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 Materials Items that are purchased to be placed in the final product (Batteries) Industrial Supplies Frequently 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$246.5 Billion4, Home Depot$ , Kroger$ , Target$ , Sears Roebuck $ ,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

Buying 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.