Business Customers
Business customers are also known as industrial customers. Business customers purchase products or services to use in the production of other products. Such industries include agriculture, manufacturing, construction, transportation, and communication, among others. They differ from consumer markets in several respects. Because the customers are organizations, the market tends to have fewer and larger buyers than consumer markets. This often results in closer buyer-seller relationships, because those who operate in a market must depend more significantly on one another for supply and revenue. Business customers also are more concentrated; for instance, in the United States more than half of the country's business buyers are concentrated in only seven states. Demand for business goods is derived demand, which means it is driven by a demand for consumer goods. Therefore, demand for business goods is more volatile, because variations in consumer demand can have a significant impact on business-goods demand. Business markets are also distinctive in that buyers are professional purchasers who are highly skilled in negotiating contracts and maximizing efficiency. In addition, several individuals within the business usually have direct or indirect influence on the purchasing process.
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