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Chapter 2

Understanding Business Markets

and Environment
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Chapter Questions
• Who are the business customers?
• How are industrial products classified?
• What are the marketing implications for different
types of customers and products?
• What are the business customers’ purchasing
orientations and practices?
• What are the different types of environment?
• How to manage external environment?
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Types of Business Customers

• Commercial enterprises (Private Sector firms)

• Government customers

• Institutional customers

• Cooperative societies
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Classification of Industrial Products and

Services

• Materials and parts

• Capital items

• Suppliers and services

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Marketing Implications for Different

Products and Customers

• Materials and parts often sold to business

customers directly.
• Capital items often sold to business customers
directly.
• Supplies and services often sold to business
customers directly.
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Purchasing Orientations of Business

Customers

• Buying orientation

• Procurement orientation

• Supply chain management orientation

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Purchasing Practice of Business

Customers
In commercial Enterprises
• Involvement of various departments
• Major tasks performed
1. Identify, negotiate, Select suppliers.
2. Ensure purchase objectives and efficiency
achieved.
3. Good relationship with suppliers.
4. Establish procedure and documentation.
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Purchasing in Government Organizations

• Establish purchase procedure.
• Purchasing through Competitive Bidding /
Tenders
1. Closed / sealed tenders
2. Open / limited tenders
• Other Government contracts
• DGS & D contracts
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Purchasing in Institutions and

Cooperative Societies
• Government institutes follow government
process.

• Often private sector institutes follow commercial

enterprise’s buying process.

• Better to study each major customer’s purchase

process.
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Types of environment
Company location, reputation, R&D,
Internal HR, Production, Finance, Marketing
Customers
(S& W Analysis)
Micro Competitors
(Affects Suppliers
a firm)
Environment
Economic

Demographic

Natural
Technological
External
Govt., Political, Legal
(O& T Analysis)
Macro Cultural, Social
(Affects Public
all firm)
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Managing External Environment

• First, continuously collect and monitor relevant
information on external environment.
• Identify changes in opportunities and threats
• Manage proactively, using strategies:
1)Independent
2)Cooperative
3)Strategic planning