Prices have been rising in the past three years due to demand growth stemming from increases in new car sales and private investment in computers and software
Los Angeles, CA (PRWEB) February 15, 2015
The market for product warranty insurance has a buyer power score of 3.5 out of 5. This score indicates that buyers have slightly more leverage than suppliers during the negotiation process. According to IBISWorld analyst Kayley Freshman-Caffrey, a low availability of substitutes hampers buyer negotiating power, while low market share concentration and low price volatility are the most notable factors boosting buyers' leverage.
The low availability of substitutes is the primary factor hurting buyers in this market. Buyers that wish to obtain protection for one of their items have little choice but to purchase a product warranty insurance policy, says Freshman-Caffrey. Some products come with a free factory warranty provided by the manufacturer, but these warranties are limited in both duration and scope. For example, they normally only cover manufacturer defects and do not offer protection for damage to the product caused by external factors. Furthermore, many products do not include factory warranties. Thus, buyers seeking a warranty must purchase product warranty insurance; this factor limits buyers' ability to leverage the availability of service alternatives during the negotiation process.
Low market share concentration partially alleviates this problem by cultivating competition among suppliers. Specifically, low market share concentration prevents individual suppliers from dominating the market by spreading market share across a high number of firms. Suppliers must therefore consider competitive pressures when making pricing and service decisions, which compels them to keep their prices within market norms and maintain high service quality. Players in this market include Assurant Solutions, Asurion and Warrantech. Low market share concentration also reinforces low price volatility, another market characteristic benefiting buyers. Low price volatility enables buyers to more accurately budget for their product warranty insurance expenses and empowers them to make their purchase as needed without worrying that prices will spike or fall after they have committed to a contract. For more information, visit IBISWorld’s Product Warranty Insurance procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of product warranty insurance. Product warranty insurance policies serve as an extended warranty on the products for which they are purchased. Product warranty insurance is also often referred to as a product protection plan. Product protection plans may be offered by the same retailer or manufacturer from which the product is purchased or by a specialized third-party provider. Product warranty insurance terms vary in length and coverage. This report excludes more comprehensive types of property insurance, such as building and contents insurance.
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.