Los Angeles, CA (PRWEB) September 02, 2014
Buyers in the illuminated sign market have a buyer power score of 3.4 out of 5, indicating a medium level of buyer power. “The primary factors negatively impacting buyer power are the low availability of substitutes and moderate supply chain risk,” according to IBISWorld business research analyst Kayley Freshman-Caffrey. Although there are some products that buyers can purchase in place of illuminated signs, none act as perfect substitutes for the product. This limitation reduces buyer power because it means that buyers seeking all of the benefits of illuminated signs, including location-based advertising and night-time visibility, have little choice but to purchase these signs and they cannot depend on substitute products to erode prices.
Additionally, moderate supply chain risk negatively impacts buyer power. Many upstream suppliers of illuminated sign manufacturers are facing high levels of import penetration, which undermine their sales and threaten their financial stability. This risk is passed onto the illuminated sign manufacturer and then onto the customer. “The bankruptcy of an upstream supplier could disrupt a sign manufacturer's operations by reducing their access to key inputs and causing potential delays in the production of a buyer's sign,” says Freshman-Caffrey.
On the other hand, buyer power is strengthened by low switching costs and low product specialization. Because illuminated signs are often a one-time purchase, there is no need for a buyer to maintain a relationship with a supplier. Buyers therefore face minor costs associated with switching from one supplier to another, which increases buyer power by allowing them to work with the suppliers that best suit their needs. In addition, product specialization in the market is low, so buyers do not need to find a specialized provider. Overall, buyers benefit from their ability to choose a supplier that fits their needs, but are hurt by suppliers' supply chain risk and the lack of substitutes. These factors balance each other, resulting in a moderate level of buyer power.
Four of the top suppliers in the Illuminated Signs market are Pattison Sign Group, Young Electric Sign Company, Fastsigns International Inc. and Signarama. The number of suppliers has been declining in the three years to 2014 as some suppliers exit the market, further reducing market share concentration. The high transportation costs associated with the product encourage this market fragmentation by making it difficult to source signs from suppliers that are not located within a close proximity of the buyer. As a result, suppliers are scattered throughout the country and do not necessarily come in direct competition with each other. For more information, visit IBISWorld’s Illuminated Signs procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of illuminated signs, which are signs that emit light from an internal or external artificial source. The primary purpose of an illuminated sign is to inform passersby about a business or organization's location. Common types of illuminated signs include light boxes, monuments and those with neon and channel letters. This report does not cover digital billboards, electronic message centers or variable message signs.
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.