Characteristics of Business Markets
In some ways, business markets are same to consumer markets. Both involve people who suppose buying roles and make purchase decisions to satisfy requirement. However, business markets differ in various ways from consumer markets. The major differences are in market structure and demand, the types of decisions the nature of the buying unit and the decision process involved.
Business markets also have their own characteristics. In some ways, they are same to consumer markets, however in other ways they are very different. The major differences include:
1. Market structure and demand
Business markets normally deal with far fewer but far big buyers. They are more geographically concentrated. Business markets have derived demand (business demand that eventually or derives from or comes from the demand for consumer goods). Various business markets have inelastic demand; that is, entirety demand for various business products is not much affected by price changes, especially in short run. A drop in price of leather will not cause shoe manufacturers to buy much more leather unless it results in lower shoe prices that, in turn, will enhance consumer demand for shoes. At last, business markets have more fluctuating demand. Demand for various business services and goods tends to change more-and more rapidly-than demand for consumer services and goods does. A small percentage enhance in consumer demand may cause large increases in business demand. Sometimes a increase of only 10 % in consumer demand can cause as much as a 200 % rise in business demand during the next period.
2. Nature of the Buying Unit
Compared with consumer purchases, a business purchase typically involves more decision participants and a more professional purchasing attempt. Frequently, business buying is done by trained buying agents who spend their functioning lives learning how to make better buying decisions. Business committees made up of technical experts and top management are similar in the buying of main goods. The companies are putting their best and brightest people on the procurement patrol. Hence, business marketers ought to be have well-trained salespeople to deal along with well-trained buyers.
3. Types of Decisions and the Decision Process
Business buyers typically face more complicated buying decisions than do consumer buyers. Purchases frequently involve large sums of money, difficult technical and economic considerations, and interactions amongst many people at various levels of the buyer's organization. Because purchases are more difficult, business buyers can take longer to make their decisions. The business buying procedure tends to be more formalized than consumer buying procedure. Big business purchases typically call for detailed product specifications, written careful supplier searches, purchase orders, and formal approval. Buying firm may even prepare policy manuals that detail purchase procedure.
At last, in business buying process, seller and buyer are frequently much more dependent on each other. Consumer marketers are frequently at a distance from their customers. In the construct, business marketers can roll up their sleeves and work intimately with their customers though out all stages of buying process-from helping customers define problems, to discovering solutions, to helping after-sale operation. They frequently customize their offerings to specific customer needs. In short run, sales go to suppliers who meet buyers' instant product and service needs.