Los Angeles, CA (PRWEB) August 05, 2014
Industrial robots have a buyer power score of 1.7 out of 5. This score indicates that suppliers have a substantial advantage over buyers in negotiating the final purchase price. “Suppliers have been increasing the price of industrial robots during the three years to 2014, due in part to high product specialization, a low availability of substitutes and high switching costs,” according to IBISWorld business research analyst Jeffrey Cohen.
Over the past three years, increasing demand among key buying industries has given suppliers leverage to raise prices of industrial robots at a fast rate, hurting buyer power. Another factor that has negatively affected buyers is high price driver volatility. This trend is largely due to the high volatility in the prices of steel and aluminum, which are key inputs into the manufacture of industrial robots. High price driver volatility harms buyer power because it ultimately leads to more difficulty on the buyer's part when budgeting for purchases and increases the risk for sudden price hikes.
Industrial robots are a highly specialized product and there are a limited number of robot suppliers throughout the United States. These robots are made to carry out a variety of manufacturing operations with precision and speed and there are virtually no substitute products that can replace them. Because the availability of substitutes is low, buyers lose negotiating power. While buyers that require highly specialized robots have fewer choices among suppliers, and therefore lower buyer power, those that require industrial robots for less specialized tasks have a wider supplier base to choose from. As a result, buyers requiring less specialized robots can more effectively negotiate a price. Furthermore, high switching costs reduce buyer power. “Due to the highly specialized nature of the products, it is risky to switch suppliers because buyers have limited options and the new supplier may not meet the buyer’s needs. Therefore, suppliers have more leverage in setting prices when they know that buyers are less likely to switch suppliers,” Cohen says.
Industrial robot prices are largely determined by the performance specifications that they are required to meet, as well as the quality of the components used. Performance specifications are related to the industry that the buyer operates in; the more complex the tasks to be performed are, the more expensive the industrial robot will be. For instance, when a robot is required to perform simple tasks such as welding or packaging products, the robot is priced much lower because the supplier requires less time and resources to manufacture it. Four major vendors in this market are ABB Ltd., Adept, Comau Inc., and FANUC Robotics America Corporation. For more information, visit IBISWorld’s Industrial Robots procurement category market research report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld.
Like IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189.
IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of industrial robots. An industrial robot is a mechanical device that manufacturers use in a variety of industries, including automotive, electronics and metalworking machinery. They are designed to perform dangerous or repetitive tasks with a higher degree of accuracy than human workers. Industrial robots are primarily sold by robot manufacturers and robot integrators. Service robots typically perform services useful to humans in household chores and not manufacturing operations; therefore, service robots are not included in this report.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.