It is concentrated or purchases in large volumes. Large volume buyers are particularly potent forces if heavy fixed costs characterize the industry.
The products it purchases from the industry form a component of its product and represent a significant fraction of its cost.
The industry’s product is unimportant to the quality of the buyers’ products or services.
The industry’s product does not save the buyer money.
The buyers pose a credible threat of integrating backward to make the industry’s product.
Most of these sources of buyer power can be attributed to consumers as a group as well as to industrial and commercial buyers; only a modification of the frame of reference is necessary.
The buying power of retailers is determined by the same rules, with one important addition.