Identify, describe, and give examples of the four major types of business markets.
a.Individuals and businesses that purchase products used to produce other products or for use in their operations for the purpose of making a profit.
b.Includes buyers of raw materials, semi-finished and finished items used to produce other products.
i.farmers –purchase seed to grow crops such as corn, soybeans, etc.,
iiconstruction firms – lumber used to build houses, decks
2. Reseller Markets
a. Consist of intermediaries including wholesalers and retailers that buy finished goods and resell for a profit. Physical characteristics are not changed in products handled. ...view middle of the document...
c. Government purchases are made through bidding or negotiated contracts. In order to bid on a job, firms must apply, be approved, and placed on a list of qualified bidders. Governments are usually required to accept the lowest bid.
4. Institutional Markets
a. Include organizations of charitable, educational, community, or other nonbusiness goals.
b. Examples include: churches, some hospitals, fraternities & sororities, charitable organizations (Wheels for Wishes, United Way, Race for the Cure, etc.) and private colleges (Augsburg, Bethany Lutheran, Concordia, etc.)
c. Institutions purchase millions annually of products to supply goods, services and ideas to congregations, students, patients, and others.
d. Institutions have different goals and fewer resources than other types of organizations. Marketers use special marketing efforts to serve institutional markets.
2. Why might business customers generally be considered more rational in their purchasing behavior than ultimate consumers?
• are more informed about the products they are purchasing.
• Typically demand detailed information about a product’s functional features and technical specifications to ensure their needs are met
• Partnerships, mutually beneficial realtionships, are formed by many suppliers and customers
3. What are the primary concerns of business customers?
Price, Product Quality, Service, and Supplier Relationships
Price-influences operating costs and cost of goods sold which affects selling price, profit margin, and ability to compete
Product Quality –most firms establish standards, usually in terms of percentage of defects allowed, for products
Services offered by suppliers –directly influences the businesses costs, sales, and profits. Typical services desired are market information, inventory maintenance, on-time delivery, and repair services.
Relationships and trust built between the supplier and business customers results in reduced search efforts and uncertainity about monetary prices for buyers
4. List several characteristics that differentiate transactions involving business customers from consumer transactions.
Business customers characteristics:
• transactions tend to be larger
• negotiations occur less frequently, though they are lengthy
• frequently involve more than one person or department in the purchasing organization
• may involve reciprocity (an arrangement where organizations agree to purchase from each other)
• are usually better informed than ultimate consumers & more likely to seek information about a product’s features and technical specifications
• business customers purchasing products are particularly concerned about quality, service, price, and supplier relationships
• Business buyers use several purchasing methods; description, inspection, sampling, and negotiation
5. What are the commonly used methods of business buying?
Most business buyers use purchase methods; description,...