Back to: Marketing SS1
These are individuals and companies who purchase goods and services for some use other than personal consumption.
The organisational buying process is entirely different from the consumer buying process. While buying decisions are made relatively easily and quickly by individual customers, organisational buying involves thorough and deep
analysis. Organisations purchase products ranging from highly complex machinery to small components.
In an organisation, the purchase decisions are influenced by several individuals and are not made in isolation by an individual. Organisational buyers are more concerned about the price and quality of the product along with the service being provided by the vendor. Price plays a major role, since the price of the raw materials is the investment from which profits are generated. Thus, price is a major factor which affects the profitability of the firm. Service also plays an important role, because no organisation would like to buy goods from a vendor who cannot provide timely and efficient service.
Organisations adopt certain methods for buying products such as checking a sample before the actual purchase. Most organisational purchases involve purchase of products in large lots. So, it is not feasible to individually inspect each and every item in the lot. In such situations, a sample is checked assuming that this sample represents the entire lot. Like the consumer markets, organizational markets also possess certain demand characteristics. The organizational demand for products or services may be inelastic, derived, joint or fluctuating in nature. Organisational markets normally purchase the goods or services for producing other goods and services, using these as raw materials. There are also resellers, who purchase the products to sell directly to other customers without any modifications. Apart from producers, and resellers, there are also government and institutional customers who buy the goods re Government buys goods for public utility or for ot use in their departments or for production nal purposes.
The buying decisions of organisations le, influenced by environmental factors The organisational factors, social factors and persona ed. factors. Participants in the organisational buying The process play as many as seven different roles an namely those of initiator, influencer, user, decider ald approver, buyer and gatekeeper. Although not organisations differ significantly from each othe in their purchasing process, the various stages of industrial buying comprise problem ng recognition, general need recognition, produc (b) he specification, value analysis, vendor analysis order routine specification, multiple sourcing and -, it performance review. Marketers need relevan nd information about the characteristics of the Ole industries for marketing their goods and services nts effectively. To search for such information, the ts, prime sources are government and industria in publications.
TYPES OF ORGANISATIONAL MARKETS
(a) Industrial or producer market: This is a market that consists of individuals organisations that buy products for direct use in manufacturing other products for resale or use in the daily opertof the business. These are business that make or create goods or services. Producers buy raw materials and machinery, often from other producers but sometimes from resellers. Marketing to producers requires technical expertise ano and a knowledge of the producer’s operations. Typical marketing strategies involve identifying problems in the producer’s industry or particular operations and proposing solutions that are cost-effective. Producers have a long-term view of markets since their needs change slowly. As a result, marketing to producers is usually based on long-term relationships.
(b) Reseller: This is a market that consists of distributor, dealers, wholesalers and retailers who buy raw materials and finished goods with the intention of selling the product at a profit. Resellers buy finished goods and resell them to the next level in a given distribution channel. Resellers do not normally transform products that they sell. The product usually is re-sold without any modifications to the next channel member. However, there may be some value added by resellers. Occasionally, resellers will bundle products from multiple manufacturers together. For example, a computer reseller may bundle
together computer hardware and software and then offer the total package at a discounted price to the consumer.
The key factor for marketing to resellers is to be aware of their added-value proposition. If the reseller is a wholesale company offering low prices for high volume, marketers must develop proposals which address this characteristic. If the company buys specialised equipment according to specifications and re-sells it to customers based on high quality and reliability, the marketing will be different.
(c) Government market: This market consists of local, state and federal governments that purchase goods and service to support their internal operations and to provide essential services for citizens. The government market consists of government units at federal, state and local levels. Agencies at all levels purchase goods and services used in performing critical government functions. Governments are huge customers of all kinds of products.
1. Define market.
2. What is consumer market?
3. List and explain the various Ho characteristics of consumer market.
4. What is organisational market?
5. List and explain types of organisational market.
6. What is a market in marketing? Explain the following: (i) government market (ii) reseller market (iii) industrial market (WASSCE June, 2017).
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