These categories are grouped together as the sales approach is similar and behavioral patterns exhibited by each conform to organizational behavior. A number of characteristics in these types of market distinguish them from consumer markets.
Institutions and businesses purchase goods either for use in their own organizations or for use in the manufacture of other goods. There are few potential purchasers, each making high-value purchases.
Industrial markets are often highly concentrated, an example being the UK textile industry which is centered in Lancashire and Yorkshire. An industrial salesperson who sells into one industry may deal with only a few customers in a restricted geographical area.
Buying decisions often involve a large number of people, particularly in the case of a public authority where a purchasing committee may be involved in a major purchase.
Many industrial buying decisions involve more than the buyer; in some cases the technical specifier, production personnel and finance personnel are involved and this is where the decision-making unit can be seen in practice.
This can prolong negotiation and decision-making processes. Salespeople have to work and communicate with people in a variety of positions and tailor their selling approaches to satisfy individual needs. For example, specifiers need to be convinced of the technical merits of the product, production people want to be assured of guaranteed delivery and buyers will be looking for value for money.
For technically complicated products, selling is sometimes performed by a sale team, with each member working with their opposite number in the buying team, e.g. a sales engineer works with engineers in the buying company.
A life insurance policy salesperson might make a sale and never meet the customer again. The nature of selling in industrial, commercial and public authority settings is that long-term relationships are established and both parties become dependent upon each other, one for reliable supplies and the other for regular custom.
There is a tendency to build up strong personal relationships over a long time and high pressure sales techniques could be counter-productive. A more considered approach involving salespeople identifying needs of individual customers and selling the benefits of the product to satisfy those needs are more likely to be successful.
The ability of salespeople to deal with complaints and provide a reliable after-sale service is important. It is suggested that the effective salesperson must understand how to develop and sustain relationships with key customer groups, along the lines of relationship selling.
This is an arrangement whereby company A purchases certain commodities manufactured by company B and vice versa. Such arrangements tend to be made at senior management level and are often entered into when there is a financial link between the companies, such as those within the same group (referred to as intergroup trading) or between companies whose directors simply want to formalize an arrangement to purchase as much of each other’s products as possible.
Such arrangements can be frustrating for salespeople and buyers alike, as they deter free competition. Buyers do not like to be told where they must purchase from, just as salespeople do not like having a large part of a potential market permanently excluded because of a reciprocal trading arrangement.