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Channel Buyers

If you sell to other businesses, who turn around and resell your products and services, your buyers are predominantly channel buyers. Examples of channel buyers from the grocery and drug industry are:

  • total country master distributors
  • local/regional distributors
  • chain store wholesaler buyers
  • individual retail store buyers

Influences on channel buyers may include non-target identification attributes such as the item's margin and profitability, discounts, free goods, cash fees, and personal relationships.

Channel buyers may be subdivided into:

  1. business-to-business markets
  2. government
  3. consumer markets

Business-to-business and government buyers. Business-to-business and government buyers are subject to many different influences than buyers of consumer goods:

  • fewer buyers
  • larger business transactions
  • regional concentration of buyers
  • defined sales and broker relationships
  • dependent upon end-user buying patterns and demand
  • an inelastic market, meaning that the demand for goods and services is not significantly affected by a significant change in price

Business buyers take many factors into account when contemplating buying decisions:

  • macroeconomic trends, nationally and internationally
  • long-term material supply trends and inventory needs
  • delivery rates, timing, and reliability
  • plant capacities
  • suppliers' financial resources

Consumer-goods buyers. Consumer-goods buyers are subject to different influences when compared with business-to-business and government buyers:

  • there may be many buyers at multiple levels in the same company
  • small to large transactions
  • national, regional, and local buyer concentration
  • direct company sales to buyers, or broker relationships
  • directly dependent upon end-user buying patterns
  • end users influenced by company advertising and promotion spending
  • an elastic market, meaning that the demand for goods and services is easily affected by slight changes in price.

Channel buying decision influences. Channel buyers may or may not directly purchase company products and services. There are many different roles in the buying process for a large supplier's customers:

  • purchasing department personnel
  • buying committees
  • department advisors
  • consultants
  • management
  • head buyers and assistants
  • store managers
  • department managers

It is not uncommon for a new item survey to be conducted throughout a majority of a chain's stores, with purchase intent/store/quantity indicated by store managers. The new item may be reviewed by all those listed above to ensure margins, store policies, technology, distribution systems, warehousing, shelf life, retail pricing, promotion programs, and profit goals and standards are being met by the company supplier.