Gatekeepers control the flow of information
15. Explain importance and role of institutional and government markets in marketing.
Institutional markets consist of organizations that look after people’s welfare. Such markets include schools, hospitals, nursing homes, and other institutions that provide goods and services to people in their care.
Many of these organizations have low budgets and captive clientele. For example, hospitals must decide what quantity of food to buy for patients. Here, the objective is not to make profits as the food is provided as part of the total service package. Similarly, the hospital will also not consider cost minimisation because poor quality of food will cause patients to complain and hurt the hospital’s reputation.
Thus, the purchase and procurement teams must search for Institutional food vendors whose quality meets or exceeds a certain minimum standard and whose prices are low. In fact, many food vendors have separate divisions to sell to institutions only because of their special needs and characteristics.
Many companies enjoy great opportunities in the government market. Irrespective of whether the company is large or small, these facilities can be enjoyed by all. In many countries, government organizations are the major buyers of goods and services. Technically, there may not be a great difference between government and institutional markets.
However, there exist some differences that marketers understand well in selling their goods and services to the government.
Stages and Requirements - Companies selling to governments should understand the differences that help them to become better suppliers. The companies should understand the various stages and requirements in buying for governments.
Selects Suppliers - For a government market, it is the government that selects the suppliers who have the lowest bids. Sometimes, the government makes some allowances for the suppliers having a reputation and superior quality.
