Government Markets

The government market offers large opportunities for many companies, both big and small. In most countries, government organizations are major buyers of goods and services. Government buying and business buying are similar in many ways. But there are also differences that must be understood by companies that wish to sell products and services to governments. To succeed in the government market, sellers must locate key decision makers, identify the factors that affect buyer behavior, and understand the buying decision process.

Government organizations typically require suppliers to submit bids, and normally they award the contract to the lowest bidder. In some cases, the government unit will make allowances for the supplier's superior quality or reputation for completing contracts on time. Governments will also buy on a negotiated contract basis, primarily in the case of complex projects involving major R&D costs and risks, and in cases where there is little competition.

Government organizations tend to favor domestic suppliers over foreign suppliers. A major complaint of multinationals operating in Europe is that each country shows favoritism toward its nationals in spite of superior offers that are made by foreign firms. The European Economic Commission is gradually removing this bias.

Like consumer and business buyers, government buyers are affected by environmental, organizational, interpersonal, and individual factors. One unique thing about government buying is that it is carefully watched by outside publics interested in how the government spends taxpayers' money. Because their spending decisions are subject to public review, government organizations require considerable paperwork from suppliers, who often complain about excessive paperwork, bureaucracy, regulations, decision-making delays, and frequent shifts in procurement personnel.

Government market

Governmental units—national, regional, and local—that purchase or rent goods and services for carrying out the main functions of government.

Federal

Busuiess

Opportunities

* FedBizOpps.gov

QUiCK SgARCH

Welcome to FB0.gov, the U.S Government's one-stop virtual marketplace. Through this single point-af-entry commercial venftofs and goverftmerat buyers are invited to post, search, monitor, and retrieve cpportuniies solicited by the entire Federal contacting ammonify.

Find Opportunities

Vendors / Citizens

Government markets: The U.S. government is the world's largest buyer of products and services—and its checks don't bounce. The Federal Business Opportunities Web site (FedBizOpps.gov) provides a single point of entry to the entire Federal contracting community.

Given all the red tape, why would any firm want to do business with the government? The reasons are quite simple: A Purchases by governments are huge. For example, last year, the U.S. government alone spent a whopping $79 billion on information technology. The U.S. Transportation Security Administration spent more than $690 million just for electronic baggage screening technology.14

Most governments provide would-be suppliers with detailed guides describing how to sell to the government. For example, the U.S. Small Business Administration publishes a guide entitled U.S. Government Purchasing, Specifications, and Sales Directory, which lists products and services frequently bought by the federal government and the specific agencies most frequently buying them. The U.S. Commerce Department publishes Business America, which provides interpretations of government policies and programs and gives concise information on potential worldwide trade opportunities. And the Commerce Department's Web site is loaded with information and advice on international trade opportunities (www.commerce.gov/TradeOpportunities/index.htm).

In several major U.S. cities, for example, the General Services Administration operates Business Service Centers with staffs to provide a complete education on the way government agencies buy, the steps that suppliers should follow, and the procurement opportunities available.

Various trade magazines and associations provide information on how to reach schools, hospitals, highway departments, and other government agencies. And almost all of these government organizations and associations maintain Internet sites offering up-to-date information and advice.

Still, suppliers have to master the system and find ways to cut through the red tape, especially for large government purchases. Consider Envisage Technologies, a small software development company that specializes in Internet-based training applications and human resource management platforms. All of its contracts fall in the government sector; 65 percent are with the government. Envisage uses a Web site to gain access to smaller procurements, often receiving responses within 14 days. However, it puts the most sweat into seeking large, highly coveted contracts. A comprehensive bid proposal for one of these contracts can easily run from 600 to 700 pages because of paperwork requirements. And the company's president estimates that to prepare a single bid proposal the firm has spent as many as 5,000 man-hours over the course of a few years.15

Noneconomic criteria also play a growing role in government buying. Government buyers are asked to favor depressed business firms and areas; small business firms; minority-owned firms; and business firms that avoid race, gender, or age discrimination. Sellers need to keep these factors in mind when deciding to seek government business.

Many companies that sell to the government have not been very marketing oriented for a number of reasons. Total government spending is determined by elected officials rather than by any marketing effort to develop this market. Government buying has emphasized price, making suppliers invest their effort in technology to bring costs down. When the product's characteristics are specified carefully, product differentiation is not a marketing factor. Nor do advertising or personal selling matter much in winning bids on an open-bid basis.

Some companies, however, have established separate government marketing departments. These companies anticipate government needs and projects, participate in the product specification phase, gather competitive intelligence, prepare bids carefully, and produce stronger communications to describe and enhance their companies' reputations.

Other companies have set up customized marketing programs for government buyers. For example, Dell has specific business units tailored to meet the needs of national, regional, and local government buyers. Dell offers its customers tailor-made Premier Dell.com Web pages that include special pricing, online purchasing, and service and support for each government entity.

During the past decade, a great deal of the buying done by government has gone online. For example, Singapore provides a single point of entry at a Web site called GEbiz (http://www.gebiz.gov.sg/) through which commercial vendors and government buyers can post, search, monitor, and retrieve opportunities solicited by the government Agencies that act as purchasing agents for the rest of government have also launched Web sites supporting online government purchasing activity. Likewise, Peru's Superior Council for the Acquisitions and Contracts of the Peruvian Government has a site called Consucode (http://www.consucode.gob.pe/) that facilitates the government's purchases.

Such sites allow authorized defense and civilian agencies to buy everything from office supplies, food, and information technology equipment to construction services through online purchasing. Online, governments not only sell stocked merchandise through their Web sites but also create direct links between buyers and contract suppliers. Internet systems promise to eliminate much of the hassle sometimes found in dealing with government purchasing.16

Salehoo Secrets and Tips

Salehoo Secrets and Tips

As with any web site, SaleHoo has a number of features that will help you in buying products from around the world. Once you have an account on SaleHoo, which only costs a one-time fee, you can establish up to twenty named searches for products. After that, any time those items become available, you’ll be alerted.

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