Chapter 7
Market structures and supply
research
Program
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Market and market structures
Supply market research
Structuring supply market research
Supply market research and information technology
Markets and market structures
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External structure
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Industrial branch, horizontal relationship
Industrial column or supply chain
Materials flow:
 Diverging materials flow
 Linear materials flow
 Converging materials flow
External factors determine the market structure
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Number of suppliers
Number of buyers
Degree of differentiation
Market structures
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Structures at the supply side:
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Pure competition
Monopolistic competition
Oligopoly
Monopoly
Structures at the demand side:
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
Pure competition
Oligopsony
Monopsony
Typology of market structures
One
Few
Many
One
Bilateral monopoly, Limited supply-side
‘captive market’
monopoly (fuel
(spare parts)
pumps)
Supply-side
monopoly (gas,
water, electricity)
Few
Limited demandside monopoly
(telephone
exchanges, trains)
Bilateral oligopoly
(chemical semimanufacturers)
Supply-side
oligopoly (copiers,
computers)
Many
Demand-side
monopoly
(weapons systems,
ammunition)
Demand-side
oligopoly suppliers
(components
automobile industry)
Polypolistic
competition (office
supplies)
Definition
Supply market research:
Systematic gathering, classification and analysis of data
considering all relevant factors that influence the
procurement of goods and services for the purpose of
meeting present and future company requirements.
On a regular or project base
 Qualitative or quantitative
 Focused on long term or short term supply

Three areas
of supply market
research
Macro-economic research
Meso-economic research
Micro-economic
research
Europe
BASF
Ford
Steel
Chrysle
Shell
BayerGMr
Automotive
e.g. Chemical
industry
industry
Chemical
industry
US
US
Japan
adapted from Faes
and de Weerd, 1983
Why supply market research?
The following factors have stimulated the
development of supply market research:
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Continuous technological development
Supply market dynamics
Monetary developments
Offset obligations
Changes in tax regimes
Structure of supply market research
Determine objectives
Prepare research report
Cost-benefit analysis
A stepwise approach
Data analysis
Feasibility study
Data collection
What?
Desk research
Execution of
research activities
Design of research activities
Where?
Field research
Purchasing market research and IT
Companies are discovering the many ways in which ICT may support
their purchasing operations and strategies. Some examples:
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Company's like Saint Gobain, which is active in a wide range of products
ranging from glass manufacturing to construction materials, have installed a
worldwide purchasing Intranet. Other manufacturing companies have built
similar systems based on Microsoft Outlook software.
Data suppliers like Yellow Pages, ABC have now available through their
websites vast supplier bases covering supplier addresses in all major EC
countries enabling buyers to conduct market surveys in short time.
Sony uses its Purchasing website to attract new suppliers for certain
commodities.
Companies like FedEx, DHL, UPS provide linkages through the Internet
which enable companies to keep track of their deliveries.
Conclusions
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The ever-increasing turbulence in global supply markets
makes supply market research a crucial activity.
Supply market research is required in order to keep
informed about going on changes
Supply market structures determine the buyer's tactics
In setting up research a stepwise approach is
recommended.