Essay: Bargaining Power of Customers

Sample Essay

An airline has hundreds of thousands of people in its customer base and many more if we include the potential customers who might decide to travel some time later, either for the purpose of business or leisure. Customers have bargaining power in an industry if there are only a few customers. For example, if the business is a B2B organization and does not provide directly to the end consumer, rather to other businesses, then these businesses are the customers of that company.

If there are only a handful of these businesses operating in the market, then this means that the bargaining power of these customers is very large and they can affect the prices of the products that they are buying, hence making it very difficult for the organization to operate according to its own preferences.

However, in the airline industry this is not the case. There are millions of people who travel each year for business, leisure, adventure or religious purposes. Therefore, customers have limited power individually to affect the airline industry.

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