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Differences Between Industrial Markets And Consumer Markets

Industrial Markets and Consumer Markets pack together under the marketing umbrella, and yet they
are different in various ways. While they are at times assumed to be the same, Industrial Marketing is
more related to Business to Business marketing (B2B) whose customers are mainly manufacturers. It is a
marketing channel that specializes in selling goods and services to other business organizations.
Marketing for B2B customers involves large orders and long-term relationships between organizations.

On the other hand, Consumer Marketing deals with Business to Consumer marketing (B2C) where the
customer is the end user who is the definitive consumer of goods and services. This is a marketing
channel that specializes in selling goods and services to individual buyers. Marketing for end customers
involves customizing the marketing campaigns and communication channels to reach the target
audience. Marketing strategies are more focused on personalizing the experience of the user with the
product or service offered.

In addressing the fundamental principles of marketing, both are quite similar as both categories chart
the principles of the marketing mix and the and objectives of marketing.

Industrial and consumer markets both share the following commonalities:

•The need to match and complement the product or service with the needs of the target market.

•Recognize and understand the market before deciding on the position and pricing of the product or
service to align with the market needs.

• Facilitate effective communication means to demonstrate the value of the product in the target
market.

•Design an end-to-end marketing process to cater to the requirements and develop a long-term
relationship with the costumer.
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Despite the similarities, obvious differences are also manifested. Let us some of the factors between the
two for better understanding.

Discuss

Industrial Markets

Buyer-Seller Relationship

•Technical expertise

•Interpersonal relationships

•Significant information exchange

•Stable, Long-term relationships

•Encourages loyalty

Promotion and Advertisement

•Emphasis on direct selling

•Advertisements are more focused on products’ application and benefits

Consumer Markets

Buyer-Seller Relationship

•Less technical expertise

•Non-personal relationships

•Less exchange of Information

•Changing, short- term relationship

Promotion and Advertisement

•Emphasis on advertising

•Advertisements are more focused on needs, wants, and trends

Price

Industrial Markets
•Competitive bidding or the result of a complex purchase process

Consumer Markets

•Pre-determined prices

Sales Cycle

Industrial Markets

•Longer Sales Cycle

Consumer Markets

•Shorter Sales Cycle

Industrial and Consumer Buyers

The buying process is segmented into 5 stages. This is also applicable for consumer buyers. As stated in
the previous chapters, buying process includes:

• Need recognition

• Search for relevant information

• Evaluation of alternatives

• Purchase decision

• Post-purchase activities.

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As for industrial buyers, please not that their buying is always in bulk and based on group decision and
influence. Raw materials purchased for further are the products for industrial buying. Product buying
takes place in the following stages.

•Problem recognition

•General need description

•Product specification

•Supplier search

•Proposal solicitation

•Supplier selection
•Order routine specification

•Performance review

It is crucial to understand why a consumer or industry makes a purchase. Without proper knowledge, it
would be very difficult to respond to customer requirements.

Note that industrial buyers go through a more rigorous process as compared to individual consumer
buyers. Decision making in the acquisition of goods and services is not done by a single individual. In a
typical industrial setting, there are different departments who handles various tasks and they are
technically equipped and considered “experts” in their own category. Decisions are made based on
thorough research and they follow strict protocols and guidelines. Their buying decisions should not be
clouded by emotions, moods, and other personal stuffs.

Another stark contrast between the two is that consumer buying behavior is largely influenced by
available information and friends and family opinions. Choice is based on personal requirements and the
decision to buy is made by an individual based on his personal choice and conviction.

In industrial setting, the buying behavior is made by a team. Calculated decisions are made after several
rounds of reviews and analysis by competent people. In short, it involves certain processes before
arriving at a conclusive and unanimous decision to buy. Impulse buying is definitely a “No” in industrial
setting.

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Differences between Consumer and Organizational Buying

•Organizational buyers are more rational as it eliminates decision making based on feelings, moods, and
emotions

•Organizational buying may be to specific requirements. There must be a reason for every purchase. An
individual may decide to buy something just because he finds the item to be “cute”. This is definitely not
the case for organizational buying.
•Organizational selling/ buying may be riskier as it involves bigger quantities and therefore more
expensive.

•Organizational buying is more complex as it must undergo a process or series of events that would
yield to a collective decision for buying.

• Negotiation is often more important in organizational buying. Terms and conditions must be clear and
adhered to by both parties. Contracts contain all stipulated agreement, failure of which could result in
damages.

Consumer Buyer Behaviour

An understanding of customers can only be obtained by answering the following questions:

•Who is important in the buying decision?

•Why do they buy?

•How do they buy?

•What are their choice criteria?

•Where do they buy?

•When and how often do they buy?

•How much do they buy?

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Choice Criteria

Choice Criteria can be:

•Economic

• Social

•Personal

(table)

Choice Criteria

1. Economic Criteria
 2. Social Criteria
3. Personal Criteria

Parameters/Variables Considered:

1. Performance, Reliability, Price

2. Status, Need for Social Belonging
3. Concerned on how the product or service relates to the individual psychologically

To reiterate, organizational buying is the decision-making process by which formal organizations

establish the need for purchase. It is to identify, evaluate, and choose among various brands and
suppliers and considers alternatives and substitutes with the intention of optimizing costs.

Producing remarkable user experience is the recipe to generate a resilient customer base. Numerous
circumstances influence the buying decisions of the consumer. Most people are engrossed on the
products’ features and style while some are driven on the quality and durability. Still, others are focused
on the price ta A number of consumers will decide for oneself, while some will settle on for the benefit
of others.

Any improvement and advancements that aims to satisfy customer needs is rewarding and successful
only when it is supplemented by innovative marketing campaigns. It is all about familiarizing and
adjusting to consumer buying behavior and recent technologies while maintaining customer focus.
Marketing crusades prosper to blend with innovation and ingenuity, to market the commodity and
associate with prospects at optimized expenditure.

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Organizational Buying Process

Buying Step

1. Problem recognition
2. General need description
3. Product specification
4. Information/Supplier search
5. Proposal solicitation
6. Supplier selection
7. Order-routine specification
8. Post-purchase performance review

Business

1. Anticipates and plans for purchase on a routine basis

2. Extensive, objective cost-benefit analysis
3. Precise technical description using techniques such as value analysis
 4. Extensive search that extends to the search for supplier
5. Formal
6. Made after extensive evaluation of objective information
7. Routine calculation of reorder points as well as time and place of delivery
8. Extensive comparison made and feedback given; concerned with quality management

Consumer

1. Reacts to needs when they arise

2. Limited analysis of benefits; concerned with total cost
3. Description more in terms of benefits
4. Limited search-geographically and in terms of resources
5. May be verbal
6. Limited analysis with subjective and anecdotal information influencing decision
7. Not routine
8. Little basis for comparison

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In Organizational Buying Process

The key prerequisite for the development of business marketing strategy is to First and foremost
understand the organizational buying process.

As mentioned in the early part of this chapter, the organizational buying process is more detailed and
complex as compared to consumer buying process.

In making business to business (B2B) buying decisions, the organization has to hurdle eight (8) stages.
Though there are certain similarities vis-à-vis consumer buying process, there are obvious and significant
variances that have an absolute comportment on the marketing strategy.

In practically all state of affairs, the organizational buying process is more formal in comparison to
consumer buying process.

Moreover, B2B buying decisions have a propensity to be more information- intensive than its
counterpart. As the marketing opportunity evolves, shoppers hunt for comprehensive information to
manage their choices. It is dubious and unlikely that a B2B buyer would ever succumb to information
they see in a standard advertisement as basis for their final decision. Individual consumers, on the other
hand, can get away with this but not in the case of organizations.

Every industry or organization has to purchase commodities to run its business operations and in so
doing needs to delve into decision making process.

Organizational Buying Behavior is the behavior that industrial buyers exhibit while making a purchase
decision.

Organizational Buying Process refers to the sequential steps taken by the industrial buyers to make a
purchase decision.
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A buying center consisting of selected members of the organization participate in the purchase process
and take relevant steps according to different buying situations.

Problem Recognition

Just like the consumer, this process begins when a problem or need is recognized. Problem recognition
can occur as a result of either or both the internal and/or external stimuli.

Internal stimuli can be a business problem or need that surfaces through internal operations or the
actions of managers or employees.

External stimuli can be a presentation by a salesperson, an ad, information picked up at a trade show, or
a new competitive development.

General Need Description

This is the stage where problems are not just identified. Define the problem at hand then lay down the
general features that may help solve the problem.

Some factors to be considered may be any or a combination of the following:

• Cost

• Type

• Quantity

• Quality

This may be assessed by a purchase committee, production manager, technical manager or even the top
management.

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Product Specification

Agreeing to the general specifications, a procurement specialist can now source for information about
available product alternatives and lay down well defined product specifications. This is generally done by
either the department, group, or individual who will utilize or allocate the product.

Supplier Search

This is the phase where search and qualification of potential sources are being evaluated. This may be
done via:
•Collection of samples

•Value analysis

•Cost reduction

•Standardization techniques

From a pool of qualified potential sources, buyers will now study to compare and determine who has
the capability to provide:

•The required quantity

•Good quality

•Appropriate price of the product needed.

Proposal Solicitation

This step involves getting quotations from various sellers that has been considered. This is similar to
bidding practices. The offers are being scrutinized against company criteria and the pool of qualified
potential suppliers are still narrowed down in number. Those sellers are short-listed who can satisfy all
requirements.

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Supplier Selection

This is the part where potential suppliers are evaluated prior to selection. The short-listed suppliers are
evaluated on the following parameters:

•Past reputation

•Quality of product

•Delivery and payment terms

•Guarantees, warranties, discounts, assurance offered by the seller

•Price

•After-sales services

Order Routine Specification

A supplier is now chosen and final order is placed specifying all technical specifications, quantity needed,
expected time of delivery, payment and return terms, installation, warranties, and after sales services.
All of the said requirements are stipulated in black and white. A contract is necessary for the protection
of both parties involved.

Performance Review

The last stage in the process that involves performance feedback and evaluation. This is also an
important stage since this is where the buyer determines whether there would be a repeat order, a
need to modify the order, or drop the seller and look for another one. This is also a case of expectation
vs. Reality. Evaluations are done based on the criteria set by the business. This would determine the
satisfaction or dissatisfaction.level that would be the basis for the next decision.