The goods which are meant to be used in making other products or rendering services are Industrial Goods. So industrial goods are basically used as inputs. Some basic features of the industrial goods are as follows:
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The number of buyers of the industrial goods is less than the number of buyers of consumer goods.
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The channels of distributions are often shorter.
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The industrial markets are highly concentrated geographically.
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The demand for Industrial goods is derived demand i.e. it is derived out of the demand for consumer products.
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There is a greater significance of technical details about the industrial goods.
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There is reciprocal buying in some Industrial goods.
These Goods are classified in following five categories:
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Raw products: Those industrial Goods which shall become become a part / component / ingredient of another good. The farm products such as cotton, sugar cane, oil seed, natural products and crude products such as minerals, crude petroleum, iron ore etc.
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Fabricating materials: These are finished products but become part of the complete product. Yarn, Buttons, Leather, flour are some examples.
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Installations: They are used in further production but don’t become the part of these goods. They are often expensive equipments.
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Accessory Equipments: They are accessories to the installations and have a lesser cost and duration.
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Operating Supplies: Short lasting goods and services that facilitate developing or managing the finished products.