Name and briefly describe five of the major differences between business and consumer markets.

Question

What will be an ideal response?

Answer 1

There were several points of differentiation discussed in the chapter, and students can discuss any five:

DEMAND. There are several differences between organizational and consumer demand. Organizational demand is derived from the demand of consumer products, tends to be price inelastic, has joint demand with related products used in combination with the final product, and tends to fluctuate more than consumer demand.

PURCHASE VOLUME. Business customers buy in much larger quantities (both in single orders and in total annual volume) than do consumers.

NUMBER OF CUSTOMERS. Business marketers tend to have far fewer customers than consumer marketers.

LOCATION OF BUYERS. Unlike consumer markets, business customers tend to be geographically concentrated.

DISTRIBUTION STRUCTURE. Channels of distribution tend to be much shorter in business marketing. Direct channels are also more common.

NATURE OF BUYING. Business buying is usually more formalized with responsibility assigned to buying centers or purchasing agents.

NATURE OF BUYING INFLUENCE. More people are involved in business purchasing decisions than in consumer purchases, because many levels and departments of the firm are involved in the purchase.

TYPE OF NEGOTIATIONS.  Negotiating is common, and buyers and sellers negotiate product specifications, delivery dates, payment terms, and other pricing matters.

USE OF RECIPROCITY. Business purchasers often buy from their customers, and vice versa.

USE OF LEASING. Businesses often lease equipment, unlike consumers who more often purchase products.

PRIMARY PROMOTIONAL METHOD. Personal selling is often emphasized in business marketing, while advertising is emphasized in consumer marketing.