Business Products & Marketing | What is a Product in Business? – Video & Lesson Transcript | Study.com

Business Market Categories

There are four major markets for business products, which are producers, resellers, governments, and institutions.

Producers

Producers are organizations that purchase business products that may take the form of goods or services with the goal of producing other products or incorporating those business products into other products. For example, a car manufacturer will purchase parts and gears for the assembling of vehicles.

Resellers

Resellers are organizations that purchase business products with the purpose of reselling them for profit. The difference between resellers and producers is that resellers purchase finished products to resell and will not further modify the business products they intend to sell. For example, grocery stores will buy from food manufacturers and sell the food as is.

Governments

Government is also a buyer of business products. The products they purchase may take the form of services. For example, the fire department will purchase vehicles and equipment needed to provide necessary services to civilians.

Institutions

Institutions are another group of business product purchasers. This group includes churches, libraries, hospitals, unions, clubs, and foundations. For example, libraries will purchase books or organizational software in order to provide their services.

Business Product Types

There are also different types of business products that different businesses will purchase in order to conduct their daily functions. These types include major equipment, accessory equipment, component parts, processed material, supplies, and business services.

Major Equipment

Major equipment is sometimes referred to as “installations.” This refers to large and expensive capital items that will contribute to the productivity and efficiency of a company. These can be large pieces of machinery, hardware, or buildings. For example, a factory may purchase and assemble a production line in order to operate.

Accessory Equipment

Accessory equipment are machines that are smaller in scale and less expensive when compared with major equipment. These are usually important pieces of machinery, but the business may still be able to continue if these are lacking. For example, a printer in an office will be considered accessory equipment.

Raw materials

Raw materials refer to unprocessed or agricultural products, such as wood, corn, vegetables, and meat. Raw materials often have a limited number of suppliers; therefore, the marketing implication is that the price tends to be stable. These raw materials are usually sold by the supplier to local processors in large amounts.

Component Parts

Component parts are finished or close to finished business products that will be used in the production of other products. For example, car factories will purchase automobile tires in order to assemble the vehicles that will be up for sale to end consumers. Component parts also include gears and parts that can be used in machinery for the production of products. These parts may wear out as time passes. Therefore, there is also a market for replacements. Some of these component parts are custom-made for specific businesses while some are standardized across the industry.

Processed Material

Processed material are products that are used in manufacturing other products that are already processed but still require more processing before they are turned into products for sale. Processed materials can be materials that have been treated from their raw material form and are to be sold to manufacturers downstream. For example, corn (raw material) can be processed into high fructose corn syrup (processed material) and will be sold to another food processing factory before it is made into soft drinks that will be sold on the market as consumer goods.

Supplies

Supplies are products that have a low cost but have to be replaced often as they will be consumed in the production of products. For example, office supplies such as pens, paper, and pencils. Supplies will not be used as a component of the final product but will need to be replaced in order to maintain the operation of a business.

Business Services

Business services are bought to maintain or support the operation of a business. These services also do not form a component part of the final product but can be vital for the business. For example, this can be the purchase of accounting services, janitorial services, and legal consulting.

Lesson Summary

A product in business can be separated into two major types: business products and consumer products. The end-user differentiates a business product from a consumer product. A business product is a product that a business sells to another business for purposes that are not for personal consumption, while a consumer product is a product sold by a business to consumers for their personal consumption.

The four types of business categories are producers, resellers, governments, and institutions. Producers are organizations that purchase business products with the goal of processing them before selling them off. Resellers are organizations that will purchase a finished product with the aim of reselling it to customers for a profit. Government is also a buyer of business products so that they can provide services to civilians. Institutions consist of churches, libraries, hospitals, unions, clubs, and foundations. There are also different types of business products. Component parts consist of finished items (or products close to being finished) that are used to make other products. Raw materials include unprocessed or agricultural products such as corn, fruit, vegetables, and fish. Major equipment is large-scale machines that are expensive but vital to the operation of a business. Accessory equipment are machines that are smaller in scale and less expensive when compared with major equipment. Component parts are finished or close to finished business products that will be used in the production of other products. Supplies are products that have a low cost but have to be replaced often as they will be consumed in the production of products but will not be a part of the end product. Business services are bought to maintain or support the operation of a business.