What is industrial market and its characteristics

Industrial market refers to the market which deals with the buying of goods and services for resale, rent, supply to others or production of other goods and services but not for final consumption. These include reseller markets which involve the buying of goods and services for resale where wholesalers and retailers lie. There is producer market where goods are bought for the production of others. 

Industrial market buyers include government agencies, business firms and various institutions like schools, hospitals, colleges among others. There are various industrial products which also consist of heavy equipment, light equipment, raw materials, processed raw materials, operating supplies like lubricants among others. 
 
These markets are characterized by various features which can be in any of the three dimensions i.e. nature of market and demand, nature of buying unit and type of decision and its process. Below are the characteristics and their market implications;
Few but large customers, these buyers place large orders that they later sell or use to produce other goods. This implies that demand for industrial products is limited to the people able to further process or sell to the final consumers.
Demand is inelastic to the price, In this market, a change in price causes no or a slight change in the purchases. This implies that at any price, the buyers are willing take the products hence transfer the burden to the final consumers explaining the high price of consumer goods.
The channel of distribution is shorter, In industrial market, there are few intermediaries as the buyers seek for the sellers directly. This implies minimal costs and limited delay of product delivery to the buyers.
There is less promotion and advertising, Not like in consumer markets, industrial products are not highly advertised. This implies the buyers in the market have the knowledge about the products hence reducing costs as lower prices are enjoyed.
Decision making is complex; Placing orders are decided upon by several key people and negotiated over a long time. This implies considerations for best quality, price and measure are in place.
Buyers and sellers work closely together and build long-term relationship. This helps the buyers in their decision making through guidance from the sellers. This also creates faithfulness as credit facilities and discounts are enjoyed.
Derived demand, in this market, the purchases is dependent upon what happens in end markets. For example, the amount of ore a steel mill buys is largely determined by the end market demand for automobiles, appliances and other products made of steel.
More professional purchasing efforts, in this market, there is a buying committee with full expertise who are well trained to buy primary goods. This implies that there is need to satisfy the demand of the industry for effective production.
They are few salespersons for industrial products compared to consumer products. This is because they are selectively distributed unlike consumer markets which are mass marketed.
Another characteristic of the market is that occasionally reciprocity will be a factor in the sale. This implies there is buying from a particular company because it buys from you.




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