Difference Between Business Market and Consumer Market

The selling environment in any business transaction presents unique differences. As such, business markets and consumer markets are different in many aspects, although often overlooked. While the business markets consist of businesses that acquire products and services used in the production of other goods and services, consumer markets consist of businesses that sell goods to the final consumers. This article outlines the differences between business markets and consumer markets. 

What are a Business Markets?

As mentioned, business markets refer to organizations, businesses or entities that acquire products and services for use in the production of other services and products. These include goods that are supplied, sold or rented to others. Among major players in business markets include fisheries, agriculture, mining, transportation, construction, mining, communication, finance, distribution and insurance services.  

Many people are investing in more resources and money in business markets. A case in point is Tesla’s plan to invest $5 billion in its new eclectic car and battery, commonly referred to as ‘Gigafactory’ in Europe. Different suppliers will then provide accessories and parts. 

Characteristics of business markets include;

• Presence of fewer but larger buyers- While the buyers may be few, they often buy in large quantities
• Geographically concentrated customers- Customers in these markets are at vast geographical locations
• Final customer demand-driven- Since production is tailored for the final consumer, the products are tailored towards the final consumers’ wants and needs
• Inelastic demand- The prices in these markets do not affect the demands as they do not change much
• Quick fluctuation in demand- Since businesses prefer to buy sat the lowest prices, an increase in prices decreases the products purchases since high price selling products do not sell well in the market
• Professional purchasing units- Due to the need of maintaining a high level of professionalism, the purchasing process is very detail-oriented. 
• Has a formalized buying process- The purchasing process involves following the organization’s protocol and the complete chain of command 

What are Consumer Markets?

This is a market whereby businesses or producers sell their products or services directly to the final consumers. 

Marketing in consumer markets involves dividing the consumers into markets and targeting them according to their likes, interests, dislikes, values and opinions. 

Characteristics of consumer markets include;

• Demographic characteristics- This is the foundation for understanding consumers and include ethnicity, age, income, gender, occupation, religion, nationality, social class, education and social class. 
• Behavioristic characteristics- These include consumer interests in a product such as how they intend to use it. 
• Psychographic characteristics- This entails the kind of lifestyle the customer lives, their interest, opinions and attitudes as well as personal values. 
• Geographic characteristics- This is information regarding where the consumer lives. It includes the climate, religion or how densely populated the geographical area is.  

Features of consumer markets include;

• Consumer focused market- The consumer market solely focuses on the consumers 
• Branding is carried out to change or improve the consumer’s perception of the product
• Packaging- This is done to attract buyers in the market
• Promotion- Brands use different promotional tools to increase sales
• Demand- The demand for consumer products is elastic since it is affected by income and price

Examples of these markets include clothing stores, grocery stores, franchises and car dealerships. 

Similarities between Business market and Consumer market

• Both play an important role in the supply chain

Differences between Business market and Consumer market

Definition

Business markets refer to organizations, businesses or entities that acquire products and services for use in the production of other services and products. On the other hand, consumer markets refer to markets whereby businesses or producers sell their products or services directly to the final consumers.

Demand

While business markets have inelastic demand, consumer markets have an elastic demand. 

Number of buyers

Business markets have fewer buyers who often buy in large quantities. On the other hand, consumer markets have many buyers who purchase in small quantities. 

Buying process

While business markets have formalized buying processes whereby the purchasing process involves following the organization’s protocol and the complete chain of command, consumer markets do not have formalized buying processes. 

Decision making

Since business markets entail many products, decision making before purchases are made is slow. On the other hand, the decision making in consumer markets is fast since impulse buying is rampant.

Investments

While business markets invest heavily in capital equipment, consumer markets invest heavily in marketing and promotion activities.  

Market segmentation

Business markets segment their businesses based on the industry, ownership, level of technology and end market reached. On the other hand, consumer markets segment their businesses based on demographic, behavioristic, psychographic and geographic characteristics. 

Business market vs. Consumer market: Comparison Table

Summary of Business market vs. Consumer market

Business markets refer to organizations, businesses or entities that acquire products and services for use in the production of other services and products. They have fewer buyers who often buy in large quantities and segment their businesses based on the industry, ownership, level of technology and end market reached. 

On the other hand, consumer markets refer to markets whereby businesses or producers sell their products or services directly to the final consumers. They have an elastic demand and segment their businesses based on demographic, behavioristic, psychographic and geographic characteristics. Both, however, play an important role in the supply chain. 

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