Speciality due to characteristics of market / product


Buying Clout

For many business products, there exist only a small number of users. For example, for a product like automobile testing equipment, only a few large buyers are there, like General Motors, Bavarian Motor works, Telco, Bajaj, Ashok Leyland and many other large car manufacturers.

This enhances the business clout of the business buyers as a class. The seller has to cultivate every buyer in his product category and maintain close and continuous contact so that no sales opportunities are overlooked.’

Concentration of Buyers

The buyers for a given industrial product are not only few in number, they are also usually concentrated in certain geographic areas. It gives them a special bargaining power over the sellers.

Direct, One-to-One Relationship with seller

In the consumer market, direct contact between the producer and the consumer is rare, whereas in the business market, one-to-one contact between producer and the buyer is the normal practice, especially when the products involved are special and technology based.

While the individual consumer is usually reached through mass communication means the business buyer is mostly approached through personal selling by executives at different level, which can range from the sales representative to the CEO.

Technical Support for Buying

The business buyer needs considerable technical service and assistance throughout the purchase process, especially when the purchase involves complex products. Any error the business buyer makes can prove to be very costly for his firm. This makes his task very responsible as well as sensitive.

New Product Diffusion is slower

Earlier, we discussed the subject of new product diffusion/adoption in the context of the individual consumer. In business buying, the length of time required to introduce the buyer to either new uses of existing products, or to altogether new/substitute products is longer than in individual consumer buying situation. This is because the new product adoption may impact the buyer firm’s process, assembly and end-product specifications. The business buyer, therefore, moves cautiously in this matter.

Business Buyer may also buy through Intermediaries

Though in most product categories, direct producer-to-user distribution is the practice, there are situation in business buying that need intermediaries.

Ø Sometimes, the buyers are widely distributed geographically demanding a relatively large sales force, which may be uneconomical for a producer. Some manufacturer may not have enough financial and manpower resources to perform all the distribution tasks; such situation requires the involvement of middlemen.

Ø Sometimes, the business market is a ‘thin’ market from both geographic and sales angles. In order to save costs, manufacturers use wholesale middlemen. The middlemen may be handling competing or non-competing lines of products.

Ø There are situations where the business buyers place frequent orders consisting of many items needing rapid delivery service. Such situations are better handled by middlemen.

Ø Sometimes there exist large numbers of small business buyers who place smaller orders more frequently. Such situations too are better left to intermediaries.

Business Buying is Partnering

Today, business buying has become a crucial management task. For any firm, the stakes here are quite high. The funds involved are huge, and any savings is precious. From the quality and end product performance angle too, it is buying that attracts full attention. The best raw material, equipment and other inputs have to be obtained at the most competitive prices. That is why supply chain management has emerged as a key concept today. Closer relationships between the buyer and supplier are no longer enough; it has yielded place to integration of the resources and facilities of the buyer with those of the supplier. The concept that is in vogue in business buying is partnership, i.e. partnering between the buyer and suppliers.