Table of Contents
Business Market
It refers to all those organizations that purchase goods or services for the purpose of utilization in the manufacturing of other products or offering services to others. The wholesaling and retailing firms are also included in the category of business market. Because these also obtain products and services for the purpose of further reselling or renting. In the purchase process of business customers, they first ascertain the required products or services. Later then evaluate and make selection among different alternatives for the final supplier. So the business buying behavior is quite different from consumer buying behavior. So those organizations that are involved in the selling of products to other business organizations should try their best. Basically to understand the business markets and relevant behavior of business customers.
Characteristics of Business Market
In certain cases the business market is much similar to the consumer market. In both kinds people are involved to assess the needs of products or services. Along with the perform different kinds of roles for the satisfaction of those needs. However in general, there are certain factors that distinguish the business market from the consumer market. Following are some of these distinguishing factors.
- Market Structure and Demand
- Nature of Buying Unit
- Kinds of Decision and Decision Process
Now, each one of these distinguishing characteristics is discussed below.
Market Structure and Demand
Usually there are few, but larger kinds of business buyer deals by organizations related to the business market. Moreover, these buyers are much more concentrated geographically. The demand involved in the business market is the derived demand that finally comes from the demands of final consumers. In certain cases the business markets deal with the inelastic demand. Actually which is not influenced by the price changes of the relative products or services especially in the short run.
For example, if the price of leather is reduced, then the demand of the shoe producer is not increased. Unless the price of the producing shoes also reduces which ultimately enhances the demand of the final customers for shoes. The demand of the business market is much more fluctuating. Hence this means that the demand for the business products or service changes more quickly. As than the demand for the consumer products or services. The business demand is affected greatly by a small degree of increase in the consumer demand. In certain cases only 15% increase in the consumer demand would cause the business demand. Actually to be enhanced for about 250% in coming days.
Nature of Buying Unit
In the consumer purchase, the participants involved are less along with relatively little efforts. However in case of business purchase, there are many more participants involved in the purchase process. Also the increased professional effort. These purchasing decisions are carried out by the highly professional people of the organizations. In fact who have spent many years of their lives in learning the way to purchase the business products effectively. With purchase of any main items of the business market, there is an established buying committee that includes a group of technical experts. Along with the members of top management who collectively perform the buying decision. The business organizations are spending much on training their brightest employees. Just for dealing with the business customers efficiently and effectively.
Kinds of Decision and Decision Process
The purchasing decisions of the business buyers are more complex than the decisions of the consumer buyers. Complex economic and technical considerations, large sums of money. And interactions among different people at various levels have taken place in the business purchase process. As then the business purchase process is longer in duration therefore the decisions of the buyers are also finalized in longer duration. Moreover, the business buying process is more formalized than the consumer buying process. In the business purchase process occurring in the larger organizations, special efforts are exerted. Actually for the specification of the detailed product, writing purchase orders, carefully the identification of suppliers and formal approval. The purchasing process is also detailed through the preparation of the policy manuals by the purchasing organization.
Finally, the buyers and sellers are highly dependent on each other in the business buying process. Normally the customers are present at a distant place from their consumer markets. On the other hand the organizations of the business market are present closer with one another. That help their business customers at every step of their purchase. They assist in the definition of the problems, searching of the solutions. Even after sales operations are also supported. Moreover, their offerings are customized according to the needs of their customers. Thus those business organizations that effectively assist their customers at every step of the purchase are more benefited. Particularly from a larger portion of sales in the short run.
Model of Business Buyer Behavior
The marketers of the business markets should understand the responses of the business buyers in front of different kinds of stimuli. For this purpose there is a standard model of business buyer behavior which explains the effects of different stimuli on the resulting responses of the buyers. The stimuli of this model include 4 P’s along with the external environmental forces like political, economic, competitive etc. All these stimuli pass into the organization where they turn into different kinds of responses like the choice of the product or service, choice of supplier, quantity ordered, delivery and payment terms etc.
The marketer must understand how these stimuli convert into different kinds of responses so that he can effectively develop his marketing mixes. There are two factors that are quite significant in the generation of different kinds of purchase responses inside the organization. These include the buyer center and buying decision process. The buyer center is composed of various people that are associated with the buying process. Moreover, there are certain factors that influence these two basic factors of purchase like individual, interpersonal and internal organizational factors.
Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
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