Business Market: Definition and Segmentation | StudySmarter

Imagine you are working from home and setting up your home office. You notice that the chair you currently have is uncomfortable, so you go to the shop and look for a new office chair. You buy the chair that seems most comfortable and looks the nicest for a price you deem appropriate. Now imagine a large corporation setting up its new office in London. It would need hundreds if not thousands of new office chairs. As the purchasing manager, you select a chair from a supplier you have worked with previously. However, the finance director says the chairs you have chosen are too expensive, and the people operations director says the chairs look too uncomfortable and would make employees lose motivation to come to the office. Both of the directors impact your purchase. In business markets, there are numerous influences on the buying process. Read along to find out more.

Business Market Definition

The global business-to-business (B2B) e-commerce market was valued at around USD 14 trillion in 2020.2 However, this figure only represents the e-commerce side of business markets. In reality, the business market is enormous and provides numerous opportunities for organisations.

A business market is a market in which organisations sell their goods and services to other organisations to use in their manufacturing process or service provision.

Business marketers sell products to (see Figure 1 below):

1. Commercial enterprises – corporations, small businesses, etc.

2. Governmental bodies – local councils, Department for Education, etc.

3. Institutions – hospitals, universities, etc.

There are two essential elements of business markets to keep in mind when thinking of marketing in the B2B context. Firstly, business buying behaviour differs from that of consumers (end-users). When we, as consumers, buy a product, we do so to use it. For example, if we buy a bowl, we will use it to eat soup, or if we buy a laptop, we use it to take notes, answer emails, and watch YouTube. These actions can be termed personal consumption.

On the other hand, businesses buy goods to integrate into their production of a good or provision of a service. For example, a car manufacturer will buy steel and tyres to make a car and buy laptops to help their sales agents provide a service.

Another essential factor of business markets is the business buying process. Business buyers go through a lengthy evaluation process to determine what they need. Therefore, the business buying process differs from the consumer buying process. We will discuss the characteristics of the business buying process in further detail in the following sections.

For an overview of the business buying process, check out our B2B Marketing explanation.

Business Market vs Consumer Market

As you may already know, business and consumer markets differ in various aspects. These contrasts are especially prevalent in the buying process and characteristics. Let’s now examine them in more detail.

Firstly, business markets usually have fewer buyers than consumer markets. However, these few buyers tend to buy larger quantities than individuals.

Imagine you are looking to buy a new laptop. As a consumer, you would go to Apple and probably purchase a single MacBook. However, a corporation looking to buy laptops for its new office will likely purchase tens or even hundreds.