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There are numerous differences between purchasing by organizations and purchasing by consumers Many differences are due to the fact that consumers purchase for personal consumption and in most cases individuals within organizations do not The purchase to satisfy needs of organization Other factors include aTypes of business customers bTypes of products personal goods organization goods cSize and location of customers dPurchasing standards and processes Industrial gods Personal goods to impulsive eThe nature of demand Types of Business Customers There are four types of business customers 1firms that consumer the product or service such as original equipment manufacturers and users 2Government agencies 3 Institutions 4 Firms that purchase and resell the products 1 When a company purchases a product or services to be included on its own final product the company is called an original equipment manufacturer OEM For example General Motors may buy gauges for installation in the dashboards of its auto mobile When GM purchases copier paper from Xerox GM is considers as a user or the business equivalent of a final consumer 2 In the United States the government is the largest single purchaser of products and services more than 300 billion each year In this and other countries the government may be the only customer for some products In all countries the government is probably the only buyer of tanks and other mored weapon systems The purchasing processes used by the government can be frustrating and complex particularly because the government seeks to accomplish social objectives through purchasing Policies designed to encourage the growth of minority - or women-owned business businesses as well as small businesses are examples of social objectives than influence government objectives 3 Institutions include organizations such as schools hospitals and nursing homes churches etc These organizations may use purchasing procedures similar to those utilized by government agencies Because of the special purchasing needs of institution many firms have special divisions
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