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B2B MarketingProf.Rupali Rajesh

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overview

Industrial marketing which somemarketing experts Fred Webster and

Jerry Wind have described as aSleeping Giant, has been the subject

of very little research.

Despite the fact that it generates

higher volumes of sales than

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Technology has become the comer stone ofindustrial marketing. New producttechnologies are emerging andmanufacturing processes are evolving.

Information technology is being leveraged todevelop new products and services, inaddition to streamlining operations.

Internet has revolutionized industrialmarketing. It has helped bring down thecommunication costs. E-procurement and e-

marketplaces have gained popularity among

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Nature of competition has undergone a seachange in the industrial marketplace.Industrial marketing has reached a stage

where we can say, The Business Networkis the Business Strategy.

Today, competition is between value-chain

partnerships rather than between industrialfirms.

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Concept of Industrial Marketing Industrial marketing is the marketing of

products and services to businessorganizations.

Business firms buy products and services to

satisfy many objectives like production ofgoods and services, making profits, reducingcosts, and so on. Opposite to consumer

marketing is the marketing of products andservices for their own consumption.

It includes manufacturing companies,government undertakings, private sectoror anizations educational institutions

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Definition

Industrial marketing consists of allactivities involved in the marketing ofproducts and services to organizations

(i.e., commercial enterprises, profit andnot-for-profit institution, governmentagencies and resellers) that use

products and services in the productionof consumer or industrial goods and

services, and to facilitate the operation

of their enterprises.

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Areas Industrial Markets Consumer Markets

MarketCharacteristics

Geographicallyconcentrated

Relatively fewerbuyers

Geographicallydisbursed

Mass markets

Product

Characteristics

Customized products

technically complexLarge quantities orhigh value items areinvolved.

Service is a strategictool, having highimportance

Standardized

productsSmall unit of sale

Service is somewhatimportant

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Nature ofdemand Derived (it is dependupon consumer goods) Direct

Price Complex pricing

policiesProducts can be leasedCompetitive biddingEvery transaction isimportant for anindustrial marketer

Simple pricing

policiesProducts can beleasedList price sellingSingle transactionmay not influenceprofit margin

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Service

Characteristics

Service, timely

delivery andavailability veryimportant

Service, delivery,

and availabilitysomewhat important

Channeldistribution More direct

Fewerintermediaries/middlemen

IndirectMultiple layers ofintermediaries

PromotionalCharacteristics

Emphasis onpersonal selling

Emphasis onadvertising andsales promotion

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Buyer

Behaviour

Involvement of various

functional areas in bothbuyer and supplier firms

Purchase decisions aremainly made on

rational/performancebasis

Technical expertise

Stable interpersonal

relationship betweenbuyers and sellers

Involvement of family

members

Purchase decisions aremostly made onphysiological/social/psyc

hological needsLess technical expertise

Non-personalrelationship

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DecisionMaking

Quality is checked by thecustomer

Informed buyer

Customer is a professionalin decision making

Less emotion involved indecision making

Customers takeimpersonal decisions

More number ofinfluencers

More emphasis is placedon negotiation skills and thenegotiation process is timeprocessing

Few quality tests areconducted by theconsumers

Relatively ignorant buyers

Consumer is relatively anamateur in decision making

Irrational decisions arepossible

Emotion is present indecision making

Consumers take personaldecisions

Negotiation is lessimportant

Less number of influencers

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Characteristics of Industrial Marketing

Demand characteristics:-

The nature of demand for industrial productsis derived, i.e. demand for industrial goodsdepends on the demand for consumer goods.

Market Characteristics:-While the number of customers of consumerproducts and services is very large, thenumber of customers of industrial productsand services is very small. But this smallnumber of customers is responsible for largescale as well as repetitive buying.

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Characteristics of Industrial Marketing

Product Characteristics:-

Industrial products include both standardizedand tailor-made products. Standardizedproducts are manufactured on the basis of

specifications developed by manufactures ofproducts and services and meant for generaluse and application. Tailor products are

those that are manufactured to customerdesigned specifications. They are verycomplex and technical.

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Contd Price Characteristics:

For standardized industrial products, Pricesare governed by price list. Customersnegotiate on these prices and get a better

deal.Commercial terms & conditions such aspayment terms, delivery terms, deliveryschedules, delivery, quantity per shipment,

fright and insurance are negotiated.Many firms and public sector follow asystem of Rate Contract wherein the price

of products and terms of business are fixedfor a s ecific eriod of time.

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Contd Promotion characteristics:

Product characteristics that industrialmarketing calls for a close and sustainedpre-and post-sale interaction between

suppliers and customers. This can beachieve through strong personal selling.

The role of advertising and sales promotion

are either to make customers aware orremind them about purchasing becomesredundant (unnecessary) in industrial

marketing.

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Contd Behaviour characteristics:

Industrial buyers are knowledgeable,technically sound and skilled in negotiations.

They need good pre-sales and post-salessupport from the suppliers.

Pre-sales: Is in the form of providing timelytechnical details and drawings, makingsuggestions, prompt handling of their queries

or clarifying their doubts, timely submission ofoffers etc.

Post-sales: It includes courtesy calls,informing customers of changes in design,

company news, advice to buy spares, timely

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Complex Decision MakingDecision making unit in BtoB, markets is

highly complex or at least it has thepotential to be so.

Ordering products for low value and lowrisk (paper clips)may well be theresponsibility of the office junior.

However purchase of a new plant that isvital to a business may involve a largeteam who makes their decision over a

protracted period.

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Buyers are more Rational

Buyers as more rational than theirconsumer .

B2B buyers has to make a profit each

month.They are buying a product for the

purpose of ROI (return on

investment).

B2B buyers buy products What they

want, not what they Need.

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Products are often morecomplexPurchase of an industrial product

frequently requires a qualifiedexpert.

Industrial products, frequently haveto be integrated into wider systems

and as a results have very specificrequirements and need intimate,expert examination and

modification.

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It is difficult to imagine a turbinemanufacturer or commercial websitedesign buyer having a look at three or

four products and then choosing onsimply because it looks nice. No, Itinvolved a whole host of technical,

productivity and safety issues, whilstthe choice of website might be basedon its integration into a wider

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Fewer behavioral and needs basedsegments

Behavioral or needs vary less than that of aconsumer audience. Whims (impulse),insecurities, indulgences (excess)and so on arefar less likely to come to the buyers mind when the

purchase is for a place of work rather than foroneself, the buying decision involves numerouscolleagues, work place norms, time etc.

Need based segments:-Price-focused segment

Quality and brand-focused segment

Service-focused segment

A partnership-focused segment

P l l ti hi

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Personal relationships are moreimportant

The important features of B2B markets is theimportance of personal relationship.

A small customer base that buys regularly fromthe B2B supplier is relatively easy to talk.

Sales and technical representatives visit thecustomers.

People are on first name terms.

Personal relationships and trust develop.

It is not unusual for a B2B supplier to havecustomers that have been loyal and committed

for many years.

E i t d i i d t i l

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Emerging trends in industrialMarketing Shift form sellers market to buyers market:

Many industrial products such as steel, cement,transport vehicles, turbines, telephone cables,tractors, computer hardware, several bulk drugs

and chemicals and the like, Indian markets havenow turned from sellers market to buyersmarket.

This has happen due to rise in production,

excess capacity in certain sectors and liberalimports.

Become more conscious about quality and cost.

Customer orientation is a consequences of shift

Emerging trends in industrial

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Emerging trends in industrialMarketing A concept of application engineering (identifying

new application of the existing products isemerging fast in this sector.

Improved product quality: quality assurance

rather than quality control has become the orderof the day.

ISO 9000 certification is an indicator of growing

industrial concern. About 85% production in industrial machines

and machine tool sectors in India is now from

the ISO 9000 certified firms.(According to J.S. Panwar,

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Emerging trends in industrialMarketing

Up gradation of technology: In order toimprove quality and reduce cost many firmshave upgraded their systems and

technologies. Steel Authority of India (SAIL), earmarked

210 billion to be spent between 1994 andAD 2001 for modernization of its plants,which the firm has already spent in its firstphase of modernization completed 1994.

Tisco has spent Rs. 50 billions to modern tomodernize its Jamshed ur lant.

Emerging trends in industrial

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Emerging trends in industrialMarketing More frequent and meaningful interaction

with customers: for understanding theneeds of customers and developingrelationships

Many firms have developed useful databaseon the purchase pattern, order quantity andorder to remittance cycle to cater to the needs

of the customer in a more effective manner. Firms like Bajaj Scooters have created

extensive computer networks linking theirsales offices to dealers and distributors toenable a uick res onse to demand in the

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Customer service: service has become athrust area for several well-known industrialfirms in the country.

Some lesser known firms have beenbenchmarking themselves against theservice quality of Xerox, Wipro and Toyota.

Firms like Kirolskar Engines, Lucas- TVS,Cummins Ltd, Larsen & Toubro (L&T) andXerox are setting examples with their In

service lies success motto.
http://www.xerox.com/

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Customer Satisfaction

Firms in India are now concerned about thecustomer. In survey of top managers of 100 firms(conducted by the Delhi-based research agencyIndia Research on behalf of Business Today

magazine) (The Economic Times, Jan 4, 1995), itwas found that:

1. 38%companies considered improving customer

satisfaction as top priority.2. 79% considered improving customer satisfaction

among top three priorities.

3. In 28% cases, systems for regular customer

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In 13 % companies it was found that top

managers meet customers regularly. Long way tointernalizing the global concept.

Controlling costs: Through better management ofinventories, avoiding wasteful expenditure,computerization and better utilization of manpowerresources, firms are now trying to bring their costsdown, in order to be more competitive in the market.

Getting motivated people: Better training andretraining of employees and the desire to invest inHR has resulted in improvement in quality ofmanpower employed in Indian firms.

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Lucas- TVS Quality pays

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Arranging finances for the customers:competition has made it inevitable for firms toarrange finances for their clients if theyhappen to need it. Looking to the needs ofbuyers several firms have promoted theirown financing subsidiaries.

Kotak Mahindra, Reliance, Bajaj and TataFinances are a few examples in this regard.

Some resourceful firms have responded tothe needs of customers by introducing the

supplier credit concept.

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Dealer Network: In a competitive market,distribution is the key to maintaining a holdon the market and boosting sales.

Few dealers of industrial products arequalified engineers or techno craftthemselves, they seek good reward andbetter growth potential from the firm for

which they work.

This is why several firms have begun to treattheir dealers as customers.

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Emergence of a New High Technology

Segment: emergence of a new technologies inthe areas of bio-engineering, softwaredevelopment, electronics, space applications andthe like have opened new vistas of growth for

technology driven firms.

The new segment termed as High Technology

Segment has emerged.

The outcome of this development is firms havestarted shifting from a low quality, low priceposition to high quality, competitive price stance.

The search for better quality and cost

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contd

Increased Marketing Interaction withR&D: Firms are trying to produce more userfriendly goods with the help of inputs frommarketing.

Relationship Marketing: Industrialmarketing is building relationship with theconsumer and dealers.

Trust is an integral part of buyers decisionon making major investments in the sellers

products, so it has to be first priority of the

marketer.

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Trustbuilding exercise often takesconsultative route, the marketer should knowwho his customer is, what he is all about,

what problems he is facing, the best way ofstrengthening a relationship is to help him insolving his problem.

The interaction is more visible in computersoftware, industrial dyes, electric turbines,industrial lighting, printing machinery,transport vehicles and packaging industries.

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Contd

Diversification: Firms are seekingdiversification mainly to become multi-product,multi-market organizations and exploit theuntapped opportunities that exist in the allied

on new areas. Some of the examples ofsuccessful diversification of Indian firms arelisted below:-

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Escorts-the manufacturer of tractors, bikes, shock

absorbers, railway coupling equipment, etc., haveventured into production of floating dry docks.

Sunderam Clayton, manufacturers of automobile

ancillaries, air brake systems, etc., are now movinginto railway signal equipment manufacturing.

BPL-Sanyo, better known as an entertainmentelectronics and home appliances firm is nowmoving into high-reach satellite communicationequipment and diagnostic systems.

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Reliance Industries has successfully diversifiedinto telecommunication business.

Telco (now Tata Motors) has diversified intopassenger car segment.

Videocon is entering into real estate andconstruction business.

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Nirma chemicals setting up turnkey powerprojects in Gujarat.

www.nirma.co.in

Diversification might improve the bottomlines of firms if they do their homeworkwell and support new products with

sound marketing strategies.
http://www.nirma.co.in/http://www.nirma.co.in/http://www.nirma.co.in/http://www.nirma.co.in/http://www.nirma.co.in/http://www.nirma.co.in/

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Emergence of E-commerce: Internet hasemerged as a strong contender for top position inthe communication industry.

Websites are being used extensively to promote

goods and services, handle the queries andnetwork with dealers and distributors.

The automotive sector, for example, continues to

take significant steps in wiring up their supplychain while Internet usage in the banking andfinancial sector in on the upswing.

http://www.tradeindia.com/Seller/Transportation/Railwa -Com onents/
http://www.tradeindia.com/Seller/Transportation/Railway-Components/http://www.tradeindia.com/Seller/Transportation/Railway-Components/http://www.tradeindia.com/Seller/Transportation/Railway-Components/http://www.tradeindia.com/Seller/Transportation/Railway-Components/http://www.tradeindia.com/Seller/Transportation/Railway-Components/http://www.tradeindia.com/Seller/Transportation/Railway-Components/

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According to the National Association ofSoftware and Service Companies (NASSCOM)by the end of March 2002 the number of publiclimited and private limited companies withInternet connections had grown to 314,588 and162,639 respectively. (www.nasscom.org)

http://www.bksmotors.in/

http://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.html

http://www.eisparts.com/BEP.html

S E l f
http://www.nasscom.org/http://www.bksmotors.in/http://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.htmlhttp://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.htmlhttp://www.eisparts.com/BEP.htmlhttp://www.eisparts.com/BEP.htmlhttp://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.htmlhttp://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.htmlhttp://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.htmlhttp://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.htmlhttp://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.htmlhttp://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.htmlhttp://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.htmlhttp://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.htmlhttp://www.bajrangautoparts.com/tata-motors-genuine-spare-parts.htmlhttp://www.bksmotors.in/http://www.nasscom.org/

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Some Examples ofOrganizational Buying

http://www.antonyasia.com/html/products.htm

http://www.tradeindia.com

http://www.industryrailway.com/category/8-

tools.aspx

http://www.suzukipartshouse.com/

http://www.suzukimotorcycle.co.in/products.asp

http://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nano

http://h71028.www7.hp.com/enterprise/downloa

ds/Sundaram%20Clayton-IN.pdf
http://www.antonyasia.com/html/products.htmhttp://www.tradeindia.com/http://www.industryrailway.com/category/8-tools.aspxhttp://www.industryrailway.com/category/8-tools.aspxhttp://www.suzukipartshouse.com/http://www.suzukimotorcycle.co.in/products.asphttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://h71028.www7.hp.com/enterprise/downloads/Sundaram%20Clayton-IN.pdfhttp://h71028.www7.hp.com/enterprise/downloads/Sundaram%20Clayton-IN.pdfhttp://h71028.www7.hp.com/enterprise/downloads/Sundaram%20Clayton-IN.pdfhttp://h71028.www7.hp.com/enterprise/downloads/Sundaram%20Clayton-IN.pdfhttp://h71028.www7.hp.com/enterprise/downloads/Sundaram%20Clayton-IN.pdfhttp://h71028.www7.hp.com/enterprise/downloads/Sundaram%20Clayton-IN.pdfhttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://www.slideshare.net/mohammadaarifkhan/the-making-of-tata-nanohttp://www.suzukimotorcycle.co.in/products.asphttp://www.suzukipartshouse.com/http://www.industryrailway.com/category/8-tools.aspxhttp://www.industryrailway.com/category/8-tools.aspxhttp://www.industryrailway.com/category/8-tools.aspxhttp://www.tradeindia.com/http://www.antonyasia.com/html/products.htm

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