Industrial Marketing

Industrial MarketingSecond Edition

Delhi-1100922014

Milind T. PhadtareSenior Professor and Dean

School of General ManagementNational Institute of Construction Management and Research

Pune

IndustrIal MarketIng, second editionMilind T. Phadtare

© 2014 by PHI Learning Private Limited, Delhi. All rights reserved. No part of this book may be reproduced in any form, by mimeograph or any other means, without permission in writing from the publisher.

IsBn-978-81-203-5005-2

The export rights of this book are vested solely with the publisher.

second Printing (second edition) … … … august, 2014

Published by Asoke K. Ghosh, PHI Learning Private Limited, Rimjhim House, 111, Patparganj Industrial Estate, Delhi-110092 and Raj Press, New Delhi-110012.

Contents

v

Preface xvii

1. Review of Marketing Fundamentals 1–14

Introduction 11.1 FundamentalDefinitionsUsed inMarketing 11.2 MarketingConcepts 21.3 StrategicMarketing 4

1.3.1 Mission 41.3.2 Objectives 41.3.3 Designing theBusinessPortfolio 41.3.4 CoordinatingFunctionalStrategies 5

1.4 BCGGrowth-ShareMatrix 51.5 GE9CellMatrix 71.6 GrowthStrategies 8

1.6.1 MarketPenetration 91.6.2 MarketDevelopment 101.6.3 ProductDevelopment 111.6.4 Diversification 12

Summary 13Problems 14Bibliography 14

2. Concept of Industrial Marketing 15–30Introduction 152.1 Concept of IndustrialMarketing 15

2.1.1 Differencesbetween Industrial andConsumer Marketing 16

2.2 Characteristics of IndustrialMarketing 182.2.1 DemandCharacteristics 182.2.2 MarketCharacteristics 18

vi Contents

2.2.3 ProductCharacteristics 192.2.4 PriceCharacteristics 202.2.5 PlaceorDistributionCharacteristics 212.2.6 PromotionCharacteristics 222.2.7 BehaviourCharacteristics 23

2.3 ExchangeTransactions 232.3.1 ProductExchange 232.3.2 InformationExchange 242.3.3 FinancialExchange 242.3.4 SocialExchange 25

2.4 Classificationof IndustrialProducts 262.4.1 Capital Items 262.4.2 Revenue Items 27

2.5 Typesof IndustrialCustomers 282.5.1 PublicSectorUndertakings 282.5.2 PrivateSectorEnterprises 282.5.3 CooperativeEnterprises 292.5.4 Not-for-profitOrganisations 292.5.5 GovernmentAgencies orDepartments 29

Summary 29Problems 30Bibliography 30

3. Industrial Marketing Environment 31–42Introduction 313.1 Levels ofEnvironment 31

3.1.1 RemoteLevel ofEnvironment 323.1.2 OperatingLevelEnvironment 363.1.3 InternalEnvironment 38

3.2 Characteristics ofEnvironment 393.3 EnvironmentalScanning 403.4 Sources ofData forEnvironmentalAnalysis 41Summary 41Problems 42Bibliography 42

4. Gathering Marketing Intelligence 43–55Introduction 434.1 DifferencesbetweenMarketingResearch for

Consumer and IndustrialProducts 444.1.1 TechnicalOrientation 444.1.2 ConcentratedAccess to Information 444.1.3 SurveyTechniques 444.1.4 RespondentCooperation 44

Contents vii

4.2 MarketingResearchProcess 454.2.1 DefiningResearchProblem 454.2.2 FramingObjectivesofResearch 454.2.3 CollectionofData 454.2.4 Analysing the Information 524.2.5 Presenting theFindings 524.2.6 Analysis on theBasis ofDataGiven inTable4.1 52

Summary 54Problems 54Bibliography 55

5. Organisational Buying Behaviour 56–71Introduction 565.1 Factors Influencing InstitutionalBuyer 57

5.1.1 DifferencesbetweenConsumer andOrganisationalBuying 58

5.2 OrganisationalBuyingProcess 585.2.1 NeedRealisation 595.2.2 DeterminingCharacteristics andQuantity 595.2.3 DefiningSpecificationsof theNeededSolution 595.2.4 Search forPotentialSuppliers 605.2.5 ObtainingProposals fromSuppliers 605.2.6 EvaluatingProposals andSelectingSuppliers 605.2.7 Negotiating andFinalisingOrder 605.2.8 Post-purchaseEvaluation 61

5.3 ValueAnalysis 615.4 PurchaseParticipants 61

5.4.1 Initiators 615.4.2 Buyers 625.4.3 Gatekeepers 625.4.4 Users 625.4.5 Influencers 625.4.6 Deciders 63

5.5 PurchaseSituations 635.5.1 StraightRebuy 635.5.2 ModifiedRebuy 635.5.3 NewTask 64

5.6 TypeofSuppliers 645.7 AttributesConsidered forPurchaseDecisionMaking 65

5.7.1 ProductRelated attributes 665.7.2 EconomyRelatedAttributes 665.7.3 SupplierRelatedAttributes 67

5.8 BuyingBehaviour inOrganisationalBuying 685.8.1 BuyingBehaviour in aPrivateEnterprise 685.8.2 BuyingBehaviour ofPublicSectorBuyers 69

viii Contents

Summary 70Problems 70Bibliography 71

6. Industrial Market Segmentation, Target Marketing and Positioning 72–85Introduction 726.1 Need forMarketSegmentation 72

6.1.1 MarketSegmentation 736.1.2 Bases forMarketSegmentation 73

6.2 Requirements ofEffectiveSegmentation 746.3 TargetMarketing 75

6.3.1 UndifferentiatedMarketing 756.3.2 DifferentiatedMarketing 766.3.3 ConcentratedMarketing 76

6.4 SelectingTargetMarketingStrategy 766.5 Positioning 77

6.5.1 IdentifyingCompetitiveAdvantages 786.5.2 Choosing theRightCompetitiveAdvantages 786.5.3 Selecting anOverallPositioningStrategy 78

Case study 79Summary 84Problems 84Bibliography 85

7. Managing Product Mix 86–98Introduction 867.1 Levels of aProduct 86

7.1.1 CoreLevel 877.1.2 ActualLevel 877.1.3 AugmentedLevel 88

7.2 DecisionMaking inProductMix 897.2.1 ProductLineDecisions 907.2.2 ProductMixDecisions 91

7.3 Concept ofProductLifeCycle 917.3.1 Managing theProductLifeCycle 92

7.4 NewProductDevelopment 947.4.1 IdeaGeneration 947.4.2 IdeaScreening 957.4.3 ConceptDevelopment andTesting 957.4.4 MarketingStrategyDevelopment 957.4.5 BusinessAnalysis 957.4.6 ProductDevelopment 957.4.7 TestMarketing 957.4.8 Commercialisation 96

Contents ix

Case study 96Summary 97Problems 98Bibliography 98

8. Managing Price Mix 99–110Introduction 998.1 Factors InfluencingPricing 99

8.1.1 Policyof theFirm 1008.1.2 ValueProposition in aProduct or aService 1008.1.3 Branding 1008.1.4 Cost 1008.1.5 Competition 1018.1.6 Sizeof theMarket 1018.1.7 Position in thePLC 1018.1.8 DistributionDiscounts 1018.1.9 MiscellaneousFactors 101

8.2 Approaches toPricing 1028.2.1 Cost-basedPricingApproach 1028.2.2 Competition-basedPricingApproach 1028.2.3 Value-basedApproach 103

8.3 PricingApproaches inPractice 1038.3.1 LandedCost of aProduct 1048.3.2 Life-timeCost of aProduct 1048.3.3 MarginalCostApproach 105

8.4 AdjustingPrices 1068.4.1 Quantity ofPurchase 1068.4.2 Long-termRelationship 1068.4.3 Imageof theBuyer 1078.4.4 FinancialStrengthof aBuyer 1078.4.5 Imageof theSupplier 1078.4.6 FinancialStrengthof theSupplier 1078.4.7 CapacityUtilisation 1078.4.8 Rivalry 1078.4.9 ProductDifferentiation 1088.4.10 OtherCommercialTerms andConditions 1088.4.11 WorkingRelationship 108

8.5 PricingStrategies forNewProducts 1088.5.1 MarketSkimming 1098.5.2 MarketPenetrationStrategy 109

Summary 109Problems 110Bibliography 110

Industrial Marketing

Publisher : PHI Learning ISBN : 9788120350052 Author : Milind T Phadtare

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