Which factor increases buyer bargaining power?

When buyers purchase in large volumes, their bargaining power significantly increases. This occurs because larger purchases often lead to better pricing, terms, and conditions from suppliers. Suppliers are more likely to negotiate favorable deals to secure large orders, as these orders can represent a substantial portion of their sales. As a result, buyers can leverage their volume to negotiate lower prices or improved service levels, utilizing their purchasing power to influence the terms of the transaction.

In contrast, when buyers have limited knowledge of products, products are highly differentiated, or sellers have exclusive rights to products, the ability of buyers to negotiate may be hindered. Limited knowledge restricts buyers from understanding the true value of products or available alternatives. Highly differentiated products create a situation where buyers may have less incentive to negotiate if they perceive the uniqueness as essential, thereby making them less powerful in the bargaining process. Similarly, if sellers hold exclusive rights to certain products, buyers have little leverage since there are no alternative suppliers to consider.