price of the product supplied by the supplier forms a big cost factor for the customers.
· The supplied product can not be made distinctive or standard product.
· The switching cost for changing the supplier is low for the customer.
· Earning power of the customer is problematic.
· The supplied product does not form a very important factor with regard to quality of the product or the services for the customer.
· The customer has considerable amount of information.
There is nothing like a state in which the supplier can select the customers, however, in this case, the supplier must consider the above mentioned conditions and it is important to select a customer in such a manner that it can carry out the transactions under most beneficial conditions.
· The customers are concentrated at one place and they contribute a considerable amount of share of profits of the supplier.
· The price of the product supplied by the supplier forms a big cost factor for the customers.
· The supplied product can not be made distinctive or standard product.
· The switching cost for changing the supplier is low for the customer.
· Earning power of the customer is problematic.
· The supplied product does not form a very important factor with regard to quality of the product or the services for the customer.
· The customer has considerable amount of information.
There is nothing like a state in which the supplier can select the customers, however, in this case, the supplier must consider the above mentioned conditions and it is important to select a customer in such a manner that it can carry out the transactions under most beneficial conditions.