IGNOU : M.COM : MCO 6 : UNIT 5 : Q - 2. Briefly discuss various types of organizational market.

 Ans. Types of Organizational Markets 

 There are four types of organizational markets: the industrial market, the reseller market, the government market, and the institutional market.

1. The Industrial Market : It is also called producer or business market. It consists of all the individuals and organizations that buy or acquire goods and services that enter into the production of other products and services that are sold, rented or supplied to others. The major industries making up the organizational market are agriculture, forestry and fisheries; mining; manufacturing; construction; transportation; communication; public utilities; banking; finance, and insurance; distribution; and services. For example, Maruti Udyog purchases large number of raw materials, component parts, machinery, and supplies. After manufacturing different brands of passenger cars it sells to final consumers and organizations. Within the industrial market, customers tend to be larger and fewer than in consumer markets. But even here, great variations are found. First, the number of industrial firms making up the market varies from one (monopsony), to few (oligopsony), to many. Secondly, we can also distinguish between industrial markets made up of only large films, or a few large and many small firms, or only small firms.

2. The Reseller Market : It consists of all the individuals and organizations that acquire goods for the purpose of reselling or renting them to others at a profit. The basic activity of resellers-unlike industrial or business market-is buying products from manufacturing organizations and reselling these products essentially in the same form to the resellers' customers. In economic terms resellers create time, place and possession utilities rather than form utility. Resellers also buy many goods and services for use in operating their businesses-items such as office supplies and equipment, warehouses, materials handling equipment, legal services, and electrical services. In the case of the resellers like small wholesale and retail organizations, buying is done by one or a few individuals. In large reseller's organizations, buying is done by a buying committee made up of experts on demand, supply, and prices. One of the major problems a reseller faces is to determine its unique assortment-the combination of products and services that it will offer to its customers. The wholesaler or retailer can choose any four of the following assortment strategies: 

• Executive Assortment : It represents the line of only one manufacturer. For example, an exclusive show room of cars from a single manufacturer. 
•  Deep Assortment : It represents a given homogenous product family in depth, drawing on many manufacturers products. For example, a TV dealer who keeps many brands of TVs from different manufacturers. 
•  Broad Assortments : They represent a wide range of product lines that still fall within the natural coverage of reseller's type of business. For example, an electronic goods dealer that keeps different electronic goods from various manufacturers. 
•  Scrambled Assortment : It represents many unrelated product families. For example, a grocery store or a super market that keeps thousands of products and brands in different product categories from hundreds of manufacturers, This choice of assortment may be available to a single reseller also. For example, a camera store may decide to sell only Kodak cameras (exclusive assortment), many brands of cameras (deep assortment), cameras, tape recorders, TVs, music systems (broad assortment), and many different products altogether (scrambled assortment). 

c) The Government Market : In most countries, government organizations are a major buyer of goods and services. The government market consists of central, slate, and local governmental units that purchase or rent goods for carrying out the main functions of government. The government market constitutes a huge market potential for many companies. For example, government market buys hundreds of products and services from large number of companies. The governmental agencies buy amazing range of products and services; they buy every thing from toiletries, clothing, furniture, computers, vehicles, and fuel to sculpture, fire engines, weapons, and practically everything. 

Government purchasing processes are different from those in the private sector of the industrial or business market. A unique feature of the government buying is the competitive bidding system. Much government procurement, by law, must be done on a bid basis. That is, the government agency advertises for bids using a standard format called a request for proposal (RFP), or quotation that states specifications for the intended purchase. Then it must accept the lowest bid that meets these specifications. An alternative to this system, the government may sometimes negotiate a purchase contract with an individual supplier. This system is used when government wants to purchase a specialized product that has no comparable products on which to base bidding specifications. In India, most of the government purchases for standard products are based on the rates approved by the Directorate General of Supplies and Disposal (DGS&D). From time to time DGS&D decides the rates of various products and services which are needed by governmental agencies. Despite the vast opportunities available from the government market, many companies are reluctant to sell because they are intimidated by the red tape. 

d) The Institutional Market : This is also known as non-profit organization or "nonbusiness" business market. This market consists of various non-profit institutions other than the government market. This includes: educational institutions (schools, colleges, universities, and research laboratories), hospitals, nursing homes, religious institutions, etc. Many non-profit institutions have low budgets and captive clienteles. For example, many universities, colleges and governmental hospitals work on funds provided by the government and in most of the cases these are limited. Therefore, those companies who wish to sell to this market should keep in mind the inherent budget constraints.