Customers can exert a powerful influence on the level of competition and the power of the customers depend on the following factors:

  • When the industry has only a few customers, the influence each customer has or impact on the industry is substantial.
  • There are a few customers whose purchasing power in term of quantities, may have a substantial effect on the industry.
  • Customers who have a wide ranges of sources for a standard product, will be in a position of power to call the prices from suppliers.
  • Customer has access to the industry's costs and level of demand
  • Big customer has the resources to take over the suppliers if they want to.
  • Customer can switch from one supplier to another easily without much difficulty.
All of the above factors will give the customer the ability to exert great influence on the industry in terms of pricing and product development and to the overall industry's competitive nature.