CONSEQUENCES OF A SHIFT IN THE POWER BALANCE FOR THE MARKET OF SERVICES

Frits van den BERG ()
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Frits van den BERG: Radboud University Nijmegen, The Netherlands

Romanian Journal of Economics, 2008, vol. 26, issue 1(35), 78-86

Abstract: This article starts with some observations on changes in the power balance between clients and suppliers in the service industry. The main forces between these changes are more information in the hands of clients (by use of internet and personal experiences) and less information received by suppliers (by less contact with potential clients because of cost reduction). These changes can be translated into the replacement of a demand oriented market by a demand driven market. For suppliers of services to individuals in such a market two aspects are highly relevant. First the client will formulate his wishes in a kind of "Terms of Reference" and the supplier has to search for interesting requests. This instead of the client searching on internet or somewhere else for the best standard offer. In the second place the client will formulate his wishes often in a way that a single enterprise cannot deliver what is wanted. In order to survive chains of enterprises have to be formed. I mentioned a few of the vulnerable points of chains, points which need to have attention in the contract between the links of the chain.

Keywords: demand-driven market; client power; business to business services; chains of enterprises; contracts between links (search for similar items in EconPapers)
JEL-codes: L86 M31 O33 (search for similar items in EconPapers)
Date: 2008
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