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Porter Five Force Analysis Bargaining Power of Buyers for Dollar Tree Explain

Porter Five Force Analysis Bargaining Power of Buyers for Dollar Tree Explain

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Bargaining Power of Buyers

Buyers are often a demanding lot. They want to buy the best offerings available by paying the minimum price as possible. This put pressure on Dollar Tree, Inc. profitability in the long run. The smaller and more powerful the customer base is of Dollar Tree, Inc. the higher the bargaining power of the customers and higher their ability to seek increasing discounts and offers.

Bargaining Power of Buyers

  • The number of suppliers in the industry in which Dollar Tree operates is a lot more than the number of firms producing the products. This means that the buyers have a few firms to choose from, and therefore, do not have much control over prices. This makes the bargaining power of buyers a weaker force within the industry.
  • The product differentiation within the industry is high, which means that the buyers are not able to find alternative firms producing a particular product. This difficulty in switching makes the bargaining power of buyers a weaker force within the industry.
  • The income of the buyers within the industry is low. This means that there is pressure to purchase at low prices, making the buyers more price sensitive. This makes the buying power of buyers a weaker force within the industry.
  • The quality of the products is important to the buyers, and these buyers make frequent purchases. This means that the buyers in the industry are less price sensitive. This makes the bargaining power of buyers a weaker force within the industry.
  • There is no significant threat to the buyers to integrate backwards. This makes the bargaining threat of buyers a weaker force within the industry.
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