dimensions of industrial marketing

8/13/2019 Dimensions of Industrial Marketing

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Also Known as :

Industrial Marketing

Or

B 2 B Marketing

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Recommended Books

Industrial Marketing, Robert R Reeder & Reeder – PHI

Industrial Marketing, Richard Hill, Alexander, James S

Cross – AITBS

Business Marketing Management, Michael D Hutt,Thomas W Speh – Thomson, 8/e, 2004

Main

Other

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Module 1Dimensions of Industrial Marketing

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Dimensions of Industrial Marketing:

Nature of Industrial Marketing

Industrial marketing Vs. Consumer Marketing,

Economics of Industrial Demand

The resellers market

The industrial Marketing concept, UnderstandingIndustrial markets, Types of Industrial markets,

Classifying Industrial Products,

Organizational Procurement Characteristics

The Industrial Marketing Environment, Environment effect on industrial Market with special

reference to government Rule.

VTU Syllabus Coverage

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Buyers can be:

Manufacturers or resellersGovernments

Not-for-profit organizations

Industr ial Market ing

Marketing aimed at bringing about an

exchange in which a product is sold for any

use other than personal consumption.

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Industrial marketing consists of all activities

involved in the marketing of products and

services to organizations ( commercial, profit

or non profit institutions, governmentagencies or resellers) that use products or

services in the production of consumer or

industrial good and service, and to facilitate

the operations of the enterprise.

DEFINING INDUTRIAL MARKETING

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What is a Business Market?

A business market comprises all the organizations

that buy goods and services for use in the

production of other products and services that are

sold, rented, or supplied to others

The B2B market is very large and involves much

more money and goods than consumer markets.

(The purchasing dept. at GM spends more than $85 billioneach year – more than the GDPs of Ireland, Portugal,Turkey, or Greece.) At $200 billion, U.S. Govt. is largest

customer in the world .

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NATURE OF THE BUSINESS MARKET

Like a final consumer, organizations

purchase products and services to fill needs

Their primary need is meeting the demands

of their own customers

Business buying decisions:

Are more formal

Involve complex interactions among many people Must consider the organization’s goals

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Product exchange:

Supply of raw materials to the organization to

process the finished goods for the end user or

consumer.Examples : . Supply of soap/ detergent powder to

the manufacturers of soaps or detergents. To HLL

there must be suppliers of the raw materials of

soap/detergent raw materials to give the end products like Rin Detergent Bar or Surf Excel.

TYPES OF TRANSCATIONS / EXCHANGES

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Financial Exchange:

Grant of credit facilities or exchange of currency

from one organization to another country.Example:

Industrial Development Bank of India (IDBI) © P r o f . B . K .

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Social Exchange: Social exchange is

important in areas of reducing uncertainty.&maintaining a better relation over a long period

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Characteristics of the Business Market

Relatively

few customers

Derived demand

for goods &

services

Prefer to buy

direct from

manufacturer

Expertise in

buying

Importance

of repeat

transactions

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Close supplier-customer relationship

Geographically concentrated buyers

Inelastic demand

Fluctuating demand

Several buying influences

Multiple sales calls

Reciprocity Leasing

Some More Business market characteristics

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Consumer marketing and industrial marketing havethe same tenets but significant differences do exist.

a. Market Size

b. The Geographic Concentration

c. The Competitive Nature of the Market.

Industrial v/s Consumer Marketing

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Business-to-Business

Marketing

Consumer-Goods

Marketing

Product Relatively technical in nature,

exact form often variable,accompanying services very

important

Standardized form, service

important but less than for business products

Price Competitive bidding for unique

items, list prices for standard

items

List prices

Promotion Emphasis on personal selling Emphasis on advertising

Distribution Relatively short, direct channels

to market

Product passes through a number

of intermediate links en route to

consumer

Customerrelations

Relatively enduring and complex Comparatively infrequentcontact, relationship of relatively

short duration

Decision-

making

process

Involvement of diverse group of

organization members in decision

Individual or household unit

makes decision

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ECONOMICS OF INDUSTRIAL DEMAND:

Demand for the industrial demand develops from the

ultimate demand for consumer goods and services.

Demand is derived from the choice and likes of

consumers.

There are principally three types of demands inindustrial marketing.

1. Derived Demand.

2. Joint Demand.

3. Cross Elasticity of Demand.

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RESELLER’S MARKET

Market CharacteristicsLarge number ( e.g. Foodworld)

Product Characteristics

Purchaser’s brand ( e.g. ITC )

Buyer’s Characteristics

Choice based on seller’s offer

Channel CharacteristicsDepends on types of product

Promotion Characteristics

Personal Selling

Price Characteristics

Purchasers’ profit based directly on cost

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Industrial Marketing Concept

Key Task of the organization is to

define the needs of the target marketand adapt organization’s product or

service to satisfy those needs moreeffectively than its competitors.

-- Kotler

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UNDERSTANDING INDUSTRIAL MARKETS

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The diversity of industrial customers and the types of

products and services they purchase.

The type of customer being served and the product

or service being marketed influences marketing

strategy.

The unique characteristics of organizationalpurchasing.

OBJECTIVES

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Components of the Business Market

Commercia l

Market: Individuals

and firms that

acquire goods andservices to support,

directly or indirectly,

production of other

goods and services

Commercial Market

Industrial Distributors & Dealers

Original Equipment Manufacturers ( OEM)

Users

Categories can overlap

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Government

Organizat ions:

Include domesticunits of federal,

state, local and

foreigngovernments

Government

Organizations

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Inst i tut ions:

Public & private

Profit / non profit

Institutions

Hospitals, schools,prisons, clubs

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The Diversity of Industrial Markets and Products

Purchased

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CLASSIFYING INDUSTRIAL PRODUCTS

Materials and Parts goods that enter the

product directly;

goods that affect the cost

structure of the firmCapital Items

Supplies and Services goods that facilitate the firm's

operation.

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Capital Items

Installations Accessories

Marketing Implications

Direct interactionNegotiations

Intermediate channels

Buildings

Computer centerDrills

Computers

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Supplies & Services

Supplies Services

Marketing Implications

Across organizations

Purchasing agents

Word of mouth

Past reputation

Consultative

Soaps

LubricantsTravel agencies

House keeping

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DISCUSSIONS

Same product as consumer & industrial productSame product with multi-classifications

Cars

Salt

Tea

Travel agency

Security Services

Examples of products or services which are never :Consumer

Industrial

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UNIQUE CHARACTERISTICS OF

ORGANIZATIONAL PROCUREMENT

How goods and services are purchased

by commercial enterprises depends on

Nature of the business,

Size of the firm,

Volume,

Variety

Technical complexity

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Multiple Influencers.

several people share the purchasing decision.

Technical Sophistication.

materials requirement planning, supplier rating systems,

economic order quantity and value analysis

UNIQUE CHARACTERISTICS OF

ORGANIZATIONAL PROCUREMENT

systematized techniques for reducing costs andimproving the performance value of materials,

components, and manufacturing processes.

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Purchasing in Government Units

Widely Dispersed Markets.

Complicated Procurement Laws.

Government Contracts.

Fixed price contracts

Cost re-imbursement contracts

Negotiated contract

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Institutional Purchasing

Somewhere between commercial enterprises and

government.

Purchasing in the Reseller's Market

Primarily on the expected contribution toward

increased sales volume and profits.

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Buyer – SellerInterface

Publics

Macro Environment

Government

The Industrial Marketing Environment

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Buyer – Seller

Interface

CompetitorsDistributors

Input Suppliers Facilitators

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The Macro envi ronment



The Macro environment

Demographic

Environment

Economic

Environment

Cultural

Environment

Ecological

Environment

Technological

Environment

Physical

Environment

Political Environment ???

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GOVERNMENT INFLUENCE

Rules & laws

Anticipating Governmental Actions

Influencing Governmental Actions ( e.g. CII)

Taxes & duties ( e.g VAT)

Labor laws

Classifications ( e.g SSI)

Impex barriers ( e.g WTO)

Safety standards ( e.g. mines safety)

Environmental regulations (e.g. Euro III)

Funding methods ( e.g. WB aid)

Social responsibility

Industry protection ( MRTP etc)

Bo th enabler & regu lator

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End of Module 1

dimensions of industrial marketing

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