MM/U3 Topic 2 Characteristics of Business Markets
Business markets are defined as all organizations that procure products or services that are consequently used in manufacturing other goods and facilitating service for other consumers. Wholesalers and retailers are also considered as business markets since they also deal in the acquisition and sale of goods and services for further selling and renting.
Business markets and consumer markets tend to be similar to some extent. For instance, in both cases, people are involved in the process of evaluating the necessity of goods and products and at the same time carry out different roles in ensuring that they attain satisfaction of such needs. However, it should be noted that some factors define the characteristics of business markets, which also distinguishes it from consumer market and they include the following;
- Market Structure and Demand
Typically, there are few but relatively large types of business buyer deals that organizations often engage in that are related to the business market. It should also be noted that these customers are much focused geographically. There are various instances when the business markets had to deal with inelastic demand that is not necessarily influenced by the changes in the price of products or service, especially within a short run.
It should also be noted that demand for the business markets and business products also tends to fluctuate, which only implies that the demand for business market products can change relatively quickly than the demand for consumer goods or services.
- Nature of Buying Unit
This is the other characteristic that distinguishes the difference between consumer markets and business markets. Participants in the business purchase tend to buy more and there are more participants, and the process also tends to be relatively professional. On the other hand, participants in the consumer purchase are often less, and efforts put towards the same is also little. The people involved in consumer purchasing lack the knowledge and experience when comparing them to those who are involved in business buying.
The business market also incorporates a committee of experts that participate in ensuring that all purchasing decisions are collectively arrived at. The organizations involved in the business market also ensure that they train their personnel occasionally in matters to deal with business purchasing hence making it possible for them to make sure that the process is efficient and effective.
- Decisions and Decision Process
Ordinarily, the decisions revolving around the business market are somewhat complex than decisions made by the consumer markets. This is primarily because business market requires an intensive process that involves technical and economic considerations, a considerable amount of money and interactions among different professionals holding different ranks in their respective trades.
The business purchase process also tend to take longer than the consumer purchase process since fine details have to be put into consideration in ensuring that every piece is accounted for. This explains why the business market tends to appear more formalised than the consumer purchase.
For instance, organizations dealing with business market happen to exert specification of the detailed product, capture the purchase order, carefully identifying suppliers and also formalise approval of the suppliers and payment.
However, it should also be noted with a significant concern that both sellers and buyers depend on each other for their success in the business buying process. The customers in the consumer market are often present at a distance in comparison to the organizations in the enterprise market, which often tend to be carefully present with one another and ensure that the customers provide any help necessary at every given step of the purchasing process.
They are always available in ensuring that all problems are defined and addressed appropriately and supporting all the operations that are within their reach. It should also be noted that they customise their offerings to suit the needs of the clients and create a close rapport for the sake of future businesses. These characteristics explained in this article provide a clear distinction between these two markets.