industrial marketing

Industrial Marketing

What is Marketing

Marketing is the science and art of identifying, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services

Marketing Marketing is often performed by a

department within the organization. This is both good and bad. It’s good because it unites a group of trained people who focus on the marketing task. It’s bad because marketing activities should not be carried out in a single department but they should be manifest in all the activities of the organization.

Marketing : DEFINITION Marketing is the social process by which individuals

and groups obtain what they need and want through creating and exchanging products and value with others. (Kotler)

Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably

The Chartered Institute of Marketing (CIM)

Industrial marketing The basic concept of marketing remain the

same for both the consumer marketing and industrial marketing. However there are differences between consumer markets and industrial markets. These differences must be understood well by industrial marketers, who want to reach and satisfy the customer better and faster then their competitors in order to achieve the corporate objective.

What is Industrial Marketing

Industrial marketing is also referred to as business to business (B2B) marketing or business marketing or organizational marketing. Industrial marketing is the marketing of products and services to business organizations. Business organizations include manufacturing companies, educational institutions, hospital, distributors and dealers.

Classification Of Industrial Product

Industrial products and services are classified into three broad groups.

(1) Material and Parts These goods enter the product directly

Raw Material ( Basic Products like iron ore, crude oil, fruits,

vegetables )

Manufactured Items ( Acids ,fuel oil, steel, chemicals)

Components Parts ( semi finished parts like bearings ,TV Tubes ,

small motors , tyres)

Subassemblies ( semi finished goods like exhaust pipe in motorcycle)

(2) Capital Items A capital good is a durable good (is a good that does not quickly

wear out) that is used in production of goods or services. These

goods are used in production process.

Light equipment or accessories ( Hand tools, computer

terminals.)

Installations or heavy equipment's ( machines , turbines)

Plant and building ( Offices ,plants, warehouses, parking lots ,

housing, which are real estate property)

(3) Supplies and Services

These goods /services support the operations

Supplies – These are operating maintenance

supplies like fuels , packaging materials, lubricants,

paints, electrical items

Services – Companies need a wide range of services

like Legal ,auditing, advertising, courier, marketing

research agency

Difference between Industrial Marketing & Consumer Market

Sr. No

Areas Industrial Marketing

Consumer market

1 Market Characteristics Geographically concentrated

Relatively fewer buyer buyers

Geographically disbursed

Mass market

2 Product Characteristics Technical complexity

Customized

Standardized

3 Service Characteristics Service, timely delivered & availability very important

Service, timely delivered & availability somewhat important


Sr. No

Areas Industrial Marketing Consumer market

4 Buyer Behaviour

Involvement of various functional areas in both buyer & supplier firms

Purchase decisions are mainly made on rational/performance basis

Technical expertise

Involvement of family members

Purchase decisions are mostly made on physiological/social/ physiological needs

Less technical expertise

Non-personal relationship


Sr. No

Areas Industrial Marketing

Consumer market

5 Channel Characteristics More direct

Fewer intermediaries/middlemen

Indirect

Multiple layers of intermediaries

6 Promotional Characteristics

Emphasis on personal selling

Emphasis on Advertising

7 Price Characteristics Competitive bidding & negotiated prices

List prices for standard products

List prices or maximum retail price (MRP)

Characteristics of Industrial Market Customers

Industrial Market customers comprise commercial enterprises, institutions and governments.

HCL Computers customers can be Air India, Delhi University and State Governments A single purchase by an industrial customer may be

far larger than individual customers. An individual may purchase one unit of Microsoft software or an upgrade but Citibank may buy 1000


The demand for industrial products is derived from the ultimate demand for consumer products.

Increase in demand for housing will stimulate demand for wood for making furniture and numerous other related products.

Relationships between industrial marketers tend to be close and enduring.

HCL Computers relationship with some key customers spans decades


Buying decisions by industrial customers often involve multiple buying influences rather than a single decision maker.

A textile producer will evaluate various textile machinery companies before buying from any particular company. Purchasing, engineering, material management and other division members may be involved in this purchase

Industrial Customers

1.Commercial Enterprises 2. Government Organisations 3. Institutions

FEATURES &

IMPORTANCE OF INDUSTRIAL MARKETING

FEATURES OF INDUSTRIAL MARKETING

FEWER; BUT LARGER MARKET: Business buyers will be very less as compared to

consumer buyers; but they purchase in bulk or more quantities.

CLOSE RELATIONS: Relation between seller and buyer have to be kept

very close and professional. Because once the relations are build; can’t be changed easily as it reflects huge profit.

COMPLEX BUYING PROCESS: Very complex procedure is adopted by business

buyers; because before purchasing, the approval is required from different officials and authorities.

CONTINUOUS SALES CALLS: To finalize the deal, it requires constant follow-ups

and continuous sales calls.

EXPERTISE SELLING SKILLS: Sharp selling skill is required to sell the product to

industrial buyers. As they are purchasing in bulk, they will not be easily convinced. Deep product knowledge is required.

INFLUENCES: To finalize the product, different authorities and

officials will interfere and influence the decision to purchase the product.

DERIVED DEMAND The demand for industrial goods is ultimately

derived from the demand for consumer goods. Thus animal hides are purchased because consumers buy shoes, purses, and other leather goods. If the demand for these consumer goods slackens, so will the demand for all the industrial

IMPORTANCE OF INDUSTRIAL MARKETING

MAJOR SHARE OF REVENUE: Major share of revenue is generated by selling the

product to business buyers as they purchase in bulk therefore it is important to take care of business deals.

LESS EXPENDITURE: as the business buyer are very few, no much

expenditure is required to reach and to contact them.

LESS PROMOTIONAL EFFORTS: Free gifts, demonstration etc is not required; because

the product is not to be shown to mass audience. PERMANENT CUSTOMERS: Once the relations are built, business buyers will

purchase the products for longer period of time. Therefore the future is secured if existing buyers are satisfied properly.

INDUSTRIAL BUYING

BEHAVIOUR

INDUSTRIAL BUYING BEHAVIOUR

Meaning:

Industrial buying behavior refers to

the study of the motives and actions of, and

influences upon, industrial buyers while engaged in

the purchasing of goods and services

Factors Influencing Buying Behaviors

There are number of external and internal factors that directly or

indirectly effect organizational buying behavior. Economic factors are

considered very important role in buying. Other factors are political

influencers that are dominant. Organizational buying is also situational

and situations play an important role. Most thinkers feel that these

influencers can be grouped under four major headings.

External Environmental Factors

Under this heading we have social,political,legal,cultural,economic

factors that interact with each other, for example they could be power

shortages, credit squeezes, political and economic changes, which govern

many of the rules regulations. The shortage of raw materials leads excessive

tariffs and taxes for a particular item. These affect the buyer behavior and the

industry has to adapt itself to these changes.

Organizational Factors

An organization is purposefully created and deliberately structured to

attain specific objectives. These objectives and polices differ in every

organization. Every organization had a climate and culture of its own.

The organization is interested in selling its products to the industries

that have a “buying center” or, a group of people who have the

authority to buy. The marketer of industrial products thus wants to

know who constitutes this “power center”,

Interpersonal Factors

The buying center consists of a number of persons who are involved in

buying. It is an inter Personal activity. Those people come from various

levels of the organization . They have different backgrounds, different

expiries, different values and considerations. They play different roles and

make the buying more complex. In some cases this leads to a conflict, which

has to be solved, and uniformity and harmony is made to prevail between

members involved in buying.

Individual Factors

The buying center consists of individual factors such as,

income, education, job, position and risk taking.

PARTICIPANTS IN BUYING PROCESS

Buyer

Formal authority to sign contracts

Member of purchasing department

Influences the vendor selection

Not in technical details

Main criteria: price + terms and conditions of the

contract

User

Person working with the product

Interested in benefits and unobstructed function of

the product to buy

Large knowhow and preconceived opinion

Influencer

A person with high technical knowledge and

practical experience

definition of minimum requirements on

technical or company standards

Gatekeeper Controls the flow of information within the buying center Assistant of decision maker Influence by preparing the decision and the relevant

documents

Rajnish Kumar Accman Institute of managementPGDM-MKT (2011-13)

Decider

Right to say yes or no

Mightiest person

Rajnish Kumar Accman Institute of managementPGDM-MKT (2011-13)

Initiator Person who brings new ideas and solutions into

the company

BUYING SITUATIONS

BUYING SITUATIONS

The business buyer faces many decisions in making a purchase. The

number depends on the buying situations.

Complexity of the problem being solved.

Newness of the buying requirement.

Number of people involved

Time Required

buying situations in B2B Straigtht rebuy – routine decision, repetitive process (energy, office supplies,

raw materials, wood, cigarettes), component suppliers for the automotive industry

– little or no new information

Modified rebuy – more complicated but less sophisticated: cars, trucks,

computers, consulting – modified rebuys are often treated too uncautious

New task – calls for thorough research – industrial plant – highest level of

uncertainty. Strategic new tasks are of extreme strategic and financial importance

(aircrafts, military equipment, infrastructure) – re-evaluation of alternatives and

search for new information and new alternatives

Buying phases Problem recognition

General need description

Product specification

Supplier search

Proposal solicitation

Supplier selection

Order routine specification

Performance review

Stages of decision in B2B procurement

Backhaus developed a widely usable model to distinguish between 5 phases of procurement Preliminary application (initiation phase) Tender proposal Negotiation Processing of order Warranty and services

THANK YOU…PRESENTED BYANAND MURALI