What are the distinguishing features of industrial goods?

Answer 1

1) Geographically concentrated: These markets are geographically concentrated and are not scattered over the geographic area.

2) Limited buyers: The market is limited to the industrial users as they are confined to particular areas and also because the concentration of industries is in the hands of a few industries. Eg: Machinery supply for railways and automobiles factories are sole to a very small no. Of firms.

3) Derived demand: The demand for industrial goods depends upon the demand of other goods. Ultimately, on the demand of consumer goods.

4) Infrequent purchase: Industrial purchases are made only once a year, and not frequently.

5) Large individual purchase: The purchase is always done in large quantities. Though the no of orders placed would be small, but the order would be large.

6) Technical considerations: It assumes greater significance because the goods are bought for a specific use in the business. The products are manufactured according to the instruction and specification of the users.

7) Leasing instead of buying: In the industrial market they lease out rather than purchase on outright basis. Eg: Transport agencies, do not purchase public vehicles but use them on hire basis.

8) Reciprocal buying: It refers to the barer system. There will be an exchange of goods without the use of money.

9) Channels of distribution: Every middleman involved in channel of distribution has to compensate for services render. This compensation is included in the price.

a. Producer-Industrial user (Direct channel)

b. Producer-Industrial distributor-Industrial user (Indirect channel)

c. Producer-Agent- Industrial user (Indirect channel)

d. Producer- Agent-Industrial distributor-Industrial user (4 level channel)