There are two types of market. Like-
• Institutional markets
• Government markets
Here, we’ll discuss the buying practices of Institutional and Government organizations. Whatever, these two have different characteristics and needs. Now, see the discussion.
Schools, colleges, hospitals, nursing home, prisons and other organizations that provide goods and services to people in their care are commonly known as institutional markets. This institution differs from one another. Because they all have different motive and goals.
For example, General life care hospital runs around 50 states and it makes more than $9.2 billion in annual revenues by providing their services. By contrast, the new general school serves only children one to ten. It makes fewer revenues than General life-care hospital. Here, each institution has different needs and resources.
Many institutions have low budgets and captive patrons. For example, patients in any hospital have little choice to make any decision but they can make a choice about the food they eat or not that provided by the hospitals. Hospital’s agents can make a better decision for ensuring food quality for the patients. Because, if they select better food, patients never refuse to take this.
This also a part of the total service packaged. Even poor quality of food damages the hospital’s reputation. Thus, the agents must concern about it and find a suitable supplier whose quality meets the standard and offer less price. Many buyers have many demands. According to meet their demand, marketers set separate division to meet the special needs of institutional buyers.
Many companies enjoy large opportunities in the government market. No matter whether the company large or small, all types of companies can enjoy these facilities. In many countries, government organizations are the major sources of goods and services for buyers.
The United States alone has 88,000 buying units that buy more than 1 trillion of goods and services. In many ways, government buying and business buying are almost the same. But it is also true that there exist some differences that marketers understand very well to sell their goods and services to the government.
In this market, sellers are the key decision makers. Only sellers can easily identify the factors that affect buyer behavior and their buying decision process. Government market doesn’t need suppliers but the government selects those types of suppliers to have the lowest bids. Sometimes, the government makes some allowances for the suppliers having a reputation and superior quality. The government also buy on the negotiation contract basis.
Government organization provides facilities to domestic suppliers than foreign suppliers. Favoritism is one kind of complaint that every country faces. Some countries overcome these types of bias.
Government buyers, consumers, and business buyers are also affected by Following factors:
# Environmental factors
# Organizational factors
# Interpersonal factors
# Individual factors.
So Government organizations carefully observe others before making any buying decision.
The government gives instruction to their suppliers on how to sell government product. Non-economic criteria also affect government buying. Marketing doesn’t affect government buying. Government spending is determined by the elected officials. The government gives emphasized the lowest price, suppliers investment efforts and technology advancement.