Characteristics of Business Market

In some ways, business markets are similar to consumer markets. Both involve people who assume buying roles and make purchase decisions to satisfy needs. However, business markets differ in many ways from consumer markets. For one, the number of products sold in business markets dwarfs the number sold in consumer market.The other differences are in market structure and demand, the nature of the buying unit, and the types of decisions and the decision process involved.

There are more transactions in business markets because business products are often costly and complex. There are also fewer buyers in business markets, but they spend much more than the typical consumer does and have more-rigid product standards. The demand for business products is based on derived demand.

Derived demand is demand that springs from, or is derived from, a secondary source other than the primary buyer of a product. For business markets, this source is consumers. Fluctuating demand is another characteristic of business markets: a small change in demand by consumers can have a big effect throughout the chain of businesses that supply all the goods and services that produce it.

The business marketer normally deals with far fewer but far larger buyers than the consumer marketer does. For example, when Goodyear sells replacement tires to final consumers, its potential market includes the owners of the millions of cars currently in use in the United States. But Goodyear’s fate in the business market depends on getting orders from one of only a handful of large automakers. Even in large business markets, a few buyers often account for most of the purchasing.