ProcurementIQ’s Buyer Power Score (BPS) answers the question: How much leverage does the buyer have in the negotiation process? The BPS is measured on a scale of 1 to 5, with 5 representing the most negotiating power. It is a weighted measure of factors based on the change in prices, the structure of the market, and market and supply chain risks.
We took a look at 10 markets in Canada that feature high buyer power scores, meaning procurement professionals can leverage their negotiating power to save money and gain value for their organisations.
1. Online Market Research Services | Buyer Power Score: 4.4
Definition: Suppliers of online market research services record, analyse and present marketing data. Data can be gathered through internet surveys, questionnaires, customer feedback forms and other online tools.
Organisations looking for big buyer power can find it in the Online Market Research Services market, which boasts a favourable price trend for the forecast period. The subtle price growth from 2016 to 2019 and an expected price drop through 2022 mean that buyers have plenty of time to survey Canada’s suppliers before making a decision.
2. Photocopier Leasing | Buyer Power Score: 4.4
Definition: Photocopier lessors loan out and help maintain photocopiers on buyers’ premises.
Photocopier Leasing vendors in the Canadian market have been passing on their savings from decreasing purchase costs to buyers in the form of lower rates. With the price of computers and electronic product manufacturing forecast to tone down more drastically during the next three years, buyers will have more room to bargain for better rates.
3. Permanent Personnel Recruitment | Buyer Power Score: 4.2
Definition: Permanent personnel recruitment agencies help businesses find potential employees by listing employment vacancies and referring and placing applicants for permanent employment.
Recruitment agencies have been working their way into the Canadian market, with the number of firms estimated to have risen 5.5% per year on average from 2016 to 2019. Buyers in Canada have thousands of Permanent Personnel Recruitment firms to choose from, making it easy to find the right recruitment agency for the job. With so many vendors in operation, buyers can employ fierce negotiation tactics and build up pressure among competing suppliers.
4. Outplacement Services | Buyer Power Score: 4.2
Definition: Suppliers help laid-off employees by offering career counsellors and job search experts to assist displaced employees with a variety of services, including interview preparation, resume and cover letter writing, business seminars and resume distribution.
Customers searching for negotiation leverage may find Canada’s Outplacement Services market ideal. In terms of buyer power, the favourable price trend is just the beginning. Buyers in this market enjoy a plethora of substitutes that can be referenced during negotiations to land reduced rates for services. Redeployment services and financial severance packages are just two of the alternate options that suppliers can employ instead of hiring outplacement service firms.
5. Promotional Products | Buyer Power Score: 4.1
Definition: Suppliers in this market provide various materials imprinted with organisations’ names and branding. These products are often passed out at trade shows and other events to advertise a company or cause, and they are also given as gifts to clients to reward continued business.
Sluggish price growth isn’t the only gift to buyers in Canada’s Promotional Products market. Organisations on the hunt for promotional products can leverage low switching costs and the wide range of substitutes in their campaign for discounted prices. Alternative advertising techniques and short contracts tip negotiation leverage in buyers’ favour. With these and other benefits in tow, buyers can pass along the message to suppliers that steep price hikes simply will not work.
6. Compensation & Benefits Planning Services | Buyer Power Score: 4.1
Definition: Vendors in this market assist with the development, communication and implementation of staff benefits programs and compensation systems. Benefits planning may include evaluating a firm’s retirement plans, health insurance, vacation pay and employee stock options.
When planning for negotiations with suppliers, buyers should consider leveraging alternative services and competing providers. As benefits to buyer power, high availability of substitutes and low market share concentration compensate for the moderate specialization and switching costs in the market. Buyers in Canada can find roughly 5,000 firms to consider during negotiations, giving them widespread access to Compensation and Benefits Planning Services. Employee leasing services and HR and benefits administration are just two of the alternatives buyers can leverage when rallying for price drops.
7. Corporate Wellness Services | Buyer Power Score: 4.1
Definition: Corporate wellness service providers design educational and organizational programs and help implement workplace practices to help support the health and wellbeing of employees.
As employers have been seeking ways to reduce absenteeism in the workplace, providers of Corporate Wellness Services have been showing up to meet their needs. From 2016 to 2019, the number of firms in the Canadian market has grown about 5.2% per year on average. With a healthy pool of vendors to choose from, buyers can shop around for the best deal on services. In searching for programs that will help minimise stress levels in the workplace, buyers can put the pressure on suppliers to match competitors’ rates.
8. Risk Management Consulting Services | Buyer Power Score: 4.0
Definition: Risk management consultants develop procedures and practices to identify, assess, mitigate and monitor risk to assist buyers. These services can cover broker selection, asset diversification, insurance audits, claims management and more.
Customers who fail to leverage their buyer power in this market will risk missing out on potential price concessions. The Risk Management Consulting Services market is rife with opportunities to save. The high availability of substitutes and low market share concentration help Canadian buyers manage the negotiation process. With roughly 10,000 operators in this fragmented market, buyers can monitor competitors’ rates to persuade vendors to concede on price.
9. Marketing Consulting Services | Buyer Power Score: 4.0
Definition: Marketing consultants advise buyers on how to pursue marketing strategies. This type of consulting covers a variety of marketing-related activities, such as development of marketing objectives, consumer profiling, new product development, pricing and data analytics.
According to the Centre for International Governance Innovation, a disproportionate share of the world’s big data experts graduate from Canadian universities. While experts abound in Canada, the big data revolution has yet to fully catch on. Amid ongoing developments in this market, customers on the search for marketing consultants and data analysts will find ample talent in Canada without needing to pay top dollar. With over 6,000 Marketing Consulting Services providers in Canada, buyers are encouraged to seek out attractive rates by building up pressure among competing suppliers.
10. Integrated Advertising Services | Buyer Power Score: 4.0
Definition: Integrated advertising firms are one-stop shops for companies looking to develop and implement advertising campaigns through a variety of platforms.
Companies across Canada have been taking their ads off the airwaves and signing online. Mobile ad spending has been climbing at a particularly fast rate, according to eMarketer, jumping an estimated 37.5% from 2017 to 2018. As Canadian customers have dialed up their ad spend in the three years to 2019, advertising firms have been scooping up new business. While large Integrated Advertising Services providers have been growing their shares of the market, each of the 1,000+ independent agencies in Canada capture under 5.0% of the market. This fragmented and competitive landscape helps promote buyer power.
To learn more about Buyer Power Scores and how you can leverage high buyer power to save your organisation money, chat with one of our representatives.
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For companies sourcing in North America, exploring additional vendors and markets outside of the United States ensures you are getting the best value for your dollar. Learn more about our Canada Spotlight Report collection.
By Kim Bucci, Business Research Analyst
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ProcurementIQ took a look at 10 markets in Canada that feature high buyer power scores, meaning procurement professionals can leverage their negotiating power to save money and gain value for their organisations.