1. Handout 5: Business markets
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Unit 320 (B&A 59): Principles of business
Handout 5: Business markets

2. Standard Industry Categories (SIC)
The primary sector covers the industries that extract or produce raw materials from the land, eg farming or fishing, extractive industries.
The secondary sector is concerned with industries that process and produce items, such as any kind of manufacturing.
The tertiary sector includes wholesalers and retailers. It also includes services such as banking, insurance, hairdressing, etc.
Another way of grouping organisations is by the industry sector in which they operate.
In the UK, organisations are grouped according to the type of service or product they provide.
This makes comparison of competitors easier and is important when considering how to best promote the product or service.
Organisation activity is grouped according to the Standard Industrial Classification of Economic Activities (SIC).
The quaternary sector consists of industries that provide information services, such as computing, ICT, consultancy and R&D. It is sometimes included in the tertiary sector. 2

3. Characteristics of organisations in the primary sector
Use materials provided by nature
Location driven by the materials
Customers are other businesses
Use materials provided by nature – extraction of raw materials such as coal, oil, minerals and ores; agriculturally-grown or farmed such as corn, oranges, beef; providing final product such as fis.
Customers are other businesses – materials are provided to secondary sector industries for production, or in the case of food, processing. In the case of fishing, customers may be the tertiary sector retailers.

4. Characteristics of organisations in the secondary sector
Heavy or light manufacturing
Focus on transformation of materials
Require:
access to raw materials
labour force
transportation of product to market.
Located out of town
Customers are other businesses
Secondary:
Heavy or light manufacturing – Heavy manufacturing such as steel making requires heavy raw materials, eg coal, and produces bulky goods; light manufacturing uses less bulky raw material, eg electrical components, and produces more easily transportable goods such as household appliances.
Require:
access to raw materials
labour force
transportation of product to market
Located out of town – premises can be located on cheaper, industrial brown field as there is no need of passing custom.
Customers are other businesses – These organisations sell their goods to wholesalers and retailers.

5. Characteristics of organisations in the tertiary sector
Wholesalers, retailers and service providers
Focus on interaction between people
Location may be important, eg to attract trade
Customers may be businesses or members of the public
Use of publicity to attract customers

6. Business to Business (B2B)
B2B and B2C
Business to Business (B2B)
Providing raw goods for manufacture, processing
Selling of goods to wholesalers or retailers
Transportation of raw materials or goods
Providing services, eg legal, financial
Business to Customer (B2C)
Sales of goods – retail
Delivery of goods
Direct services, eg hairdressing, medical care, financial and legal
The volume of B2B transactions is much higher than B2C due mainly to the supply chain where a primary industry provides a secondary industry with raw materials for manufacture who, in turn, provides the product to a wholesaler or retailer.

7. Reasons why businesses interact
Business transactions – buying and selling and transportation
Supply chain
Expertise
To increase business by offering loyalty points or discounts at allied businesses
To increase market share through alliance
To save money mounting joint promotions
Business transactions – eg manufacturers will buy raw materials from primary sector industries, sell their goods to wholesalers, use transport companies to ship them.
Expertise – providing financial or legal services, banking; consultancy services. 7