What is meant by Buyer Concentration?

Buyer Concentration refers to a market condition where a limited number of buyers hold a significant proportion of the market share. This situation can lead to greater bargaining power for those few buyers over suppliers. When there are only a handful of buyers, they can exert influence on prices, terms, and conditions to extract better deals due to the limited number of potential customers for suppliers.

In scenarios of high buyer concentration, suppliers may find themselves in a competitive position, needing to meet the specific demands and preferences of these large buyers to retain their business. This dynamic shifts the power balance in the supply chain, making it crucial for suppliers to have strategies in place to address the needs of these dominant buyers effectively.

The other options do not accurately capture the concept of Buyer Concentration. For example, having many small buyers indicates a diverse market, which would typically suggest low concentration of buyer power. High switching costs relate more to buyer behavior rather than concentration itself, and an even spread of buyers across suppliers indicates a balanced market with no influential buyer concentration.