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Industrial Markets

Special Characteristics of Industrial Markets


Though similar to consumer markets, both involve people who take buying roles and make decisions. However the main differences are; Market structure and demand 1. Fewer but larger customers 2. More geographically concentrated

3. Demand is derived
4. More in-elastic and not much affected by price changes and 5. Fluctuates more Nature of buying units Involvement and efforts are more and buyers are professional Types of decisions and Decision Process It is a more complex buying, more formalised and the buyers and sellers work more closely and build close long term relations


Difference between Industrial and Consumer marketing

Industrial Markets Markets Geographically concentrated Fewer buyers Oligopolistic competition
Technical Complexity Normally (but not necessarily) Customised Service like after sales, technical support, timely delivery, continuous up-gradation of product & technology required Functional involvement Rational and task motives predominate Technical expertise Long term stable relations Interpersonal relationship Reciprocity

Consumer Markets Dispersed or large market Mass market (large numbers) Monopolistic competition
Less complex Standardised product Less important due to large number of buyers and large replaceable / alternate products available


Buyers behaviour

Family involvement Social / personal & psychological motives predominate Less technical expertise Non personal relationships


Industrial Markets Decision Making Distinct as observable

Consumer Markets Mental stages and un-observable

Channels of Distribution Promotions

Shorter Mostly direct selling More emphasis on personal selling List prices of certain standard products Competitive bidding Negotiations on most purchases and therefore more pressure on seller

Multiple channels Indirect selling More advertising to create awareness among masses Mostly list pricing


Industrial Markets


The Industrial Buying Process

Problem Recognition

General Need Description (Product / Quantity)

Product Specifications

Supplier Search

Solicit Proposals (Ask quotations)

Supplier Selection

Order-routine Specifications (Formal P.O. placement With details terms)

Performance Review

Industrial Markets


Business Buyer Behaviour - The buying situations in business is three types; 1. Straight re-buy 2. Modified re-buy 3. New task buy Participants in Buying Process Users Influencers

Deciders Gatekeepers

Major Influences on Business Buyers

Environmental factors
Organisational factors Inter-personal factors Individual factors