7 Types of Business Markets You Need to Know for Export Success
If you want to grow your business and reach new customers, exporting is a great option. But before you start selling your products or services abroad, you need to understand the different types of business markets and how they affect your export strategy.
A business market is a group of organizations that buy goods or services for their own use or for resale. Business markets are different from consumer markets, which are made up of individuals who buy goods or services for personal or household use.
There are many types of business markets, each with its own characteristics, challenges and opportunities. In this article, we will explain the 7 most common types of business markets and how you can target them effectively.
Industrial Market
The industrial market consists of businesses that buy raw materials, components, machinery, equipment or other products to manufacture goods or provide services. Examples of industrial buyers include factories, construction companies, mining companies, utilities and transportation companies.
The industrial market is usually large, geographically dispersed and highly competitive. Industrial buyers are often price-sensitive, quality-conscious and rational in their purchasing decisions. They tend to have long-term relationships with their suppliers and require high levels of technical support and after-sales service.
To succeed in the industrial market, you need to offer products that meet the specific needs and standards of your customers. You also need to provide reliable delivery, competitive pricing and excellent customer service. You may need to adapt your products to different regulations, specifications and preferences in different countries.
Reseller Market
The reseller market consists of businesses that buy finished goods or services and resell them to other businesses or consumers. Examples of resellers include wholesalers, distributors, retailers and e-commerce platforms.
The reseller market is usually fragmented, diverse and dynamic. Resellers are often intermediaries between producers and end-users, and they add value by providing access, convenience, information and promotion. Resellers are usually profit-oriented, cost-conscious and opportunistic in their purchasing decisions. They tend to have short-term relationships with their suppliers and require low levels of technical support and after-sales service.
To succeed in the reseller market, you need to offer products that have high demand, high margin and low risk. You also need to provide attractive terms, incentives and discounts to your resellers. You may need to work with multiple resellers in different channels and regions to reach your target customers.
3. Government Market
The government market consists of public sector organizations that buy goods or services for their own use or for public benefit. Examples of government buyers include federal, state and local agencies, public schools, hospitals, libraries and military forces.
The government market is usually large, stable and regulated. Government buyers are often influenced by political, social and environmental factors in their purchasing decisions. They tend to have formal, complex and lengthy procurement processes that require bids, contracts and audits. They also have strict requirements for quality, safety and compliance.
To succeed in the government market, you need to offer products that meet the specific needs and objectives of your customers. You also need to comply with the rules and regulations of the government agencies you deal with. You may need to obtain certifications, licenses and approvals to qualify as a supplier.
Institutional Market
The institutional market consists of non-profit organizations that buy goods or services for their own use or for charitable purposes. Examples of institutional buyers include churches, universities, foundations, museums and clubs.
The institutional market is usually small, scattered and diverse. Institutional buyers are often motivated by social values, ethical principles and altruistic goals in their purchasing decisions. They tend to have limited budgets, resources and authority to make purchases. They also have high expectations for quality, service and social responsibility.
To succeed in the institutional market, you need to offer products that align with the mission and vision of your customers. You also need to demonstrate your commitment to social causes, environmental sustainability and ethical practices. You may need to offer discounts, donations or sponsorships to gain trust and loyalty.
Professional Services Market
The professional services market consists of businesses that buy specialized knowledge, skills or advice from experts in various fields. Examples of professional service providers include lawyers, accountants, consultants, engineers and architects.
The professional services market is usually small, concentrated and competitive. Professional service buyers are often sophisticated, demanding and loyal in their purchasing decisions. They tend to have high standards for quality, reliability and reputation. They also have high levels of involvement and interaction with their suppliers.
To succeed in the professional services market, you need to offer services that deliver value-added solutions to your customers’ problems or needs. You also need to establish your credibility, expertise and differentiation in your field. You may need to build long-term relationships with your customers based on trust, communication and satisfaction.
Consumer Business Market
The consumer business market consists of businesses that buy goods or services from other businesses for personal or household use. Examples of consumer business buyers include online shoppers, home-based businesses and freelancers.
The consumer business market is usually large, diverse and dynamic. Consumer business buyers are often influenced by personal preferences, emotions and lifestyles in their purchasing decisions. They tend to have low levels of loyalty, switching costs and bargaining power. They also have high levels of access, choice and information.
To succeed in the consumer business market, you need to offer products that appeal to the needs, wants and desires of your customers. You also need to provide convenience, variety and value to your customers. You may need to use effective marketing strategies to attract, retain and engage your customers.
International Market
The international market consists of businesses that buy goods or services from other countries or regions. Examples of international buyers include importers, exporters, foreign direct investors and multinational corporations.
The international market is usually vast, diverse and complex. International buyers are often influenced by cultural, economic and political factors in their purchasing decisions. They tend to have high levels of uncertainty, risk and competition. They also have high levels of adaptation, customization and coordination.
To succeed in the international market, you need to offer products that meet the needs and expectations of your customers in different markets. You also need to comply with the laws and regulations of the countries or regions you operate in. You may need to use different modes of entry, strategies and tactics to enter and expand in different markets.
Understanding the different types of business markets is essential for any business that wants to export successfully. By knowing the characteristics, challenges and opportunities of each market, you can tailor your products, prices, distribution and promotion accordingly. You can also identify the best markets for your business based on your strengths, goals and resources.
Types of Business Market and Global Demand
One way to classify business markets is based on the types of customers they serve and the types of goods or services they offer. Business markets can be divided into four main categories: consumer market, service market, industrial market, and business-to-business (B2B) market. Each category has different characteristics and trends that affect the global demand for their products or services.
Consumer Market
The consumer market involves businesses selling products directly to customers for personal or household use. This is the largest type of business market, as it caters to a wide range of potential consumers with different preferences, needs, and incomes. The consumer market is influenced by various factors, such as demographics, culture, lifestyle, technology, and social media. The global demand for consumer products is expected to grow steadily in the coming years, especially in emerging markets where the middle class is expanding and disposable income is increasing. Some examples of consumer products are clothing, food, electronics, and entertainment.
Service Market
The service market involves businesses providing intangible benefits to customers, such as education, health care, transportation, and entertainment. The service market is also a large and diverse type of business market, as it covers many sectors and industries that cater to different customer segments. The service market is affected by factors such as quality, convenience, customer satisfaction, and innovation. The global demand for services is projected to rise significantly in the future, especially in developing countries where the demand for education, health care, and tourism is growing rapidly. Some examples of service providers are schools, hospitals, airlines, and hotels.
Industrial Market
The industrial market involves businesses selling products or services that are used in industrial or production processes, such as raw materials, machinery, equipment, and energy. The industrial market is usually characterized by high-volume and low-margin transactions that require long-term relationships and contracts between buyers and sellers. The industrial market is influenced by factors such as economic conditions, technological changes, environmental regulations, and trade policies. The global demand for industrial products or services is expected to fluctuate depending on the performance of various sectors and regions. Some examples of industrial products or services are steel, oil, electricity, and logistics.
Business-to-Business (B2B) Market
The B2B market involves businesses selling products or services to other businesses that may resell them or use them as inputs for their own products or services. The B2B market is usually characterized by low-volume and high-margin transactions that require specialized knowledge and customization. The B2B market is affected by factors such as industry trends, competitive advantage, customer loyalty, and innovation. The global demand for B2B products or services is expected to increase steadily in the near future, especially in emerging markets where the business sector is developing and diversifying. Some examples of B2B products or services are software, consulting, advertising, and research.
References:
https://en.wikipedia.org/wiki/Business_marketing#cite_ref-7
https://www.investopedia.com/terms/b/business-to-business.asp
https://www.investopedia.com/terms/b/business-to-consumer.asp
https://www.investopedia.com/terms/g/government-procurement.asp
https://www.investopedia.com/terms/n/nonprofitorganization.asp
https://www.investopedia.com/terms/p/professional-service-provider-psp.asp
https://www.investopedia.com/terms/c/consumer-to-business-c2b.asp
https://www.investopedia.com/terms/i/international-trade.asp
