INDUSTRIAL MARKETING - Module 1

We don’t see very often TV ads for example mining industry equipments or other technical equipments or stuff. Why is that?

Are industrial or business to business companies using marketing or advertising? If yes, how do they do marketing?

Why advertising agencies focus (almost exclusively) on FMCG? Why do they treat industrial products and services like on outkast?

We have a large marketing experience in both categories. In business to consumer fields we met fast moving consumer goods – FMCG, services for large public, retail, tourism. And on the other side, the business to business fields: steel and building material trading, buildings, logistics – transports, IT – webdesign and online marketing, industrial sewing machine trading… Everywhere we met new, interesting marketing and selling methods,  tools and strategies.

BUYING CENTER - Module 2

When selling to companies the first question is who has the decision to buy?Is it one person or a group?When we sell to one person it can be easier, but not necessarily. When selling to a group we call it buying center.What is a buying center and how it works?Buying center is a group of professionals, employees of the company who are involved in the decision making for a specific buying.

We can meet different roles:-    Promoters: they make the first step or proposal-    Users: they will use it effectively, they help to make a choice on technical/ professional level-    consultants / influencers: they can offer advices-    buyers: they will select the supplier, they negotiate and sometimes make even the decisions-    approvers: financial department-    decision maker: they approve the big value buying-    gate keeper: they can have (negative) influence on the selling/buying process.

Let us see an example: a regional trade company wants to buy IT and communication equipment to his sales force. The promoter could be the sales manager or an It manager. Users will be the sales forces. Consultants/ influencers the IT and communication professionals, who knows different equipments and technology: laptop, palmtop, wi-fi, LAN, mobile net etc. The buyers will be the employees of the procurement department. The decision maker could be the CEO, if its about a large investment. Gate keeper could be the assistant manager/ secretary when observes some negative behavior on the selling team.

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Why is important to analyze all these information? If we want to have a successful selling campaign we have to focus on every member of the buying center, offering the optimal sales argument for each member. Let’s see some sales argument for each:

for the final user: we have to convince them that the machine, equipment etc. will be perfect for their work: easy to use, handy, comfortable, they can have faster information from the market, faster and easier communication with the company etc.

for the sales manager: he will have a bigger control on his team, easier communication etc.

for the financial department: the new equipments will save costs, etc.

for the decision maker: his whole company will benefit from the purchasing: growing selling, closer control on sales forces and market and finally bigger profits.

So, the first step when selling to a buying center is to define the partners and their roles and influence in the decision making, then to offer the optimal sales argument for decision makers.

FEATURES OF ORGANIZATIONAL BUYING - Module 2

What is organizational buying/selling?Companies need different materials, equipments, services or products to maintain their activity. We talk about business to business or industrial marketing when:-    a manufacturer sells to another manufacturer, for ex. Equipments-    a manufacturer sells to a trader-    or a trader (en-gross) sells to a retailer.

Reporting to consumer goods selling this business is usually more quite, almost invisible for large public. Anyway there is about fat cash.

What are the main features?-    big volume and fat cash-    industrial equipments, machines or products for reselling-    low number of buyers, but with great capacity-    special services-    intensive relationship between seller and buyer-    professional procurement-    large number of factors to influence decisions-    the importance of sales forces-    derived demand – it depends on consumer goods demand-    unstable demand-    geographical concentration of the buyers

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MARKETING INTELLIGENCE -Module 3

Marketing intelligence includes the procedures and data sources used to obtain information from the business environment for decision making. This information can be external or internal. This data usually pertains to various political, economical, technological and sociocultural elements. It also can include information on customer demographics and competitors. Small-company managers usually collect marketing intelligence data either by themselves or through various research or government agencies.

Market Reports

Small companies often want to determine how they are faring in certain markets. Hence, they may order secondary research reports from companies like Nielsen or Forrester Research. One important component of market data is market share, which tells a company what percentage of the market it controls in both units and dollars. Small-business owners also can use the data to determine whether there's room for growth in certain markets.

Competitive Information

Another type of marketing intelligence is competitive information. Business owners usually use industry reports, articles, newsletters and personal observation to study their competitors. They may also collect competitive brochures or study their websites. Small companies use competitive information to learn more about competitors' investments, organizational changes and strategies. They may also purchase competitive products to study various features and technology. Marketers may also study competitive information to determine the types of customers they serve.

Internal Databases

Marketing managers also use market intelligence they obtain from customers. This information goes far behind the typical name, address and emails of customers. For example, a marketing manager may have detailed information about key customers, including their average age, income, education and what they typically spend per visit. This allows companies to create profiles of typical customers, characteristics they use to target other noncustomer consumers.

Using Competitive Intelligence

Small companies often use competitive intelligence to conduct analyses of strengths, weaknesses, opportunities and threats (SWOT). A company usually uses a SWOT analysis to compare its strengths and weaknesses against key competitors. It then uses those advantages to identify various opportunities in the marketplace. For example, a plumbing company may have stronger distribution channels in place. It may then use those distribution channels, including showrooms and retail stores, to get more product exposure. Similarly, a small company strong in customer service may include that fact on websites, brochures and other printed materials

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INDUSTRY LIFE CYCLE - Module 4

Life cycle models are not just a phenomenon of the life sciences. Industries experience a similar cycle of life. Just as a person is born, grows, matures, and eventually experiences decline and ultimately death, so too do industries and product lines. The stages are the same for all industries, yet every industry will experience these stages differently, they will last longer for some and pass quickly for others. Even within the same industry, various firms may be at different life cycle stages. A firms strategic plan is likely to be greatly influenced by the stage in the life cycle at which the firm finds itself. Some companies or even industries find new uses for declining products, thus extending their life cycle.

The growth of an industry's sales over time is used to chart the life cycle. The distinct stages of an industry life cycle are: introduction, growth, maturity, and decline. Sales typically begin slowly at the introduction phase, then take off rapidly during the growth phase. After leveling out at maturity, sales then begin a gradual decline.

STAGES OF THE LIFE CYCLE

Introduction: In the introduction stage of the life cycle, an industry is in its infancy. Perhaps a new, unique product offering has been developed and patented, thus beginning a new industry. Some analysts even add an embryonic stage before introduction. At the introduction stage, the firm may be alone in the industry. It may be a small entrepreneurial company or a proven company which used research and development funds and expertise to develop something new. Marketing refers to new product offerings in a new industry as "question marks" because the success of the product and the life of the industry is unproven and unknown.

A firm will use a focused strategy at this stage to stress the uniqueness of the new product or service to a small group of customers. These customers are typically referred to in the marketing literature as the "innovators" and "early adopters." Marketing tactics during this stage are intended to explain the product and its uses to consumers and thus create awareness for the product and the industry.

Because it costs money to create a new product offering, develop and test prototypes, and market the product, the firm's and the industry's profits are usually negative at this stage. Any profits generated are typically reinvested into the company to solidify its position and help fund continued growth. Introduction requires a significant cash outlay to continue to promote and differentiate the offering and expand the production flow from a job shop to possibly a batch flow. Market demand will grow from the introduction, and as the life cycle curve experiences growth at an increasing rate, the industry is said to be entering the growth stage.

Growth: Like the introduction stage, the growth stage also requires a significant amount of capital. The goal of marketing efforts at this stage is to differentiate a firm's offerings from other competitors within the industry. Thus the growth stage requires funds to launch a newly focused marketing campaign as well as funds for continued investment in property, plant, and equipment

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to facilitate the growth required by the market demands. However, the industry is experiencing more product standardization at this stage, which may encourage economies of scale and facilitate development for production efficiency.

Research and development funds will be needed to make changes to the product or services to better reflect customers' needs and suggestions. In this stage, if the firm is successful in the market, growing demand will create sales growth. Earnings and accompanying assets will also grow and profits will be positive for the firms. Marketing often refers to products at the growth stage as "stars." These products have high growth and market share. The key issue in this stage is market rivalry. Because there is industry-wide acceptance of the product, more new entrants join the industry and more intense competition results.

The duration of the growth stage, as all the other stages, depends on the particular industry or product line under study. Some items—like fad clothing, for example—may experience a very short growth stage and move almost immediately into the next stages of maturity and decline. A hot toy this holiday season may be nonexistent or relegated to the back shelves of a deep-discounter the following year. Because many new product introductions fail, the growth stage may be short or nonexistent for some products. However, for other products the growth stage may be longer due to frequent product upgrades and enhancements that forestall movement into maturity. The computer industry today is an example of an industry with a long growth stage due to upgrades in hardware, services, and add-on products and features.

During the growth stage, the life cycle curve is very steep, indicating fast growth. Firms tend to spread out geographically during this stage of the life cycle and continue to disperse during the maturity and decline stages. As an example, the automobile industry in the country was initially concentrated in the small area and surrounding cities. Today, as the industry has matured, automobile manufacturers are spread throughout the country and internationally.

Maturity: As the industry approaches maturity, the industry life cycle curve becomes noticeably flatter, indicating slowing growth. Some experts have labeled an additional stage, called expansion, between growth and maturity. While sales are expanding and earnings are growing from these "cash cow" products, the rate has slowed from the growth stage. In fact, the rate of sales expansion is typically equal to the growth rate of the economy.

Some competition from late entrants will be apparent, and these new entrants will try to steal market share from existing products. Thus, the marketing effort must remain strong and must stress the unique features of the product or the firm to continue to differentiate a firm's offerings from industry competitors. Firms may compete on quality to separate their product from other lower-cost offerings, or conversely the firm may try a low-cost/low-price strategy to increase the volume of sales and make profits from inventory turnover. A firm at this stage may have excess cash to pay dividends to shareholders. But in mature industries, there are usually fewer firms, and those that survive will be larger and more dominant. While innovations continue they are not as radical as before and may be only a change in color or formulation to stress "new" or "improved" to consumers. Laundry detergents are examples of mature products.

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Decline: Declines are almost inevitable in an industry. If product innovation has not kept pace with other competing products and/or service, or if new innovations or technological changes have caused the industry to become obsolete, sales suffer and the life cycle experiences a decline. In this phase, sales are decreasing at an accelerating rate. This is often accompanied by another, larger shake-out in the industry as competitors who did not leave during the maturity stage now exit the industry. Yet some firms will remain to compete in the smaller market. Mergers and consolidations will also be the norm as firms try other strategies to continue to be competitive or grow through acquisition and/or diversification.

PROLONGING THE LIFE CYCLE: Management efficiency can help to prolong the maturity stage of the life cycle. Production improvements, like just-in-time methods and lean manufacturing, can result in extra profits. Technology, automation, and linking suppliers and customers in a tight supply chain are also methods to improve efficiency.

New uses of a product can also revitalize an old brand. A prime example is baking soda. Sales were dropping due to the introduction of packaged foods with baking soda as an added ingredient and an overall decline in home baking. New uses for the product as a deodorizer for refrigerators and later as a laundry additive, toothpaste additive, and carpet freshener extended the life cycle of the baking soda industry. Promoting new uses for old brands can increase sales by increasing usage frequency. In some cases, this strategy is cheaper than trying to convert new users in a mature market.

To extend the growth phase as well as industry profits, firms approaching maturity can pursue expansion into other countries and new markets. Expansion into another geographic region is an effective response to declining demand. Because organizations have control over internal factors and can often influence external factors, the life cycle does not have to end.

An example is feminine hygiene products. Sales in the United States have reached maturity due to a number of external reasons, like the stable to declining population growth rate and the aging of the baby boomers, who may no longer be consumers for these products. But when makers of these products concentrated on foreign markets, sales grew and the maturity of the product was prolonged. Often so-called "dog" products can find new life in other parts of the world. However, once world saturation is reached, the eventual maturity and decline of the industry or product line will result.

LIFE CYCLES ARE EVERYWHERE: Just as industries experience life cycles, studies have documented life cycles in many other areas. Countries have life cycles, for example, and we traditionally classify them as ranging from the First World countries to Third World or developing countries, depending on their levels of capital, technological change, infrastructure, or stability. Products also experience life cycles. Even within an industry, various individual companies may be at different life cycle stages depending upon when they entered the industry. The life cycle phenomenon is an important and universally accepted concept to help managers better understand sales growth and change over time.

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EXPO AND FAIRS - Module 7

How to participate with success to expos

Many expo and fair centers opens with fresh forces even in difficult economical environment. Even this year when companies have less money to spend on marketing and expos, a lot of them don’t want to renounce to participation to expo and fairs. The most important thing is to profit after every penny we invest by getting new customers.

Participation to regional, national and international fairs is an excellent opportunity to build up new business partnerships, to build company’s image, to present company’s business or products to potential and existing partners.

Unlike traditional advertising, PR events, or expos can offer a much more personal experience, because at this events we can influence our customers through almost all of their senses. At many occasions they do have the opportunity to live test the products or services.

Why do we participate to fairs?

Possible reasons, goals to participate:

-          launching new products-          new market’s research-          competitive analysis-          customers’ data base development-          developing commercial partnerships-          building company’s brand

We have to pay attention to the following:

The first major step to expo participation is the right selection of the expo. We have to pay attention to the place and period of the expo, the precise theme of the expo (general, technical, consumer goods, automotive industry, tourism ..), the organizers, it’s brand, the visitors, the costs of the participation and the budget of the event.

Then we have a long list of important actions. We recommend a well defined action plan,

- stand reservation, month before the event, (specifying dimension, position, facilities)- preparing the advertising materials (product catalogues, flyers, banners, posters)- sending personal or through media invitation to existing and potential partners,

stakeholders,- logistics- selection and training for stand staff (company’s employee)- building the stand: rented from the organizers (cheaper and faster to prepare) or custom

made (with much more effects on image)

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- the effective participation to the event: reception of the visitors, presentation of the company and it’s products, making contracts, obtaining demands and data

- final action: disassemble the stand, packaging, data processing and using, and follow-up.

The positive effects of the expo can be pushed further by a series of methods: short interactive programs at the stand (product presentation or mini-conference), visiting potentials partners stand with specific business gifts, maybe unusual gifts.

Data processing and using them is vital. We don’t have to forget “promises” we made at the expo to customers – send them quotations, visit them, call them. A simple thank you call or e-mail could have a very positive effect in the following days or weeks.

Don’t forget participation to a fair has a long term effect. It’s very rare that we can sell as much at the fair that we can cover our expenses. But, what is important, that some customers may remember after months and make a bid or when next meeting them after long weeks they may accept much easier an offer to cooperate.

BUSINESS TO BUSINESS SALES FORCES - Module 8

In the last 150 years the market changed, and new forms of selling were introduced. We can mention self-service shops, catalogue selling. Most of them decreased the importance of personal selling. The products’ presentation and buying became more and more impersonal. Anyway in the beginning 21st sales forces are still the major factor of a company’s success on market.

Sales forces in industrial marketing are the major communication and selling channel. The key to success or failure.

We must not forget anyway, that the various marketing functions—sales force, advertising, customer service, product policy, market research—must work together. All of these functions must be parts of a focused marketing strategy and coordinated from the customer’s point of view.

Sales forces in business to business fields are in permanent contact with the customers, they are the company’s “eyes and ears”.  This is very important that they pick up information missed by other means and do this systematically. Marketing department must coordinate their effort to gather every significant data of the market: new product, new trends, prices, customers’ behavior and needs, competitions’ moves. And the most important thing is to analyze these INFORMATION and USE IT.

In order to achieve all the objectives (including sales target) a professional sales representative must have the following characteristics: very good communication skills (personal, technical), professional competence in his specific field (steel products, high tech, building or real estate, machinery etc), courtesy, reliability and responsiveness.

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