Service prices are anticipated to stagnate over the next three years due to falling operating costs
Los Angeles, CA (PRWEB) September 09, 2014
Seismic and geophysical services have a buyer power score of 3.4 out of 5. This score signifies that buyers have moderate leverage in the negotiation process. “Buyer power is positively influenced by the prevailing favorable price trends, and negatively impacted by the high levels of market share concentration, specialization and switching costs,” according to IBISWorld business research analyst Deonta Smith.
Recent price trends have been favorable for buyers, primarily because of the declining price of major purchases, such as crude oil. “At the same time, wage costs have stagnated, creating a purchasing environment that strengthens buyer power,” says Smith. However, the rise of domestic oil and natural gas production has boosted demand for seismic and geophysical services, thus minimizing the impact of lower operating costs. As a result, prices for seismic and geophysical services have slowly risen from 2011 to 2014.
Over the next three years, buyers should anticipate slower price growth as purchase costs further decrease, thus improving buyer power. Although, demand will remain strong, purchase items, such as fuel used for transportation to project sites and operate machinery, will hinder price growth in the seismic and geophysical service market over the next three years.
Although buyers benefit from current pricing trends, the high level of specialization, market share concentration and switching costs limit negotiating power. High specialization stems from the fact that each project or program has unique needs and every contract is customized for the buyer's specific requirements and investigation site conditions. As a result, buyers are limited to one service provider for the duration of the contract. Switching costs are also significant and prevent buyers from changing suppliers even when their needs are not being fully satisfied. Coupled with high market share concentration, which diminishes price competition and limits buyers' choice of suppliers in the market, these factors further reduce buyer power. Major vendors include Baker Hughes Incorporated, China Oilfield Services Limited, Halliburton Company and Schlumberger Ltd. For more information, visit IBISWorld’s Seismic & Geophysical Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of seismic services, which vary from well velocity survey services to borehole seismic land acquisition services. Service providers gather, interpret and map geophysical data.
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.