Medium sized customers are under pressure from both their larger and smaller peers
Symptom: Medium size customers in the industry are coming under pressure from competitors.
Implications for the market:
In a hostile market, medium-sized customers are at a competitive disadvantage. Large customers get sizable discounts and pass these on in their own prices, making medium-sized customers relatively high on price compared to their larger peers. Small customers, who have no price leverage, often choose to outperform the medium -sized customers on service. Caught in the middle, the medium-sized customer has no evident strength.
These medium-sized customers , in turn, put increasing pressure on their suppliers, which makes this customer segment the most difficult to serve. Some medium customers demand price concessions, others want high performance, and still others want both.
Despite the difficulty in serving them, medium-sized customers are important to a supplier's overall strategic position. They can offer greater volume than the small customers and greater returns than their larger counterparts.
Picking the right set of medium-sized customers to serve, although difficult, will increase the chances of long term success in the industry.
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Perspectives: Conclusions we have reached as a result of our long-term study and observations.