Marketing Lessons for SBI PO : Understanding Consumer and Industrial Markets

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Consumer Market : The consumer market consists of all the individuals and households that buy or acquire goods and services for personal consumption. Consumers vary in age, income, educational level, mobility patterns and taste. Marketers find it useful to distinguish different consumer groups or segments and to develop products and services tailored to their needs. If a market segment is large enough, some companies will set up a special marketing program to serve this market segment e.g., women, older consumers, young urban professionals, etc.


Consumer behavior is influenced by four factors. Those are,

1. Cultural (Culture, Subculture and social class)
2. Social (reference groups, family and social roles and status)
3. Personal (age, stage in the life cycle, occupation, economic circumstances, lifestyle, personality and self-concept)
4. Psychological (motivation, perception, learning, beliefs and attitudes)
   

Industrial Market : The industrial markets consists of individual and organizations that acquire goods and services that are sold, rented or supplied to others.

More money terms are involved in sales to industrial buyers than consumers. Industrial markets differ from consumer markets in many major ways.

• Small Number of buyers : The industrial marketer normally deals with far fewer buyers than does the consumer marketer. Develop tyres depends for its survival on getting orders from the three automobile manufacturers. But when it sells tyres in the replacement market, it faces the lakhs of car owners in the consumers markets.
• Biggest Buyers : Many industrial markets are characterized by a high buyers concentration ratio in that few large buyers also most of the purchasing. In such industries as telecom, aircraft engines, steel, tractors, the top few manufacturers account for bulk of the total production. 
• Close Supplier-customer relationship : Because of the smaller customers base and the importance and power of the larger customers over the suppliers, we observe close relationship between customers and sellers in industrial markets. Suppliers often need to customize their offerings to individual customer needs. They must cooperate with the buyers on technical specifications and delivery requirements.
• Geographically concentrated buyers : Industries such as steel, tea, petroleum, petrochemical show great geographical concentration. Most agricultural output comes from a relatively few states. This concentration of producers helps to reduce selling costs. At the same time, industrial marketers need to monitor regional shifts of certain industries. 
• Derived Demand : The demand for industrial goods ultimately derived from the demand for consumer goods. IF the demand for these consumer goods is less, so will the demand for all the industrial goods entering into their production. 
• Inelastic Demand : The total demand for many industrial goods and services is not much affected by price changes. Demand is less especially in the short run because producers cannot make quick changes in their production methods. Demand is also inelastic for industrial goods that represent a small percentage of the item's total cost. At the same time, producers may switch suppliers in response to price differences.
• Fluctuating demand : The demand for industrial goods tends to fluctuate more than consumer demand. This is specially true for new plants and equipments. A given percentage increase in consumer demand can lead to a much larger percentage increase in the demand for plant and equipment necessary to produce the additional output. This is called acceleration principle. 
• Professional Purchasing : Industrial goods are purchased by professionally trained purchasing agents who spend their work lives learning how to buy better. Their professional approach and greater ability to evaluate technical information leads to more cost-effective buying. This means that industrial marketers, have to provide and master greater technical data about their product and competitor's products.
• Multiple-buying Influence : More typically influence between buying decisions than consumers buying decisions. Buying committees consisting of technical experts and even senior management are common in the purchase of major goods. Consequently, industrial marketers have to hire well-trained sales-reps and often use sales teams. Advertising, sales promotion, and publicity are less important than personal selling n the industrial buying process. 

Read more study materials and online practice tests on Marketing for SBI PO Exam from here 

Bhavya Vasudevan

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