A buyer's market is a market situation that is characterized by excess supply or by a particularly strong buyer position. It is often characterized by intense price competition and falling prices. The opposite of this is Seller market.
Definition / explanation
Buyer's markets are typical for developed industrial societies and occur particularly in consumer goods. In this constellation, buyers can choose from a large number of offers; more goods are brought onto the market than are actually necessary to satisfy the needs.
The excess supply leads to intense competition between suppliers, which is often - but not only - based on price.
In buyers' markets, buyers are in the stronger position. As a result, the providers are forced to adopt a fundamental customer and market orientation in their corporate policy. Marketing has a crucial key position in this and all other company activities are geared towards this.
Reasons for buyers' markets
In addition to the excess supply, there are also other reasons that can lead to a buyer's market:
- there is a need that is not urgent in terms of time and can therefore be postponed
- Asymmetrical information: there is better market knowledge on the buyer side than on the supplier side
- Restraints of competition and concentration of power on the buyer side Oligopolies, Purchasing cartels or market regulation