To keep a better understanding of the business market or any other market ,it is very important to analyse who are your customers. The customers in the consumer market are different from the customers of the business market. The customers of the business market are grouped as follows
- Commercial enterprises (Private Sector firms)
– Industrial distributors
- Government customers
- Institutional customers
- Cooperative societies
Since the business market specifically deals with industrial products a large number of the industrial products are grouped into different categories like : –
- Materials and parts
- Capital items
- Suppliers and services
- Materials and parts: these are those products that are used to manufacture the final product directly .They involve the raw materials like vegetables, fruits, oil,iron ore etc. ,manufactured materials like chemicals, acids, fuel,steel etc. , component parts like battery, tyre, bearings etc.
- Capital items: these type of goods are used for the purpose of production and include goods like light equipments, accessories like tools terminals etc.these goods are used in production process.
- Supplies and services: these goods do not take part in the production but support the operation through their usage. Such type of goods include packaging material, electrical items advertising, courier, auditing etc.
There are different type of purchase orientation for the business customers which include : –
- Buying orientation – In such type of orientation the firm who is supposed to purchase has a narrowed focus. In this type of orientation the buyers they follow lowest price strategy since the buying firm invite only few buyers for the proposal. Buyers in such orientation try to avoid risk they follow the standard procedure for purchase as followed by the company, they only select those suppliers who have experienced or worked well in the past. There are practices followed like commodification and multisourcing.
- Supply chain management orientation – this type of orientation involves a complete co-ordination between of the purchase functions with all the other functions of the firm as well as with the other firms in the value chain. The main focus in this orientation is to improve the the value chain and ensure timely delivery to the end customers.Itfocus on the philosophy of outsourcing the non core activities of the firm. First the top management categorize those activities that can offer competitive advantage to the firm and develop strategy to follow those than the non core activities of the firm are outsourced from different other organization to gain expertise in their core functionalities.