Lecture 1 Flashcards
Differences B2B en B2C market, B2B…
- Order larger quantities
- Sales contracts are usually a long-term agreement
- Buying decision process takes longer (decisions bu committee)
Name the three business markets
- Business
- Government
- Institutions
How can businesses be concentrated?
- By size = fewer but larger customers
- by geographical = large potential volume exists in a given area
What are two purchasing strategies for the government?
- Formal advertising = open bid from appropriate suppliers (when product is standardised)
- Negotiated contract = when goods can not be differentiated on price alone
Important factor in institutional buying
Group purchasing = allows lower prices, improved quality and reduced administration costs
What are functions of business products?
- Used to manufacture other products
- Become parts within other products
- Aid in the normal operations of an organization
- Acquired for resale and distribution
3 Kinds of B2B goods
- Entering goods (raw materials, manufactured materials)
- Foundation goods (Installations, accessory equipment)
- Facilitating goods (Supplies, services)
4 Kinds of B2B demands
- Derived demand
- Inelastic demand
- Joint demand
- Fluctuating demand
Derived demand
Refers to the direct link between the demand for an industrial product and the demand fro consumer products
Inelastic demand
When a change in price causes smaller percentage change in demand. Those goods tend to have few substitutes and considered necessities
Joint demand
Characteristics of certain products which are used together and where a change in demand causes a similar change in demand for the other
Fluctuating demand
Market interest for a product that shows variation over time
