Expanding R&D and technological advancements that allow for new types of testing will underpin demand and prices
Los Angeles, CA (PRWEB) February 11, 2015
Product testing services have a buyer power score of 3.5 out of 5, reflecting a mixture of favorable and hampering conditions that have influenced buyer negotiation power during the three years to 2014. During the period, prices of product testing services have been increasing on the back of expanding demand for new product testing, which has been bolstered due to increasing corporate profit and research and development (R&D) spending. However, growth has been relatively meager and price volatility has remained extremely low. “Buyers benefit from low price volatility, which provides them with the time to evaluate their product testing needs and make more informed purchasing decisions without fear of major price swings,” according to IBISWorld business research analyst Anna Son.
Low market concentration and mounting competition among testing firms have further bolstered buyer power. Despite a few prominent players (such as Intertek and SGS), most service providers are small to midsize firms that operate on a local or regional basis. Although large firms offer a wide range of testing and other related services, boutique testing firms specialize in certain industries or niches. Given their breadth of knowledge in a particular field, boutique firms can deliver more effective and creative solutions. Despite increased consolidation in the past three years, more new players are anticipated to take advantage of this still-growing market. “The continual entrance of new players will help keep market competition high and, thus, support buyer negotiation power,” says Son.
Nonetheless, the highly specialized nature of product testing services and high switching costs undermine buyer power. Considering the unique nature of each product, suppliers generally craft a contract tailored to the buyer's specific needs. High product specialization, which requires an accredited supplier with adequate resources to carry out specialized testing, allows suppliers to charge a premium for their services. Buyer power is further restrained due to a low availability of substitute services. Although in-house testing is a viable substitute for larger buyers, outsourcing testing services can be more cost effective for small and midsize firms. Major firms include Intertek Group PLC, SGS SA, Bureau Veritas and Exova Group. For more information, visit IBISWorld’s Product Testing Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of product testing services. Suppliers perform various physical, chemical and other analytical testing for commercial purposes. Such testing can occur in a laboratory or on-site (i.e. where the product is manufactured or developed). Most results from these tests are checked against government regulations and environmental, industrial and product standards. This report excludes medical and veterinary testing labs.
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.