Buying Markets

1. Buying Markets By Jeff Wagner

2. 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

3. 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 …

4. 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

5. Types of Buyers Markets • Industrial • Reseller • Government & Institutional What is bought and how has to do with the type of company making the purchase

6. 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.

7. 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

8. 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)

9. Agriculture Forestry Fisheries Mining Manufacturing Construction Transportation Communication Public Utilities Banking Finance Insurance Distribution Services Industrial Markets Industries making up the Industrial Market include:

10. Reseller Markets Companies who buy finished goods and resell them without any reprocessing Types of Reseller Markets: • Wholesalers/Distributors • Retailers

11. Wholesalers/Distributors Obtain goods from manufacturers and resell them to industrial users, other wholesalers, and retailers “Middle Man”

12. Selling or promoting Buying and assortment building Bulk breaking Warehousing Transportation Financing Risk bearing Market information Management services and counseling used when they are more efficient in performing one or more of the following functions: Wholesalers/Distributors

13. Retailers Intermediaries that purchase products and re-sell them to final consumers for non-business use Top US Retailers Sales# Stores • Wal-Mart $246.5 Billion 4,694 • Home Depot $ 58.2 1,532 • Kroger $ 51.8 4,098 • Target $ 42.7 1,475 • Sears Roebuck $ 41.4 2,192

14. Reseller Markets Characterized by: • More buyers buying in smaller quantities • Can choose from a variety of suppliers • Geographically dispersed • Demand driven by consumer • Fewer buying influences

15. Government & Institutional 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

16. Government & Institutional Markets Institutions must provide goods and services to the people in their care Include: Schools Hospitals Nursing homes Prisons

17. 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

18. 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.