Business Markets: Definition, Types and Examples
The nature of a business market can tell a company how to advertise and sell their products to specific demographics of consumers. When you work in sales, knowing about the types of business markets can help your company determine which form of marketing might bring the most success to your business.
As business markets expand, you can stay informed about their developments to adjust your sales and marketing strategies to align with whichever market might benefit your company the most. In this article, we explore what a business market is with different types of business markets and examples.
What is a business market?
A business market is a method a company uses to sell products or services to a specific group of consumers. Typically, business markets facilitate sales from one business to another in cases where one business plans to reuse or resell another company's products or services.
A company that purchases goods and services in a business market might also use the items they purchase as materials to produce new products of their own. There are business markets designed around making sales directly to consumers as well, and they focus on reaching a large audience rather than marketing to other businesses.
Five types of business markets
Here are five different types of business markets:
A business-to-consumer market involves businesses advertising products directly to customers for purchase. The business-to-consumer market is usually identified as the biggest type of business market, as it caters to the largest group of potential consumers. This is because companies that use a business-to-consumer market design their efforts considering the general public or specific demographics that exist within the population, such as different age groups, genders or groups with special interests.
Companies that use business-to-business markets advertise and sell their goods or services to other businesses instead of marketing directly to consumers. Products and services sold in a business-to-business market are often reused or resold by the company that purchases them and sometimes function as materials for manufacturing new products. Some companies that operate in a business-to-business market might also sell to consumers, but most focus on selling their products or services to other companies and businesses.
If a business sells products or services used in industrial or production projects, it likely operates in an industrial market. Most companies that use an industrial market advertise and sell their goods and services to other companies rather than immediately to consumers.
This is because industrial products and services are typically most useful to companies that can reuse them to complete other projects and are not usually ideal for personal use by individuals. Industrial markets are often considered one of the smallest business markets, as their products and services serve smaller groups of consumers instead of large consumer demographics.
A services market refers to when a business advertises and sells services instead of products. Businesses that operate in a services market can also function in a business-to-business market if they sell their services primarily to businesses or a business-to-consumer market if they more frequently sell directly to customers. This can depend on the type of service a business offers, such as whether it's a service that benefits individual consumers or entire businesses.
Professional services market
A professional services market facilitates the advertising and sale of services from specialized professions. As companies that operate in professional services markets offer specialized work, their businesses and employees typically have some sort of licensing or certification that permits them to work in their field. Because some companies in a professional services market might provide services that can benefit entire businesses as well as individual consumers, they can sometimes function in both a business-to-business and a business-to-consumer market.
Business market characteristics
Here are a few common characteristics of business markets:
Business markets often serve a smaller consumer market that contains large buyers.
Business markets can facilitate business between companies that are far away from each other in terms of location.
Demand in business markets remains consistent and unaffected by changes in prices.
Business markets grow and shrink depending on how many customers are purchasing a final version of a product.
Purchases made in a business market might involve several buyers.
Selling and advertising in a business market requires a high degree of professionalism.
Business markets can present more complex purchasing decisions than consumer markets.
Making purchases in a business market is a formal process.
Business markets facilitate long-term professional relationships between buyers and sellers.
Examples of business markets
Here are some examples of business markets:
Business-to-consumer market example
As business-to-consumer markets operate by selling goods and services directly to customers, most companies that use one involve some form of retail. For example, clothing stores that advertise new fashions and garments that customers can purchase immediately in their stores can be classified as business-to-consumer companies. More examples include businesses like grocery stores, online retailers and cosmetics companies.
Business-to-business market example
A company in a business-to-business market sells their products and services to other business for reselling or reuse, which means they typically sell products that can benefit companies as a whole. One example of a business-to-business company is a business that sells materials to construction companies for construction projects, as the construction company purchases its materials from another business and uses them to create new structures or make repairs. Additional examples include businesses that sell furniture for office spaces or advertise accounting services for companies or organizations.
Industrial market example
Because companies in industrial markets focus on selling products for industrial use, they can operate in several fields. Because of this, a company in an industrial market is likely an expert in their specific field and can provide specialized products for certain purposes. For example, companies that sell steel, glass, wood, or other raw materials offer their products for other businesses to use for manufacturing their own new products. Other industrial market companies might include businesses that sell machinery or vehicles for other companies to use.
Services market example
A company in a services market advertises and sells services to businesses and consumers, which means there are many examples to consider. One example of a business-to-business company in a services market might be companies that install cable or internet services in office spaces. Some companies in a services market might also work in a business-to-consumer market, such as plumbers, electricians, or hair stylists who offer services to both organizations and individual customers.
Professional services market example
As businesses that function in a professional services market provide specialized services, they usually operate in an advanced field. For example, doctors, accountants and lawyers need extensive training, certification and licensure to practice, which qualifies them as professional services. These businesses can also serve other companies or individual consumers, such as in the case of a law firm that represents individual clients as well as corporations.