The market can be understood as the place, through which the business firm delivers value to its customers. The market can be divided into the business market, which sells goods to those entities that use it for further production or resale, and consumer market, which can be understood as the marketplace for consumers, wherein products are sold by the business entities to the consumers, for final consumption.
The crucial difference between consumer market and business market is that in a consumer market standardised products are offered to the consumers, whereas in a business market, technical or customised products are provided to the business customers. Further, there are only a few intermediaries in the case of the business market. As against, multiple layers of intermediaries can be found in consumer markets.
Content: Consumer Market Vs Business Market
Comparison Chart
| Basis for Comparison | Consumer Market | Business Market |
|---|---|---|
| Meaning | Consumer Market refers to a market, wherein goods are bought by/sold to the consumers for personal or family consumption. | Business Market refers to a market, in which goods are bought by/sold to the business entities for further production or resale. |
| Influenced by | Market Demand | Organizational Demand |
| Number of Customers | Many | Few |
| Purchase Volume | Small | Large |
| Consumption of goods | Final | Intermediate |
| Nature of deal/transaction | Informal | Formal |
| Geographical Location | Dispersed | Concentrated |
| Promotion | Advertising | Personal Selling |
| Product | Standardized | Technical |
| Reciprocity | No | Yes |
| Price | Listed Price or Maximum Retail Price (MRP) | Competitive bidding and Negotiated prices |
Definition of Consumer Market
Consumer Market as the name suggests refers to the marketplace that comprises of household consumers, who buy goods for personal or family consumption or sharing with others and not for the purpose of resale. Consumer refers to any person who buys goods or services for personal consumption.
In such a market, the decision for spending the money on goods is not influenced by any person, instead, the decision is based on the need, willingness and ability of the person to purchase the product or service at the given rate. In a consumer market, marketing plays a catalytic role in changing the market trends, influencing the customer’s tastes and preferences and spreading awareness about the various options available to them.
The market is subdivided into four categories: Consumer Products, Food and beverages, Retail products, Transportation products, etc. To understand the consumer market, one needs to understand:
- Buying motives: Why consumers buy the products?
- Consumer Behavior: What, When, Where, How and How much, the consumer wants to buy?
Definition of Business Market
Business Market refers to the marketplace wherein the firms acquire raw material, natural resources, equipment and supplies, for the purpose of resale or for use in the manufacturing of another product or rendering services to other. These markets comprise of business entities (wholesalers, retailers, etc.) that buy products to use it in their own operation.
The purchase process of business entities is not as easy as that of a final consumer, as for the purpose of the purchase, first of all, the quotation is requested from all the potential suppliers, then a choice is made from the number of suppliers, to get the supply of raw materials.
Characteristics of Business Market
- Business Market comprises of few but large buyers.
- The demand for buyers is based on final consumer demand.
- Demand is inelastic, which fluctuates frequently and quickly, with the business cycle.
- Customers are located at a particular geographical location.
- A strong customer-supplier relationship is there.
- Customer Heterogeneity.
- The buying decision is not taken by the purchase managers solely, rather, various factors are considered, and heads of different departments are consulted before placing the order for purchase.
- Due to high-cost volume, technical nature of products and number of individuals involved, there are long purchase cycles.
Key Differences Between Consumer and Business Market
The following points are noteworthy, so far as the difference between the consumer and business market is concerned:
- Consumer Market is a market, characterised by products and services, which are designed for and offered to the public at large, for personal consumption. On the other hand, Business Market is the market consists of all the business entities that procure raw materials and equipment, to use them in producing or providing goods or services, which are sold or supplied to others.
- The consumer market is influenced by market demand. The word ‘market demand‘ means the aggregate quantity of products that all the consumers in the market are willing and able to buy at a given price. As opposed to the business market, is influenced by organizational demands. Here, ‘organizational demand‘, demand for a commodity which an organization is willing and able to buy.
- In a consumer market, you can find many customers, whereas in the business market there are only a few customers or clients.
- The purchase volume is high in the business market as compared to the consumer market.
- In the consumer market, final goods are sold to consumers. On the other hand, in the business market, intermediate goods are sold to business customers.
- In a consumer market, the nature of the transaction is personal or informal. Conversely, in the case of a business market, the nature of the deal is formal and professional, between the company and the client.
- The consumer market is dispersed, while the business market is geographically concentrated.
- Advertising is the main tool of marketing, used in the consumer market to attract the consumer to buy more of a product or service. On the contrary, personal selling tool of marketing is used in the business market, to attract clients and business customers to buy the company’s products or services.
- In the consumer market, standardised products are sold to customers. In contrast, technical and customised products and services are offered to the business customers and clients.
- Reciprocity is prevalent in the business market but not in the consumer market. Here, reciprocity means, the process of exchanging goods or services for mutual benefit.
- In a consumer market, the goods are sold at the listed price or maximum retail price. However, in a business market, the products are bought or sold after competitive bidding, at negotiated rates.
Conclusion
When it comes to buying behaviour, in a business market, functional areas of the concern are involved in both firms, i.e. buying and supplying firm. As against, the buying behaviour of an individual in a consumer market is influenced by his/her family members.
Further, the buying decision is based on rational or performance basis in a business market, whereas social or psychological or physiological needs forms the basis for buying decision in consumer market.
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