Factors Underlying Buyer Power
|
Response
|
Effect on Industry
|
Strength
|
Rank
|
Weight
|
Reasoning
|
Is Buyer Concentration High?
|
Yes
|
Unfavorable
|
5
|
5
|
5.00%
|
Buyers are increasingly demanding and also receiving higher levels of functionality at lower prices.
|
Is the Market Growth Rate High?
|
Somewhat
|
Moderately Favorable
|
2
|
4
|
15.00%
|
For different reasons though, with growth in US and Europe driven by handset replacement to have access to latest technology and in emerging markets driven by low market penetration,
|
Is the Firm’s Product Strategically Important to the Buyer?
|
Somewhat
|
Moderately Favorable
|
2
|
3
|
5.00%
|
Buyer needs the phone to use wireless service, but there are enough options available with different value propositions depending on feature based bundling
|
Is the Buyer Strategically Important to the Firm?
|
Yes
|
Unfavorable
|
5
|
2
|
15.00%
|
Each buyer helps attain economies of scale
|
Are there Substitutes Available for the Buyer?
|
Yes
|
Unfavorable
|
5
|
1
|
15.00%
|
There are handsets with varying value proposition in terms of features and price providing options. Also there is increased competition from landline companies, Wi-Fi and cable companies.
|
Is there a High Need of the Firm to Fill Capacity?
|
Yes
|
Moderately Unfavorable
|
4
|
11
|
5.00%
|
To attain economies of scale and reduce costs to make the product attractive to customers
|
Is there High Threat of Vertical Integration from Customer?
|
No
|
Favorable
|
1
|
10
|
5.00%
|
Customers are not keen to manufacture handsets
|
Is Buyer Price Sensitivity high?
|
Yes
|
Unfavorable
|
5
|
6
|
10%
|
The buyers in all markets are price sensitive. Corporate and high end users are less price sensitive but their market size comparatively is much smaller
|
Is the Buyer switching costs high?
|
Yes
|
Moderately Unfavorable
|
4
|
7
|
10%
|
The buyer in most cases has to pay a contract cancellation fee which can be a significant amount. This is partially offset by service providers’ rebates and the facility to keep the telephone number when switching
|
Is the product a significant portion of buyer’s costs?
|
No
|
Moderately Favorable
|
2
|
8
|
10%
|
The basic handsets are free with a new contract for most subscribers and handsets are also heavily subsidized
|
Does buyer have full information?
|
No
|
Favorable
|
1
|
9
|
5%
|
The buyer is usually not aware of the full retail price of handsets and the profitability margins associated with it
|
OVERALL BUYER POWER LEVEL
|
|
Moderately Unfavorable
|
3.6
|
|
|
|
