Marketers need to know how to market to individual consumers
but also how to market to the organizational and government buyers.
Organizational buying is defined as, “ the decision-making process by which formal
organizations establish the need for purchased products and services and
identify, evaluate, and choose among alternative brands and suppliers.” (Kolter
86).
A business or organization will
make different purchases than an individual consumer. A hospital for example,
will buy medical supplies in bulk and they are looking for the best bid and
best experience with the medical supplier. It’s also important that a supplier
be able to meet the needs of the business and have extra stock ready to deliver
at the drop of a hat.
“A business market consists of all
the organizations that acquire goods and services used in the production of
other products or services that are sold, rented, or supplied to others. The
major industries making up the business market are agriculture, forestry, and
fisheries; mining, manufacturing; construction; transportation; communication;
public utilities; banking, finance, ad insurance, distribution, and services.”
If a company spends too much on the products that they use to make their
product, then it reduces their net profit. A marketer for the business market
must know their customer specifically and be extremely competitive in order to
win the bid.
The institutional market consists
of schools, hospitals, nursing homes, and other institutions that provide goods
and services to people in their care. Marketing to institutions is unique
because they are usually on a limited budget and they are looking for the best
bang for their buck, which sometimes means sacrificing quality. Government
markets are affected buy region or locations and have close relationships with
the suppliers because they usually only use a few suppliers and need to
maintain tight security.
Marketers must be aware of the
unique needs of businesses and their buying processes. The only difference
between business buying processes is the product specification and the proposal
solicitation.
Source: Kotler, Philip, and
Kevin Lane Keller. A Framework for
Marketing Management. 5th ed. Boston: Prentice Hall, 2012.
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