Industrial Market

• Size: Companies naturally vary in size. Older and more prominent companies tend to be the biggest competitors in the marketplace. The size of a consumer company will affect one's approach to selling to them. Their needs and desires are generally different from those of smaller businesses.
• Industry: Companies' sentiment differs from industry to industry. Organizations in one industry will naturally prioritize different aspects of the business than an organization operating in another industry. A restaurant obviously requires more cooks compared to an investment bank.
• Product: Business is based on the trading of products. Products are central to the economy next to consumer demand. Without products, there would be no value to exchange. This imperative role that products play speaks to how important it is to understand the goods and services that a potential customer is selling in order to formulate the most effective marketing strategy.
• Culture: Traditionally, culture was a rigid aspect of a business. Most companies across all industries related to a single set of values and principles that dictated their operations. However, the modernization of enterprise saw the rise of progressive business practices such as strict labor laws, consumer-centricity, and inclusiveness.

Operating Variables

Operating variables follow demographics and it is the second layer of the Nested approach. Unlike demographics, the factor of operating variables examines client bases in more detail. For example, under operating variables, companies looking to create a marketing strategy would study the technology that consumers use as well as their natural capabilities.

Purchasing Approach

The third layer of the nested approach is purchasing. As one of the more detailed factors, it looks at the processes that consumers go through when buying a product. It is important to understand how consumers think in order to fully capitalize on their demands. For example, this factor studies power relations, the relationship between buyers and sellers, purchasing policies, and purchasing as a function in the industrial market.

Situational Factors

Situational factors are the fourth layer. Being the second most detailed factor, it requires intimate knowledge of the exchange. Whenever companies engage in business, they always do so within a certain context that is comprised of circumstances. It is these circumstances that the layer of situational factors aims to understand. Factors like bankruptcy, monopoly, and debt can all potentially play a role in situational factors.

Personal Characteristics

Personal characteristics are included in the inner layer of the nested approach due to similarities between buyer and seller, buyer motivation, individual perceptions, and risk-management strategies. The name of this layer captures how it is the most intimate level of the Nested approach to industrial marketing. When studying personal characteristics, one can precisely calibrate a marketing strategy to efficiently create demand and lure customers in. Personal characteristics largely relate to whether customers are risk-averse or open to taking on risks.

Lesson Summary

The industrial market consists of business-to-business sales. A situation where one business serves as a consumer, purchasing goods or services from another business. The Nested approach is regarded as the most efficient mechanism to analyze the industrial market. It segments the market and starts with the largest section, the outside layer, and moves inward. Segmenting the market helps a business to determine the consumer that is most likely to make a purchase. The layers of this analysis include demographics, operating variables, purchasing approach, situational factors, and personal characteristics. Personal characteristics are included here because of similarities that are found between buyer and seller, buyer motivation, individual perceptions, and risk-management strategies.