Scribd
Upload
230 views4 pages

Nature and Characteristics of The Business Market

Business marketing involves selling goods and services to other businesses rather than individual consumers. It differs in several key ways from consumer marketing. The business market consists of fewer but larger customers that purchase in bulk, and the buying process is often more complex as it involves negotiations between a buying center of multiple individuals within a company. Products may be customized to business needs and purchasing is classified into different situations like straight rebuys, modified rebuys, or new tasks that influence the buying process.

Uploaded by

Edgar Junior Pahonang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
230 views4 pages

Nature and Characteristics of The Business Market

Business marketing involves selling goods and services to other businesses rather than individual consumers. It differs in several key ways from consumer marketing. The business market consists of fewer but larger customers that purchase in bulk, and the buying process is often more complex as it involves negotiations between a buying center of multiple individuals within a company. Products may be customized to business needs and purchasing is classified into different situations like straight rebuys, modified rebuys, or new tasks that influence the buying process.

Uploaded by

Edgar Junior Pahonang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

BUSINESS MARKETING

Business marketing is the marketing of products to organizations for the


direct use of the product in the production of another product, for use in the
general daily operations of the organization, or for reselling the product to
other businesses or the final consumer.

Marketing goods and services to businesses and organizations, while


sharing some similarities with consumer markets, is different in many ways.
The nature and characteristics of the business market, the types of
consumers, the different buying situations that occur in businesses and
organizations, who is involved in the decision-making process and the
business-to-business buying process all differ significantly from the
consumer market.

These differences often make the normal purchasing process more involved
and complex.

NATURE AND CHARACTERISTICS OF THE BUSINESS


MARKET
The first obvious difference is that there are significantly fewer customers in
the business market than in the consumer market. These customers also
buy in significantly larger quantities (e.g., tires by the thousands) and the
prices of some of their single item purchases far exceed those of an
individual consumer (e.g., millions of dollars for a new bridge). Finally,
business customers in the same industry often tend to be located in a
concentrated geographic region. For example, the Silicon
Valley in California has a high concentration of firms in the high-tech
industry.

The nature of the demand for products differs from consumer demand
because it is often derived from consumer demand. A derived demand
means that the demand for original equipment leather seat covers installed
in new cars depends on the demand for the models of automobiles that use
those seat covers. They have a more inelastic demand curve because the
demand for the seat covers depends on the consumer demand for the
automobiles, not on the price of the seat covers. Another factor influenced
by derived demand is that it may cause large fluctuations in the demand for
the seat covers. If the demand for the automobiles drops, it may have a
small effect on the sales figures of the auto manufacturer, but if this
particular contract represents a large share of the seat cover vendor's
production, that vendor could suffer a significant loss of revenue.

Finally, the products and the buying process may differ from the consumer
market to varying degrees. While some products purchased in the business
market are the same or very similar to the products bought by consumers
(e.g., office supplies), the buying process may be much more involved
because of negotiated contract and unique or customized needs. Product
specifications, price, quantity, service requirements, length of the contract,
and delivery schedules are just a few of the terms that may need to be
negotiated. On the other hand, many of the products are very complex and
often custom-made to agreed-upon specifications. The complexity of the
buying process is further complicated because a given purchase will need to
satisfy a number of different individuals and departments within the
company. Because of these factors, the buying decisions in businesses and
organizations are often determined by a group of individuals known as the
buying center, which is discussed later in this entry.

TYPES OF CONSUMERS
The business market consists of many different organizations involved in
many different primary activities, but they generally fall into four major types:
1. Manufacturers —Manufacturers produce products to be sold at a profit. They buy products and
services that are directly used in the products they produce or are consumed in the general operations
of the firm.
2. Trade —Trade includes organizations that purchase finished goods and resell them at a profit or
use products and services for the general operations of the firm. Wholesalers and retailers are included
in this type of business customer.
3. Government —Federal, state, and local governments represent the largest single business or
organizational market. Collectively they spend trillions of dollars for services and products needed for
governmental operations and to provide citizens with the products and services needed for their general
welfare.
4. Institutions —Institutions are those organizations whose primary activities and goals are charitable,
educational, community, or nonbusiness in nature. They include both public (such as libraries) and
private (some hospitals) institutions, which may be nonprofit (charitable organizations) or profit (some
nursing homes) oriented.

TYPES OF BUYING SITUATIONS


There are three major types of buying situations, each requiring a different
buying approach. The straight rebuys are routine purchases of standard
products from an existing vendor without modifying specifications or without
renegotiating new terms. Little effort, beyond a short performance review, is
necessary.

On the other hand, modified rebuys occur when the product is not
purchased on a regular basis, when there is a change in the specification of
the product, when there is dissatisfaction with the current vendor, or if a new
vendor offers better terms. Modified rebuys may involve new product
specifications, additional evaluation of vendors, or renegotiation of
contracts.

The third buying situation is a new task buy. This situation normally involves
purchases made by a business for the first time The buying process needs
to start from scratch and will probably be an extended problem-solving
endeavor. One of the early decisions will be whether the firm wants to
purchase the product from a vendor, lease the product, or produce the
product in-house. These decisions and the actual purchase decisions are
often the responsibility of a buying center.

THE BUYING CENTER


Because of the size, importance, complexity, and commitment involved in a
business buying decision, often a committee called the buying center is
formed. The buying center is responsible for deciding how best to acquire
the products and services needed to operate the business. The individuals
included in the buying center can differ from one buying decision to another,
but may involve representatives from the purchasing, finance/accounting,
and engineering departments, as well as the departments that will use the
product, and an executive from management. The members of any given
buying center committee could play one or more of the following roles:
 Gatekeeper —The individual responsible for the flow of information to the other members of
the buying center
 User(s) —The member(s) most likely to use or be responsible for the use of the product
 Influencer(s) —The individual(s) who will influence(s) the decision but may not necessarily
use the product
 Decider(s) —The member(s) who make(s) the final decision
 Purchaser —The member who negotiates the actual purchase
BUSINESS-TO-BUSINESS BUYING PROCESS
The typical process that is followed by the buying center to analyze the
needs and develop solutions to meet those is:
1. Recognize or anticipate and clearly define a need
2. Determine and evaluate alternative solutions
1. Straight rebuy
2. Modified rebuy
3. New task buy
3. Select a course of action and develop product specification
4. Select a vendor
1. Identification of potential vendors
2. Evaluation of vendors—solicitation and analysis of proposals
3. Select a vendor
5. Negotiate a contract
6. Review performance

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy