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Under Porters Five Forces, what does the power of customers mean?

Customers will also have the potential power to drive prices in the market. The variables consist of how many customers exist within a given industry and how many customers the firm specifically has.

Additionally, the power of customers will depend on how much it would cost a firm to find new customers or markets for its output. A firm with a smaller client base generally means that each customer will have the power to negotiate lower prices and better deals.

Conversely, a firm with a variety of smaller customers will be able to dictate their own higher price points to increase their profitability.


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