Business Product

Business products also carry designations related to their durability. Durable business products that cost large sums of money are referred to as capital items. Nondurable products that are used up within a year are called expense items.

Installations

Installations are major capital items that are typically used directly in the production process of products. Some installations, such as conveyor systems, robotics equipment, and machine tools, are designed and built for specialized situations. Other installations, such as stamping machines, large commercial ovens, and computerized axial tomography scan machines, are built to a standard design but can be modified to meet individual requirements.

The purchase of installations requires extensive research and careful decision making on the part of the buyer. Manufacturers of installations can make their availability known through advertising. The actual sale of installations, however, requires the technical knowledge and assistance that can best be provided by personal selling.

Accessory Equipment

Products that fall into the subcategory of accessory equipment are less expensive and have shorter lives than installations. Examples include hand tools, computers, desk calculators, and forklifts. While some types of accessory equipment, such as hand tools, are involved directly in the production process, most are only indirectly involved.

The relatively low unit value of accessory equipment, combined with a market made up of buyers from several different types of businesses, dictates a broad marketing strategy. Sellers rely heavily on advertisements in trade publications and mailings to purchasing agents and other business buyers. When personal selling is needed, it is usually done by intermediaries, such as wholesalers.

Raw Materials

Raw materials are products that are purchased in their raw state for the purpose of processing them into consumer or business products. Examples are iron ore, crude oil, diamonds, copper, timber, wheat, and leather. Some (e.g., wheat) may be converted directly into another consumer product (cereal). Others (e.g., timber) may be converted into an intermediate product (lumber) to be resold for use in another industry (construction).

Most raw materials are graded according to quality so that there is some assurance of consistency within each grade. There is, however, little difference between offerings within a grade. Consequently, sales negotiations focus on price, delivery, and credit terms. This negotiation, and because raw materials are ordinarily sold in large quantities, makes personal selling the principal marketing approach for these goods.

Component Parts and Processed Materials

Component parts are items that are purchased to be placed in the final product without further processing. Processed materials, on the other hand, require additional processing before being placed in the end product. Many industries, including the auto industry, rely heavily on component parts. Automakers use such component parts as batteries, sunroofs, windshields, and spark plugs. They also use several processed materials, including steel and upholstery fabric.

Buyers of component parts and processed materials have well-defined specifications for their needs. They may work closely with a company in designing the components or materials they require, or they may invite bids from several companies. In either case, in order to be in a position to get the business, personal contact must be maintained with the buyers over time. Here again, personal selling is a key component in the marketing strategy.