What Are Enterprise Markets?

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Enterprise customers represent a large important market sector.
Enterprise customers represent a large important market sector. (Image: Stockbyte/Stockbyte/Getty Images)

In business-to-business marketing, organizations use the terms enterprise and small and medium business (SMB) to identify two distinct market sectors for their products or services. The enterprise market is the sector populated by large organizations. The threshold between SMB and enterprise markets is based on number of employees or annual turnover. Some marketing teams make further distinctions between large and small enterprise sectors.

Segmentation

Organizations use a number of different categories to break the total market into sectors. Enterprise and SMB are just two of the categories. Some organizations use vertical or industry sectors to identify target markets where they can differentiate themselves through specialist market knowledge or product characteristics. Other organizations combine the categories -- for example, marketing products to large enterprises in the automotive sector or marketing services to small health care enterprises.

Purchase Size

Enterprise markets offer organizations the opportunity to sell higher volumes and earn more revenue than they would by marketing the same products to SMBs. However, enterprise customers may be able to negotiate large discounts based on their purchasing volume, a factor that would reduce profit margins on enterprise sales.

Purchasing Decisions

Purchasing decisions are complex in enterprise markets. In SMBs, a purchasing manager makes buying decisions, with input from specialists such as technical managers for more complicated product decisions. Enterprise purchasing decisions involve a number of different decision-makers, as well as people who influence the decisions. A decision-making team for a major purchase, such as a new manufacturing control system, might include the head of purchasing, chief executive, finance director, manufacturing director and information technology director.

Insight

The complexity of enterprise purchasing decisions makes customer information a valuable asset. According to the Information Management website, organizations need to adopt a form of enterprise customer management based on detailed insight into all the transactions that take place between organization and customer. That insight will provide a basis for planning products, services and business processes to support the customer.

Enterprise Class

Organizations that have high-profile customers in the enterprise sector sometimes use the term enterprise class to describe their products and services. The implication is that enterprise customers have demanding standards of quality or reliability that the organization is able to meet. On that basis, other customers can feel confident that the product will meet or exceed their requirements.

Risk

Customer loss poses a high risk in enterprise markets. If revenue from a small number of enterprise customers represents a high proportion of their turnover, the loss of just one major customer could have a damaging effect on the organization. To protect their enterprise customer base, some organizations utilize a system of key account management. A team of account managers, customer service staff and technical staff focus on building strong relationships with the customer and creating a partnership that competitors would find hard to overcome.

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