following conditions hold:
Industry customers’ “switching costs” to competitors’ products or to substitutes are
relatively high.
The number of buyers in the industry is large.
Customers demand products that are differentiated rather than purchase commodity
products that they can obtain from any supplier (and subsequently can pit one company
against another to drive down price).
Customers find it difficult to gather information on suppliers’ costs, prices, and
product features—something that is becoming much easier for customers in many
industries to do by using the World Wide Web.
The items companies sell to the industry account for a relatively small portion of the
cost of their customers’ finished products.