Industrial Marketing

Definition

Marketing could be split into consumer marketing (B2C) and industrial marketing (B2B).

Industrial marketing is the marketing of goods and services from one business to another.

Industrial Marketing

The creation and management of mutually beneficial relationships between organizational suppliers and organizational customers.

Customer can be private firm, public agency, or nonprofit organization

Features of B2B

Marketing is one-to-one in nature.

Highly professional and trained people in buying processes.

High value considered purchase.

Purchase decision is typically made by a "buying team”.

Features of B2B

The technical characteristics of the product are important.

These products directly affect the operations and economic health of the customer.

Features of B2B

Often the buying/selling process is complex and includes multiple stages.

The selling process is long and includes prospecting, qualifying…

Major DifferencesBetween B2B and B2C

Products.Nature of demandHow the customer buysCommunication processEconomic/Financial factors

Products

Invariably more complexFunctional vs. Symbolic AttributesLarge unit value and/or large quantitiesTailor madeVarious Stages from raw material to finished

goods.Foundation, Entering, Facilitating Goods

Nature of Demand

Derived

Concentrated

Inelastic

Communication

Personal selling more important than mass paid advertising.

Support sales with other promotional activities: advertising in trade journals, catalogs, trade shows, direct mail, WWW.

Message focused on technical, factual, and descriptive content.

INDUSTRIALINDUSTRIAL CONSUMERCONSUMER

Evaluated for functionality .

Purchasers are experts .

Higher interaction with the supplier.

Formal processes.

Social / psychological factors are important.

Family involvement & focus more on product per se.

Non personal relationship with the supplier.

Less of formal processes.

Buyer Behavior

Economic/Financial Factors

Competition oligopolistic.

Power/Dependency relationships.

Reciprocity: Doing business with companies that do business with them.

Distribution Channel

Industrial markets: Shorter, more direct & fewer linkages between seller and buyers.

Example : Hotel buying Cold Drinks: Supplied directly by the distributor, may even be serviced by company employee on a regular basis.

A big reseller can be treated as a Industrial Buyer

Organizational Customer

Commercial Enterprise

Government Agency

Institutions in the Private and Public sector

Organizational Customer

Industrial Dealers & Distributors – Essentially their objective is to trade on the items.

OEM – The customers of OEMs use the products as component of their own output. (Hyundai as a user of headlights/rear view mirrors)

Users- Western Coal Fields for TISCO: No coal => No Steel.

Organizational Customer

Institutions: One time deals, large orders, less of technical evaluation, non – specialist buyers.

Example: Vodafone buying T-Shirts for its employees.

Types of Industrial Goods

Materials and parts

Raw materials (coal) Manufactured materials (copper wire) Component parts (switches, motor)

Custom orders sold by manufacturers and standard products by industrial distributors

Types of Industrial Goods

Capital Items Installations (heavy machinery) Accessories (office furniture)

Supplies and Services.

Supplies (stationary) Services (maintenance, canteen)

Buying Situation

Straight rebuy

Modified rebuy

New task

Buying Situations

Straight rebuy: When the purchasing department reorders on a routine basis and chooses from suppliers on an “approved lists.”

Modified rebuy: When the buyer wants to modify product specifications, prices, delivery requirements, or other items.

New task: When the purchaser buys a product or service for the first time.

Buying Situations

Fewest decisions in the straight rebuy situation and the most in the new-task situation.

In the new-task situation, the buyer has to determine

product specifications, price limits, delivery terms and times, service terms, payment terms, order quantities, acceptable suppliers, and the selected supplier.

Systems Buying and Selling

Many business buyers prefer to buy a total solution to a problem from one seller.

Systems contracting where a single supplier provides the buyer with his or her entire requirements of maintenance, repair, and operating (MRO) supplies.

The Buying Center

Composed of “all those individuals and groups who participate in the purchasing decision-making process, who share some common goals and the risks arising from the decisions.”

Roles in purchase decision process

InitiatorsUsersInfluencersDecidersApproversBuyersGatekeepers

Buying Center Influences

Buying centers usually include several participants with differing interests, authority, status, and persuasiveness.

Each buyer has personal perceptions, and preferences that are influenced by age, income, job position, attitude towards risk etc.

Of Concern to Business Marketers

Who are the major decision participants?

What decisions do they influence?

What is their level of influence?

What evaluation criteria do they use?