Differentiate between organizational buying and individual buying?

Answer 1

Consumer buying is where the final consumer buys goods and services for the personal consumption. In other words consumer buying means the day to day purchases by individuals to satisfy their daily needs. Organizational buying involves purchasing goods and services to produce another good with the intention of reselling it to final consumers to earn profits. The organizational buying is also known as business buying.

Difference between consumer buying and business buying can be summarized as follows:

Consumer markets contain of many small scale buyers where as business markets consist of few large buyers. As an example consumer market for clothing would be every individual who purchases their clothing needs at a small scale and business market for clothing would be retailers who purchase cloths from manufacturers for reselling at a large scale.

In a consumer market consumers demand for goods when they recognize their needs. As a result the demand for a good created in large scale. The demand for goods in business market is derived from the summation of the demand for goods in the consumer market. As an example the the business market demand for clothes (the quantity purchased by the clothing retailer) depends of the quantity demanded by the final consumer of clothing.

Demand for goods in consumer markets is heavily affected by the changes in the prices where it can be concluded that consumer market demand is price elastic. Demand for goods in business markets are not affected by the price changes in short run where it can be concluded that demand for goods in business market is price inelastic.

The purchasing behavior in the consumer market is highly personal and varies from person to person. The purchasing behavior in business market carries a lot of professional behavior where everyone would behave in a standardized manner.

Buying decisions of a consumer market is simple where it purely depends on the wish of consumer. But business buyers face complicated buying process where they have to adhere to purchasing standards and involves approval of many people.

Consumer buying is generally short term focused where they conclude the relationship with seller upon the transaction is completed. Business buying process focuses on long term where they build long lasting relationships with suppliers.

Consumers buy goods from retailers where business buyers usually buy goods straight away from the manufacturer.

Additionally, business markets practices reciprocity where they buy goods from a supplier and the same supplier again purchase goods from the them. In other words they buy and sell to same organization.