Business Marketing: Producers, Resellers, Governments & Institutions

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  • 0:05 Business Markets
  • 0:45 Defined
  • 2:17 In Action
  • 4:09 Importance
  • 4:43 Lesson Summary
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Lesson Transcript
Instructor: John McLaughlin
In this lesson, you will learn about the four different business markets and what makes them different from each other. You will learn how each business market typically buys goods and services and why it is important for marketers to be able to distinguish between these types of markets.

The Four Different Types of Business Markets

Meet Carlton the Courier. His job is to deliver whatever his customers need as fast as he can. Carlton has never lost a package or been late for a delivery. Many of Carlton's customers think he is the best courier in the world. One time, Carlton was delivering an enormous wedding cake, and his truck got a flat tire. Carlton hailed a taxi, strapped the cake to the roof of the cab, and made his delivery just in time to hear the bride say, 'I do.' There are four different types of business markets, and Carlton delivers different goods to all four types.

Business Markets Defined

A business market is made up of groups of people who buy goods and services to use in producing other products, to resell, or for their own use in their day-to-day operations. The four different types of business markets are:

  • Producer markets: Producers buy goods and services and transform them into a sellable product, which they sell to their customers for the purpose of making a profit. Examples of producers are farmers, manufacturers and construction companies.
  • Reseller markets: Resellers buy finished products and resell them to their customers for the purpose of making a profit. Resellers do not modify the products they buy. Resellers can be wholesalers who sell their products to other resellers or retailers who sell their products to end users.
  • Government markets: Governments buy goods and services to support their internal operations; they do not transform the goods and services or resell them to make a profit. Government markets usually buy their goods through a bidding process and include federal, state, county, and local governments.
  • Institutional markets: Institutions are non-government organizations that buy goods and services to support their internal operations. The function of institutions is to better their communities, not to make a profit. Examples of institutional markets are churches, hospitals, and colleges.

Business Markets in Action

On an average day, Carlton will serve all four business markets. His first delivery today is to Manny's Mattress Factory. Manny is about to run out of the springs he puts into the mattresses he makes. If Manny can't make mattresses, he can't sell them and won't make a profit. Manny is a producer who transforms many different parts into mattresses, which he sells in order to make a profit.

Carlton's next delivery is to Paula's Pet Store. Paula is having a sale on iguanas today and has almost sold her entire inventory of heat lamps. Since iguanas must have a heat lamp, she cannot sell any more iguanas until Carlton delivers more heat lamps to her. Paula tells Carlton to hurry because without the heat lamps, she is losing sales, which will have a negative impact on her profits for the day. Paula is a reseller since she does not transform the products she sells and does try to make a profit.

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