Customers and Demand

Characteristics	Current situation	Future trend
Segmentation of customers	Economy, middle, premium, lux.	Growth of economy segment
Does a buyer's purchase volume represent large fraction of typical seller's sales revenue?	It depends on a type of a buyer: end-buyers purchase in small volumes which represent a negligible fraction of seller’s sales revenue. Retail chains purchase in extensive volumes and hence are able to negotiate prices with confectionery producers.	Same
Switching cost	Low due to large variety in similar products.	Same or lower
Can buyers find substitutes for industry's product?	Yes. Substitutes correspond to the various purchase purposes of confectionery and include different types of snacks and different gifts (e.g. flowers, postcards). Switching costs for both types of buyers are quite low. However, in case of retailers the ability to switch can be limited by large investments of confectionery producers in advertising and by the existence of brand loyalty among end-buyers.	It might be slightly higher, as new substitutes may be introduced.
Price elasticity of market demand	Low because consumption would increase despite increasing prices.	Same
Price elasticity of demand for typical firm	It is relatively high, which can be explained by several factors: the existence of readily available substitutes, low switching costs, independence of buyers.	Slightly higher, due to increase in some of the factors mentioned.
Price elasticity of various customers	It depends on customer’s type. For economy and middle type it’s high, and it’s quite low for premium.	It’ll remain the same for economy and premium type, and slightly lower for middle.
Price discrimination (actual and potential)	Discrimination with regards to price in sales to competing purchasers of like quality and quantity is prohibited. However, volume discounts are allowed, and buyer groups are allowed under certain criteria.	Same
Versioning (actual and potential)	Versioning exists in case of packing (wrapping) the same product differently.	Same
Bundling and Tie-ins (actual and potential)	-	-
Are prices negotiated on each individual transaction or set as take-it-or-leave-it" for all transactions?	Generally, producers negotiate with retailers and establish a certain price which applies to further transactions	Same
Do buyers pose credible threat of backward integration? (for B2B)	-	-
Does product represent significant fraction of cost in buyer's business? (for B2B)	-	-

Дата добавления: 2015-11-16