Characteristics of business market

A: On the basis of market structure and demand:

1. Fewer but larger buyers: The business marketer normally deals with fewer but larger buyers than the consumers market does. For example, the tire company’s fate/market share depends upon getting contracts from a few major automakers and few large buyers of aircraft engines.

2. Demand is derived: The demand for business goods is ultimately derived from the demand for consumer goods. For example, the US General Motors alone purchases 7% of domestic steel which indicates that the demand of steel is derived from the ultimate car buyers.

3. Inelastic demand: The total demand for many business goods and services is inelastic that is not much affected by price changes especially in the short run because producers cannot make quick changes in production method. For example- a drop in the price of sugar cane will not cause sugar manufacturers to buy much more sugar cane unless it results in lower sugar prices that in turn will increase consumer demand for sugar.

4. Fluctuating demand: The demand for business goods tends to be more volatile/unstable than that of consumer goods. The demand of business markets fluctuate more and more quickly. For example, Sometimes a rise of only 10% in consumer demand   as much as 200% rise in business demand for products in the next period.

B. On the basis of nature of the buying unit:

1. More decision participants: Business purchases involve more buyers. In case of business buying process, they have to consider the price, quality, delivery date etc very highly. All the things may not be done by a single person.

2. More professional purchasing effort: Business buying is done by trained purchasing agents who spend their working lives learning how to buy better. Buying committees made up of technical experts and top management is in the buying of major goods.

C. On the basis of types of decision and the decision process:

1. More complex buying decision: Business buying decision is more complex than consumer buying decision. Business purchases often involve large sums of money. In business buying decision, buyers have to take some important and complex decision.

2. More formalized buying process: Business buying process is more formalized than any other buying process. In businesses buying process,                                                                       it has to maintain some formalities which are not to be followed in any other buying process. It calls for product specifications, written purchase order, careful supplier search etc. So this buying process is more complex.

3. More dependent: Personal selling is very much effective in business buying, because buyers and sellers are very much close in this buying. They work more closely together. As a result they maintain a long term relationship.