nature of industrial marketing,reeder & brierty,ch 1

The Nature of

Industrial Marketing

By:-SaurabhSwarnimVivek

Why Study INDUSTRIAL

MARKETING ????

Because

• Composition is Uniquely different– Product – Quality Maintenance– Information – Answering Technical, Economic, organizational

question over a long period of time– Financial – Granting Credits, Currency Exchange– Social – Trust Interpersonal Relationships

• Forces that affect Industrial Demand are differentC:\Users\Vivek\Desktop\Michael_Porter_Five_Forces_Model.png

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• Employment Opportunities

Industrial Marketing is the human activity directed toward satisfying wants and needs of organizations through the exchange process.

Industrial Marketing consists of all the activities involved in the marketing of products & services to organizations, institutions etc, that use products and services in the production of consumer or industrial goods & services and to facilitate the operation of their enterprises.

Definition

Points of Parity

• Must define Target Markets• Determine the needs of those market• Design products for those “needs” satisfaction• Communicate and Reach those markets

Industrial Marketing is more a responsibility of General Management

Points of DifferentiationCharacterstic B2B B2C

Product Technically Complex, Often Customized

Non-Technical, Standardized

Price Competitive Bidding, Negotiated Pricing, not so

Critical factor

MRP, very critical factor in

purchase decisionPlace Geo Concentrated,

Few BuyersGeo Distributed,

More number of BuyersPromotion Importance to Personal

SellingImportance to Advertising

Channel More Direct,Multi Channel

Indirect, Few Channels with many

layersBuyer Behavior Various Functional involved,

Mainly Rational buying decisions, Technically

competent

Family Members involved, Physiological/Psychological/S

ocial need based buying decision

Service Very Important Somewhat

Market Characteristics

• Size of the Market– Relatively few Industrial Customers

• Geographic concentration– Jamshedpur

• Competitive nature of the market– Oligopsonistic buying

• control of the purchase of a commodity or service in a given market by a small number of buyers

– Large firms tend to dominate many markets

• Product Characteristics– Technical– Service & support more needed

Industrial Demand

• Derived Demand– Demand for B2B is derived from the ultimate demand

for B2C– Recessionary Effects

• Joint Demand– Demand for B2B depends upon its use in conjunction

with another product or service– B2B customers prefer to buy joint products lines from

one supplier

Cross Elasticity of Demand

• Substitute Effect– a good's demand is increased when the price of another good is increased– Steel & Aluminum, Margarine & Butter

– More the availability of Substitute, more is the Cross Elasticity of demand

• Complementary Effect– the demand for a good is decreased when the price of another good is

increased– Computer hardware and computer software, Printer & Cartridge– Demand is more closely related

In B2B, it is important to measure the interrelationships among industries

Reseller’s Market

• Similar to Industrial Market

• Market Characteristics– Retailers have strong bargaining power (Wal-Mart)

• Product Characteristics– Customized products– Additional Cost factors removed– After Sales Service is a major differentiating factor

• Buyer Characteristics– Compare technical features of different competiting products– Unlike industrial buying, multiple buying influencers & decision makers

are involved

Reseller’s Market

• Channel Characteristics– Length of distribution depends on type of Product– Availability of Goods is very important, or may lead to

lost sales

• Promotional Characteristics– Emphasis on Personal selling

• Price Characteristics– More concerned

Importance of Reseller’s Market

• Ability to affect consumer demand directly through– Increased promotion– Value enhancing services– Reduced price

• Positioned closest to ultimate consumers– Better feedback, Information catalyst

• Joint Demand

Few Check Points

• Excessive preoccupation with products

• Too much technical orientation and not Customer Service

• Customer benefits and Needs satisfaction should be the center of attention

THANK YOU

Questions??