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This drives the prices of groceries down in both companies.
Buyer power also acts to force prices down. If beans are too expensive in Tesco, buyers will exercise their power and move to Sainsbury. Fortunately for Tesco, there are few other large supermarket companies. This means the market is disciplined ? the supermarkets have a disciplined approach to price setting. Discipline stops them destroying each other in a profit war.
Another of Porter's five forces, supplier power, is wielded by suppliers demanding that retailers pay a certain price for their goods. If retailers don't pay the price, they don't get the goods to sell...
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