Business Market: Types, Examples And Characteristics
Updated 4 November 2022
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Businesses offer products or services to consumers to use in their daily life or to other companies to improve their operations. The type of product or service a business offers can help organisations determine their market category and assist employees working in sales to promote their products by identifying their appropriate target audience. Staying informed about various developments in these market types can help you make wise decisions regarding marketing and sales tactics for your workplace. In this article, we explain what a business market is, examine five market types, explore examples and review characteristics of a commercial market.
What Is A Business Market?
A business market or B2B market is a platform that allows organisations to offer products and services to other companies. These platforms are ideal for businesses that wish to trade goods with other companies that then resell these goods to consumers or use them as raw materials for manufacturing other products. The companies of a marketplace typically have direct links with one another in the form of a supplier–consumer or a distributor–manufacturer business relationship. Companies can also sell their products in other consumer marketplaces, aiming to reach a mass audience and sell directly to consumers.
Related: What Is A Business Plan? (Types And Importance)
5 Types Of Buyer–Seller Markets
A dedicated marketplace can allow a firm to target various types of customers and may permit a business to adjust its products or services to become part of a larger market. Selling the same product in a different market is often easier if you change the pricing or use various promotional strategies and distribution techniques. Here are the five types of marketplaces:
1. Business-to-consumer (B2C)
Businesses that are a part of a B2C market sell and advertise their products and services directly to the end customer. The B2C marketplace is the largest among such markets, as it serves an extended audience of prospective consumers. Companies operating in this type of marketplace can adjust their selling and advertising strategies depending on the interests of their target consumers. By taking advantage of various metrics, such as age, interests and gender, companies can advertise their goods to specific customers.
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2. Business-to-business (B2B)
Companies in a B2B market may purchase goods and utilise them as raw materials in the manufacturing process to create new products. Alternatively, companies may repackage commodities and services and then sell them to other businesses. While most organisations operating in this market sector sell directly to other businesses, a few companies also sell directly to consumers.
3. Industrial goods
Companies that sell their goods or services to use for manufacturing other products belong to the industrial goods market sector. These companies promote and sell their wares to other manufacturing enterprises rather than selling directly to consumers. The goods these companies sell are typically only beneficial to businesses that can reuse them in manufacturing new products and are often unsuitable for a consumer's needs. Unlike a B2C market, industrial markets cater to a much smaller audience than the general consumer population, making them amongst the smallest commercial markets.
Related: What Is Market Segmentation? (With Types And Benefits)
Companies that are advertising and selling services instead of products to consumers are a part of the services market. Companies operating in a service market can also operate in a B2B or a B2C market, depending on the services they offer. Suppose the service benefits a business, such as a consulting service. In that case, the company may operate in a B2B market. If the service is consumer-oriented, such as a telephone service, the company may function in a B2C market.
5. Professional services
A professional service marketplace consists of businesses that promote and sell their specialised professional services to other organisations. Companies and individuals operating in this market sector often have a verified licence or certification permitting them to work in a specialised field. You can also find these services in the B2B and B2C markets, as they can often benefit businesses and individual consumers.
Related: What Is A Target Market? (Definition, Importance And Tips)
Examples Of Various Market Types
The following examples can help you identify which companies belong to various sectors of a commercial marketplace:
B2C market example
Companies in this sector are often retail businesses that participate in the distribution and sales of goods to consumers. A clothing store that sells and advertises its merchandise in a store where consumers can make immediate purchases is an example of a business operating in a B2C market. Fast-food chains, cosmetic companies, grocery stores and automobile dealerships are additional examples of companies in the B2C sector.
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B2B market example
An organisation operating in the B2B market sells their commodities to other organisations for repackaging and selling the goods. Companies may also sell products to various manufacturers who can use the products as raw materials to build a completely new commodity. A business that supplies raw materials to construction companies is an example of a company operating in the B2B market sector. The construction company can use the raw materials to build new structures or repair existing ones. Another example of a B2B company is an automobile manufacturer that buys various components from multiple third-party companies.
Related: What Is A Cash Cow And What Are Its Characteristics?
Industrial goods market example
Companies operating in an industrial goods marketplace sell their commodities to other organisations for industrial purposes. Firms that advertise and sell in the industrial goods market are usually experts in their specific industries and can manufacture specialised products for their clients. Companies that sell raw materials, such as steel, wood and glassware, to manufacturers who create new products for the consumer are examples of businesses in the industrial market.
Service market example
Most companies in the service market offer their services to consumers, but organisations can also use some services. For example, both an individual consumer and a large organisation can benefit from a telephone service. Other examples include service industry professionals, such as plumbers, electricians and car mechanics, who provide maintenance and repair services for consumers. Since the service market accommodates B2B markets as well, businesses also offer their services to other firms. For example, a company providing internet to an organisation is conducting their business in the B2B sector of the service market.
Related: List Of 11 Types Of Pricing Strategies (With Their Benefits)
Professional service market example
Organisations in the professional service market provide other businesses with the services of highly trained and skilled professionals. These service providers have the training, certifications and licences, making them experts in their industry of operation. Examples of professionals in the service market are doctors, lawyers, accountants, architects and consultants. A law firm that can represent individual clients and other corporations is an example of a service agency working in the B2C and B2B markets.
Related: Format Of A Cash Flow Statement (With Methods And Examples)
Characteristics Of Commercial Markets
The following are a few characteristics of commercial markets:
Commercial markets can allow companies geographically far from each other to conduct business together.
Small consumer markets with numerous customers typically buy their products directly from a larger corporate market.
The demand for products in a professional marketplace is consistent and remains constant with price changes.
The growth of such markets depends on the number of customers purchasing the final variant of a product.
Any products sold in an industrial market may involve multiple buyers.
Promoting and selling products and services in a corporate market can require a high grade of corporate professionalism.
A commercial marketplace can help buyers and sellers find long-term, reliable solutions.
Purchasing products from a corporate market is a formal procedure.
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