How is it different & more complex?
- 1.Fewer but larger customers (larger
- purchases) – 10 million businesses vs. 132 million consumer households
- 2.More geographic concentration in the business market.
- a.Businesses tend to be concentrated in
- cities, and in certain parts of the country where as consumers are spread
- 3.Derived demand: Business demand is derived from consumer demand for goods and services.
- Meaning it is directly/indirectly related to consumer demand.
- Consumer demand is driven by: price, availability of goods, consumer tastes,
- discretionary income
ie: if we are looking at the demand for paper & pulp industry -> it is driven by postal boxes, textbooks, papers, etc.
- 4.Business market is inelastic demand.
- Doesn’t matter (for the most part) if the price of the product goes up or down, the demand remains about the same. Often products is one of many needed to make the product.
- 5.Fluctuating demand in the business market.
- The business market is subject to greater fluctuations than consumer demand.
- 6.Multiple buyers: The product must satisfy
- many individual needs (think office printer)
- 7.There is a more professional purchasing
- effort: More folks involved
8.The buying process is more formalized
- 9.The buyers and sellers have more of a
- working partnership. (Verses consumers where it is a transaction ie:supermaret)