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Organizational markets are markets in which companies and individuals purchase goods for purposes other than personal consumption. These markets are characterized by having fewer buyers, but larger purchase volumes, than consumer markets do. Their marketing is focused on corporate goals, return on investment and technical suitability, rather than the styles, fads and perceived values found in consumer markets. The main organizational market types are producers, resellers and institutions.
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One of the first tasks of marketing is to segment the market so that sellers can apply marketing strategies that are appropriate and most effective for a particular segment. Examining the type of organization is one way to segment non-consumer markets. Producers, resellers and institutions require different approaches, while organizations within one of these three segments have much in common. This segmentation allows marketers to develop particular approaches to a potential customer in government, while handling a wholesale company in a completely different manner.
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Producers buy raw materials and machinery, often from other producers but sometimes from resellers. Marketing to producers requires technical expertise and a knowledge of the producer's operations. Typical marketing strategies involve identifying problems in the producer's industry or particular operations and proposing solutions that are cost-effective. Producers have a long-term view of markets since their needs change slowly. As a result, marketing to producers is usually based on long-term relationships.
Resellers include wholesale companies and retailers, as well as niche suppliers that specialize in particular areas where they have expertise. The key factor for marketing to resellers is to be aware of their added-value proposition. If the reseller is a wholesale company offering low prices for high volume, marketers must develop proposals that address this characteristic. If the company buys specialized equipment according to specifications and re-sells it to customers based on high quality and reliability, the marketing will be different.
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The institutional market includes governments and non-profits. Marketing to these organizations is highly specialized, with marketers relying on long-term relationships as well as large, one-time opportunities. The purchasing process for governments tends to be highly bureaucratic, and a familiarity with government procedures is a prerequisite. Where the idea of value in the other two market segments tends toward the economic, value for these institutions exists more in terms of benefits rather than economics. Marketers must structure proposals keeping this in mind.
Bert Markgraf is a freelance writer with a strong science and engineering background. He started writing technical papers while working as an engineer in the 1980s. More recently, after starting his own business in IT, he helped organize an online community for which he wrote and edited articles as managing editor, business and economics. He holds a Bachelor of Science degree from McGill University.