Question

the lesser the number of customers there are in the market ,the greater their bargaining power. discuss

Answer 1

Lesser number of customers means less possible potential buyers in the market. This is the case of Business to Business (B2B) market. As there are less number of potential buyers, so less possibility of expanding the customer base by attracting more number of buyers..

At the same time, each customer contributes towards a significant portion of the sale of the seller and thus makes a larger revenue base for the seller.. It is quite unaffordable for the seller to miss a single customer also being forming a significant revenue base for the seller..

This happens in the case of B2B market where there are less number of customers but each customer being bulk buyer contributes significantly towards the revenue earned by the seller.

As a result, the customer has got greater bargaining power where there are lesser number of customers.