Buying Markets

By Jeff Wagner

Objectives

Define Market Buyer

Identify and describe three buyer markets

Know the characteristics of each market

Identify and describe two reseller markets

Know the benefits of distributors

Set Induction

Where would you go if you were going to buy a new sweater?Would you go to the same place to purchase the material to make a sweater?Probably not. Discuss …

Organizational Buyers

Those manufacturers, retailers and government agencies that buy goods and services for their own use or resale.

Job Titles:

• Purchasing Manager• Industrial buyers• Procurement Manager• Buyer

Types of Buyers Markets

1. Industrial

2.Reseller

3.Government & Institutional

What is bought and how has to do with the

type of company making the purchase

Industrial Markets

Consist of all organizations that acquire goods and services in the production of other products or services that are sold, rented, or supplied to others.

Industrial Markets

Characterized by: Fewer buyers buying in large quantities A close customer-supplier relationship More geographically concentrated Derived demand Inelastic demand Several buying influences Direct purchasing Leasing

Industrial Markets

Five categories of use• Installations:

Major capital items used directly in production (Manufacturing Equipment)

• Accessory Equipment:Less expensive capital items (Computer Equipment)

• Raw Materials:Products purchased in the raw state for processing into finished

goods

• Fabricated Parts and MaterialsItems that are purchased to be placed in the final product (Batteries)

• Industrial SuppliesFrequently purchased items that contribute indirectly to production

(Computer paper)

Industrial Markets

Agriculture

Forestry

Fisheries

Mining

Manufacturing

Construction

Transportation

• Communication

• Public Utilities

• Banking

• Finance

• Insurance

• Distribution

• Services

Industries making up the Industrial Market include:

Reseller Markets

Companies who buy finished goods and resell them without any reprocessing

Types of Reseller Markets:• Wholesalers/Distributors• Retailers

Wholesalers/Distributors

Obtain goods from manufacturers and resell them to industrial users, other wholesalers, and retailers

“Middle Man”

used when they are more efficient in performing one or more of the following functions:

Selling or promoting

Buying and assortment building

Bulk breaking

Warehousing

Transportation

Financing

Risk bearing

Market information

Management services and counseling

Wholesalers/Distributors

Retailers

Intermediaries that purchase products and re-sell them to final consumers for non-business use

Top US Retailers Sales # Stores

1. Wal-Mart $246.5 Billion 4,694

2. Home Depot $ 58.2 1,532

3. Kroger $ 51.8 4,098

4. Target $ 42.7 1,475

5. Sears Roebuck $ 41.4 2,192

Characterized by: More buyers buying in smaller quantities

Can choose from a variety of suppliers

Geographically dispersed

Demand driven by consumer

Fewer buying influences

Reseller Markets

Government markets are made up of federal, state, and local agencies that buy goods and services for the constituents they serve.

Include:

Federal Aviation Administration

Defense Department

Department of Sanitation

Government & Institutional Markets

Institutions must provide goods and services to the people in their care

Include: Schools

Hospitals

Nursing homes

Prisons

Government & Institutional Markets

Government & Institutional MarketsBuying objectives are not profit oriented

Characterized by:• Special Needs• Low Budget• Tend to favor domestic suppliers over foreign• Usually follow strict guidelines

• Emphasis placed on price

Product differentiation, advertising, or personal selling are not much of a consequence in a winning bid

Buying Markets Summary

The three buying markets are : Industrial Reseller Government/ Institutional

Buying Markets are defined by the use the buyer intends to make of the good purchased.