Product market stakeholders refer to parties who influence or are affected by the company’s offer. They consist of customers, suppliers, local communities, and government. Their satisfaction contributes to the company’s success.
Why are product market stakeholders important?
Dissatisfied product market stakeholders can stop providing them with the resources needed for production or bring money to the company. Suppliers offer valuable input to the company. Their input affects the quality of the product and the company’s cost structure. To be willing to supply, they demand timely payment at the right price.
Supplier dissatisfaction results in the input supply stop. Also, other risks must too be faced by the company. They may be unreliable in supplying inputs. They deliver inputs such as raw materials that are not timely or not according to specifications. All of this can have an impact on product cost and quality. Therefore, companies must strike a balance between supplier satisfaction and reliable input requirements.
Customers bring money to the company. They buy products and cash flows to the company. With this money, companies can pay suppliers, pay employees, pay back debt, distribute dividends to shareholders, and become capital in the future (retained earnings).
Customer dissatisfaction can have an impact on a lower income. They flow money to competitors when they are not satisfied with the company’s products, making the company uncompetitive.
Customers demand reliable products to satisfy their needs. They want a quality product (differentiation) at the lowest possible price. However, price and quality demands are a dilemma because companies often find it challenging to fulfill simultaneously. Therefore, companies can focus on one of them: cost differentiation or leadership. Differentiation allows customers to pay premium prices. Whereas, cost leadership will enable companies to offer slightly lower prices through a lower than average structure in the industry.
The community provides labor for the company. They demanded that companies prioritize healthy labor practices and pay adequate wages. They also want the company not to cause negative externalities such as pollution.
The government provides public services such as infrastructure, transportation, and education. All of it contributes to the company through lower logistics costs and quality human resources. That indirectly affects the cost and quality of the company’s products.
On the other hand, the government is also interested in business. The government is trying to encourage increased business activity. That way, they create more labor. Besides, the government also wants companies to pay taxes and comply with applicable laws and regulations. Examples of such rules are product health standards, labor practices, minimum wages, and antitrust.