Industrial Marketing1

7/31/2019 Industrial Marketing1

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B2B Marketing


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Industrial Marketingconsists of allactivities involved in the marketing of

products and services toorganizations( i.e., commercial enterprise, profit and not-

for-proft-institutions , governmentagencies, and resellers)

that use products and services in production

of consumer or industrial goods andservices and to facilitate the operation of

their enterprises


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In ustrial versus Consumer Mar eting

Industrial Markets Consumer Markets

MarketStructure

Geographicallyconcentrated

Relatively few buyers

Oligopolistic

Competition

Geographicallydispersed

Mass markets

Monopolistic

Competition

Products Technical complexity

Customized

Service, delivery andavailability very

important

Standardized

Service, deliveryand availabilityimportant


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Industrial versus Consumer Marketing

Industrial Markets Consumer MarketsBuyerbehavior

Functionalinvolvement

Rational/taskmotives predominate

Technical expertise

Stable relations

Interpersonalrelationships

Reciprocity

Familyinvolvement

Social/psychological motivespredominates

Less technicalexpertise

Nonpersonalrelationship


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Industrial versus Consumer Marketing

Industrial Markets Consumer Markets

Decisionmaking

Distinct, observablestages

Unobservable,mental stages

Channels Shorter, more direct,

fewer linkages

Indirect, multiple

linkagesPromotion

Emphasis onpersonal selling

Emphasis onadvertising

Pricing

Competitivebidding, negotiatingon complex purchases

List price onstandard items

List prices


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Value Creation Selling1 You as a seller and your organization devote

large amounts of time and energy.

2 You use capabilities and tools that youve

never used before to understand how yourcustomers do business and how you can help

them improve that business.

3 Youre going to make it your business to know

not only your customers but also your

customers' customers.


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Economies of Industrial Demand

Derived Demand : is the single most importantforce in the marketing of industrial goods and

services.

Joint Demand : It occurs when one product requires

the existence of others to be useful.

Cross Elasticity of Demand : Responsiveness of the

sales of one product o a price change in another


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The Process Exchange in the Industrial

Market

Quality

Maintenance

ServiceCustomers

Product

Exchange

Suppliers


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Market

Technical

Economics Customers

Information

Exchange

Suppliers


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Market

Credit

Leasing Customers

Financial

Exchange

Suppliers


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Market

Trust

Interpersonal

Relationship

Customers

Social

Exchange

Suppliers


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The Resellers Market

Resellers purchase goods and services to facilitate the

operation of their businesses.

Everything that is purchased is purchased to make profit.

Wholesalers and retailers are treated as a n element of the

marketing mix (place or distribution) rather than as

served market.

These firms represent a sizable and important Buying

Group whose behavior is similar to Industrial Buyers


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Industrial Customers

IndustrialDistributors

Commercial

Enterprises

Government

Agencies

Profit/non profit

institution


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Industrial Customers ( Products Purchased)

Commercial

Enterprises

Original Equipment

Manufactures

(OEM)

Users

Lubricants, coal,

hand tools, brooms,

paper and

management

consulting services

Steel, cement,

generators, motors,

batteries, plastics,

farm products, raw

materials


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Government

Agencies

Airplanes,computers, desks,

guns, paint, pencils

and legal services


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Profit/nonprofit

institutions

Surgical appliancesand supplies, X-rays

tables, soap and

window cleaning

services


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Classification of Industrial Products

Raw materialsManufactured

materials and

parts

InstallationsAccessory

equipment

SuppliesBusiness

services

Materialsand Parts CapitalItemsSupplies andServices


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Apple iPod(Gross Margin v/s Cost)


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We help people

find their way

Marketing Strategies over Various Buying


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Marketing Strategies over Various BuyingSituations & Phases

Phases New Task Modified Rebuy

ProblemRecognition

Anticipate problem;

use advertising andcreative people toconvince buyers of

problem-solvingcapabilities

In supplier; maintainquality/servicestandards : outsupplier :watch for

developing trends

SolutionDetermination

Provide detailedproducts/serviceinformation todecision makers

In supplier and outsupplier : stresscapability, reliability,and problem solvingcapabilities



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Determiningneeded item

Provide detailedproduct/serviceinformation todecision makers

In supplier and outsupplier : stresscapability,reliability, andproblem solvingcapabilities

Searching for

andqualifyingsupplier

In supplier :

maintaindependability;

out supplier :

demonstrate abilityto erform task

In supplier : watch

for problems ;out supplier :demonstrate

ability to performtask



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Analyzing

proposals

Understands

details of customerproblem/needs ;make timelyproposals

Understands

details of customerproblem/needs ;make timelyproposals



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Phases Straight Rebuy

ProblemRecognition

In supplier : maintain close relationshipwith users and buyers;

Out suppliers : convince firm to reexaminealternatives

SolutionDetermination

Same as phase 1



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Phases Straight Rebuy

Determiningneeded item

Same as phase 1

Searching for

and qualifyingsupplier

Same as phase 1

Analyzingproposals

Make timely proposal


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Conflicts Marketing /Engineering

Marketing

Responses

Engineering

Responses

NewProducts

Design

They dont give usproducts we can

sell.

By the time we getthem to design

they are obsolete.

Were limited in whatwe can design because

we have to keep itsimple for marketing

Breadthof the

ProductLine

We need morevariety

We have too muchvariety now.


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Marketing

Responses

Engineering

Responses

ProductAppearance

Our line looksso inferior

Our line does notneed a lot of fancy

window dressing

ProductProblems

Why cantengineering

make workableproducts

Neither the customernor our marketing

departmentunderstand the productand how it is supposedto work.


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Marketing

Responses

Engineering

Responses

ProductPromotion

Theinformation weget fromengineering is so

dull andtechnical that noone would read it

The information thatmarketing includes isso exaggerated. Wecould get sued for false

advertising.

Conflicts Mar eting /Engineering


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Conflicts Mar eting /EngineeringMarketing

Responses

Engineering

Responses

Packaging It looks so cheap& functions sopoorly that it

makes ourproducts hard tosell.

Trying to package somany products andhold costs down is

extremely difficult.

Quality Why cant we

have reasonablecosts.

We must design so

many products withnumerous options thatit is hard to maintainquality and keep costsdown.

Conflicts Mar eting /Engineering


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Conflicts Mar eting /EngineeringMarketing

Responses

Engineering

Responses

Technical We need atechnical expertto soothe

customers eventhey really do nothave a problem

We dont have enoughmanpower to hold thehand of some pet

customers ofmarketing

Warranty Engineering

always goes bythe book, theydont understandthat you have to

bend a little

Marketing wants us to

pay the full amount ofevery claim, even aninvalid one

Documents

Industrial Marketing1