Characteristics of Industrial Market

1. Close Supplier and Customer Relationship

A business relationship starts with a sale transaction. A good business

relationship is created and maintained in directing the company’s
marketing activities towards creating and maintaining successful
exchanges with the customers.

2. Derived Demand

The demand of the good and services is derived from the demand of the
consumers. Thus, if consumer demand for cars decreases, car
manufacturers demand for tires, car paints, car air condition, and other car
accessories will also drop.

3. Direct Purchasing

Sales people from manufacturing companies go to industrial market for

product sales. Industrial market normally purchase product volume. Thus,
companies provide buyers technical assistance before during , and after
sales are made.

4. Geographically Concentrated Buyers

Allows manufacturers to easily reach their target market. When buyers are
concentrated geographically, manufacturer use more personal selling:
while if buyers are dispersed, media promotion is the best medium to use.

5. Inelastic Demand

Many companies have inelastic demand. This means that the companies
demand for business product, which are not affected by price change. For
example, a decrease in the price of car tires will not cause the
manufacturing companies to buy more cars.

6. Larger but Fewer Buyers

Industrial market normally interacts with fewer but larger buyers. Buyer
purchase in huge product quantity.
 7. Leasing

This is common to most firms in the industrial market. Before, only large
equipment or expensive machineries were rented out, such as
construction equipment and warehouses. Nowadays, industrial market
players like suppliers and users lease other items such as delivery trucks
for product distribution and storage houses for investors.

8. Professional Purchasing

Purchasing decisions can be done by anyone without undergoing training,

purchasing and selling in the industrial market necessitate either the firms,
seller or buyer to undergo professional training effectively close a sale.
Expertise in the area of sales or business is a must.

9. Reciprocity

This means the company will purchase products from a firm only in the
seller will also purchase products from the buyer. Firms practice recprovity
as a solution to a declining sales volume.

10. Several Buying Influences

In the industrial market, a team of buyers in the firm normally influences

buying decisions.

Types of Buying Station

1. Straight Rebuy – describes a situation where affirm reorders on a regular basis.

2. Modified Rebuy – describes a buying decision where a firm wants to make

some changes to a product specifications, process, delivery or payment
requirements, and other terms.

3. System Purchase – involves a total solution to the buyer’s problem of not

making separate purchases decisions.

4. New-task Buying – refers to purchasing products for the first time.

Steps of product Development

1. Idea Generation
Begins by gathering ideas through brainstorming. Ideas may be gathered
through different ways like news, magazines, talking to suppliers, getting
customer’s feedback, attending seminars to know new business trends,
and through results of research.

2. Idea Screening
This stage where ideas gathered are screened and evaluated.

3. Product Concept Development and Concept Testing

In this stage, new product idea is concretized into meaningful and
understandable terms.

4. Market Strategy
This involves different game plans of the company in relation to the
product it intends to produce.

5. Business Analysis
Making company assessment by accomplishing what is called the SWOT
Analysis. It will help to fully understand what needs to enhance.

6. Budget
The main consideration of any product development is the capital involved
in the process. All aspects of product development involve budget.

7. Product Development
This is the stage where actual production of the product is done.

8. Test Marketing
Majority of companies produce and distribute products to selected
geographical location only. This is done in order for the company to know
product acceptability of the market before going to full commercialization.

9. Full Commercialization
Full-scale production are achieved at this stage. Expected that the
company is now ready to face its competitors with great hope that the new
product can provide not only profit on its part, but also satisfaction of the
needs and wants of its potential market.