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INDUSTRIAL MARKETINGText and Cases

MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW AHMEDABAD ERNAKULAM BHUBANESWAR INDORE KOLKATA GUWAHATI

Fourth Revised Edition : 2015

Francis CherunilamM.A., M.B.A., D.D.P., Ph.D.

Dean, School of Management Studies,Viswajyothi College of Engineering & Technology,

Muvattupurha, Kerala.

(Formerly Professor and Chairman, Marketing Area, IIMK;Director, School of Management Studies,

Cochin University of Science & Technology;Director, Albertian Institute of Management, Cochin;

Director, Kochi Business School;Director, Mangalam Management Studies, Kottayam.)

E-mail: [email protected]

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First Edition : 2004Second Revised Edition : 2009Third Revised Edition : 2011Fourth Revised Edition : 2015

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PREFACE TO FOURTH EDITION

Industrial Marketing, also known by such other names as Business Marketing,Business to Business Marketing, Organisational Marketing etc., is growing inimportance because of the fast growth of the industrial (business) market.

Although the size of the business market is enormous — much larger than thatof the consumer market — and it is often more complex than consumer goodsmarketing, the subject has not yet received the importance it deserves. Thereis a dearth of research and literature on this subject. The main objective of thisbook, which is a modified version of my earlier work Business Marketing, isto present a fairly comprehensive and succinct textbook in a simple and easyto understand style.

This edition is chatacterised by updating of information and modification of

some topics.

Words fail to express the gratitude to Mr. Anuj Pandey, Niraj Pandey, K.N.Pandey and the Himalaya Publishing House Pvt. Ltd. for the constantencouragement and inspiration.

Cochin, Dr. Francis CherunilamJune 21, 2015.

CONTENTS

1. An Overview of Industrial Marketing 1 - 25Meaning and scope of Industrial Marketing; Classification of industrial goods; industrialcustomers; components of industrial market; summary.

2. Comparison Between Industrial and Consumer Markets/Marketing(Characteristics of Industrial Markets/Marketing) 26 - 37Why and what; product and demand characteristics; customer characteristics; product/service mix; market characteristics; marketing mix characteristics; summary.

3. Demand for Industrial Goods 38 - 45Derived demand; joint demand; price insensitivity; price sensitivity; reverse elasticity;cross elasticity; summary.

4. Industrial Buying and Buyer Behaviour 46 - 76Factors affecting industrial buying decision; environmental factors; organisationalenvironment; buying centre factors; roles in buying process; structural dimensions; individualfactors; buying objectives/criteria; non-economic objectives; Webster-Wind model; Shethmodel; the buygrid model; buy classes; buy phases; appropriate marketing strategies overvarious buying situations and phases; business buying process complexity; summary.

5. Partnering/Relationship Marketing and CRM 77 - 89Characteristics of adversarial and partnership models; lifecycle models of buyer-supplierrelationship; stages of buyer seller relationship models; selection of firms for collaboration;production linkages and industrial marketing; CRM; summary.

6. Industrial Market Segmentation, Targeting and Positioning 90 - 122Market segmentation; requirements for effective segmentation; macro and microsegmentations; intermediate segmentation; nested approach to segmentation; other basesof segmentation; benefits of market segmentation; criteria for segmentation variables;market targeting; differentiation; positioning; summary.

7. Industrial Product Decisions 123 - 140Product; product lifecycle; new product development; classification of new product;product revitalisation/elimination; summary.

8. Industrial Pricing 141 - 169Characteristics of industrial prices; factors affecting pricing; pricing objectives; costs inindustrial pricing; pricing methods/approaches; new product pricing; pricing over thePLC; pricing policies; geographic pricing; transfer pricing; leasing; summary.

9. Industrial Marketing Communication 170 - 179Communication mix; salient features of business marketing communication; majordecisions in industrial marketing communication; trade fairs and exhibitions.

10. Personal Selling 180 - 190Types of industrial salesmen; management of sales force; knowledge/training for sales force;organising sales force; personal selling process; summary.

11. Industrial Business Marketing Logistics 191 - 210Components of logistics: importance of logistics; business-to-business logistical services;supply chain management; types of distribution; channel systems; multi-channel marketingsystem; channel conflicts; factors influencing channel design; summary.

12. Industrial Marketing Information System 211 - 226Marketing information system and marketing research; information requirements; utility/importance and objectives of industrial marketing research; consumer research vs. industrialresearch; types of research; phases of a research project; methods of data collection;sampling; research agency; summary.

13. Services Marketing 227 - 237Characteristics of services; service marketing mix; service marketing strategy; differentiationand positioning.

14. E-Business 238 - 246Tele marketing to e-business; growth and significance of e-commerce; barriers toe-business; summary.

15. Strategic Marketing Planning and Control 247 - 297Classes of decisions; strategic management; levels of strategy; strategic management process;approaches to strategy making; competitive structure of industries; strategic groups; structuralanalysis and competitive strategy; generic competitive strategies; four routes to strategicadvantage; strategic business marketing management; evaluation and control of industrialmarketing; summary.

16. International Industrial Marketing 298 - 328International market for industrial goods; trends in major exports; trends in major imports;direction of trade; market segmentation; international trade in services; market entrystrategies: exporting; licensing and franchising; contract manufacturing; managementcontracting; turn-key contracts; wholly owned manufacturing facilities; assembly operations;joint ventures; third country location; mergers and acquisitions; strategic alliance; countertrade;global sourcing.

17. Cases 329 - 378 1. Distribution Barrier 2. In and Out 3. Business Ethics 4. The Equations 5. Decision Muddle 6. Tetrapack 7. Partnership Pangs 8. Intel Inside 9. Behavioural Diversity of University Departments10. Knocking at a Closed Door11. Lakshmi Machine Works Ltd.12. V-Guard Industries Ltd.13. The Documentation Market14. The Indica Saga

01AN OVERVIEW OFINDUSTRIAL MARKETING

The objective of this chapter is to helpunderstand:

The meaning and scope ofindustrial marketing

Broad categories of industrialgoods and their marketingimplications

Important types of industrial buyers

Components of industrial market

Chapter Objective

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AP

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RC

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INDUSTRIAL MARKETING2

Several specialised disciplines within the broad discipline of Marketing have emergedover time, like International Marketing, Industrial Marketing, Services Marketing and SocialMarketing.

Industrial goods account for a substantial share of the total sales in a modern economy.However, Industrial Marketing, also known by such names as Business Marketing, Businessto Business Marketing, Commercial Marketing, Institutional Marketing and OrganisationalMarketing, is a subject that has not yet received the importance it deserves, even in a countrylike U.S.A., although, the size of this market is enormous — much larger than that of theconsumer market — and it is often much more complex than consumer goods marketing.“Traditionally, business marketing has been a distant cousin of the mainstream of the marketingthought. However, the employment opportunities, along with the growing importance ofhigh-technology business products and the success of foreign competition have highlightedthe need for increased business marketing study.”1

MEANING AND SCOPE OF INDUSTRIAL MARKETING

Industrial goods/services are those goods/services which are used (mostly commercially)in the production/rendering of goods/services. They include such goods as capital goods,raw materials, intermediates and MRO supplies.

According to the Industrial Marketing Committee Review Broad, “industrial marketingconsists of all activities involved in the marketing of product and services to organisations(i.e., commercial enterprises, profit and non-profit institutions, government agencies, andresellers) that use products and services in the production of consumer or industrial goodsand services, and to facilitate the operation of their enterprises.”2

Haas defines Industrial Marketing as “the process of discovering and translating industrialcustomer wants, needs, expectations and requirements into product and service specificationsand then, in turn, through effective promotion, channeling, pricing and after sale servicing,convincing more and more of these customers to use and continue to use these goods andservices. Thus, in a general sense, industrial marketing describes all marketing activities notdirected at the household or the ultimate consumer. Used in this manner, the term industrialmarketing applies to the marketing … of all goods and services to businesses and otherorganisations for their use, either directly or indirectly, in the goods and services that they,in turn, produce.”3

Bingham Jr. defines Business Marketing as “those activities that facilitate exchangesinvolving products and consumers in business markets. A business marketing transactiontakes place whenever, a good or service is sold for any use other than personal consumption.”4

Gross et al. define Business Marketing as “the marketing of products and services toorganisations rather than to households or ultimate consumers. The purchase is made notfor self gratification, but rather to achieve organisational objectives.”5

The term Industrial Marketing was popular in the past. However, in many circles today,the term Business Marketing has supplanted the term Industrial Marketing. Robert W. Haas,one of the popular authors on this subject, has changed the title of his book from Industrial

3AN OVERVIEW OF INDUSTRIAL MARKETING

Marketing Management to Business Marketing Management for the recent edition. BusinessMarketing/Business to Business Marketing is broader than Industrial Marketing. It encompassesindustrial goods marketing and a considerable part of the consumer goods marketing. Infact, a large chunk of the consumer goods pass through certain business marketing processesbefore they finally reach the consumers. The marketing of consumer goods to marketingmiddlemen, like wholesalers and retailers, is business marketing. Business Marketing alsoincludes marketing of consumer goods to organisations (like hospitals, educational institutions,hostels, orphanages, etc.), for in-house consumption, to charitable/voluntary socialorganisations (like Red Cross) for free distribution to the target beneficiaries, to firms andother organisations to give away as gifts and compliments (this is, in fact, a sizable business— such gift items include diaries, pens, wrist watches, clocks, fancy items, etc.)

Thus, industrial marketing includes the following:

1. Marketing of industrial goods

2. Marketing of consumer goods to:

Marketing middlemen Organisations for in-house consumption Organisations for giving away as gifts/compliments Organisations for charitable distribution

In sum, business markets are “markets for products and services, local to international,bought by businesses, government bodies, and institutions (such as hospitals) for incorporation(e.g., ingredient materials or components), for consumption (e.g., process materials, officesupplies, consulting services), for use (e.g., installations or equipment), or for resale.... Theonly markets not of direct interest are those dealing with products or services which areprincipally directed at personal use or consumption, such as packaged grocery products,home appliances, or consumer banking.”6

Figure 1.2, given in the Summary at the end of the chapter, outlines the scope ofIndustrial Marketing.

CLASSIFICATION OF INDUSTRIAL GOODS

On the basis of how people buy, consumer goods are classified as convenience goods,shopping goods, speciality goods and unsought goods. Such classification does not, however,suit the business goods as there is no such conspicuous variability in the buying behaviourof business goods. An appropriate classification of the business goods would be on the basisof how the goods are used. Based on such criterion, business goods may be classified asfollows:

Capital Equipment and InvestmentsThese include capital goods, land, building and other companies. They are also known

as foundation goods.


There are mainly two categories of capital equipment, namely, single purpose equipmentand multipurpose equipment. Multipurpose machines, also known as general purposemachines, are versatile machines which can be used for different operations and, therefore,they have a horizontal market, i.e., a market extending across many industries. Examplesinclude lathes, milling machines, shapers, boilers, compressors, etc.

Single purpose machines (SPMs) are made specifically for performing exclusiveoperations in only one company or industry. SPMs are often meant for mass production.Piston turning lathe, camshaft grinder and gear generator are examples of SPMs.

Capital equipment also includes accessories which are light equipment used to facilitateproduction, administrative or marketing activities such as hand-held drills, personal computers,typewriters, calculators, fire extinguishers, furniture, etc.

Investments include land, building, and companies acquired.

Marketing Implications:The top executives very actively involve in the decision-making in respect of major

capital investments and the decision-making process involves very careful evaluation ofalternatives from the commercial and several other points of view. This is not only becauseof the large size of the capital outlay but also because the type of technology/equipment,the size of productive capacity, etc., impact on the quality and cost of the output andcompetitiveness of the firm. Similarly, the choice of location and site will have to be evaluatednot only from the commercial point of view but also from other perspectives like ecological,political, demographic and sociological.

The marketing people should, therefore, be able to convince the decision-makers withfacts, figures and logic the superiority of their offer. In case of items of large capital outlayor of highly technical nature, the role of direct marketing is very great.

Whether a capital equipment is multipurpose or single purpose has also got certainimplications. Because of the limited scope of use, the demand for SPM tends to be morevolatile than that of the MPM. As the SPM is custom built, or has only limited applications,it is often difficult to find alternate buyers if a buyer backs out. It is, therefore, quite commonthat the machine manufacturers take some advance payment with the order for SPM. Therecould still be risks. For example, in June 1998, the Coimbatore based Lakshmi MachineWorks Ltd. (LMWL) decided to curtail its production by about 50 per cent despite the factthat its order book was so full that it needed 18 months to complete the execution of allthe orders at hand. Though spinning mills had placed orders on LMWL by paying advance,the units were not willing to confirm their plans of taking delivery because of the grimtextile situation. It was reported that even some units which had confirmed the deliverydates had backed out on their earlier commitments. As most of these textile machinery weretailor made for each customer, alternative avenues of marketing was hardly present.

The SPM is more prone to become obsolete than the MPM. Even if the products and,therefore, the nature of the machinery used to produce it, of one firm or industry changes,the total demand for MPM may not be very drastically affected. MPM, therefore, tend tohave a longer life cycle than the SPM. Because of their versatility, many MPMs have asecond hand market whereas, there may not be, or may have only a very narrow, marketfor used SPMs.


A very close relationship is required between the manufacturer and buyer of SPM.

In large organisations, the purchase of standard accessories is normally routinised withoutthe need for the active involvement of top executives. Indirect channels are common in themarketing of such goods. Easy availability is a very important factor in their marketing.

Demand for major capital equipment depends on a number of factors like governmentpolicy, prospects of user industries, investment climate, credit availability, etc.

Leasing of capital equipment has become popular.

Manufactured Materials and Component PartsManufactured materials are raw materials that have undergone some processing before

entering into the manufacturing process of a product. For example, rubber sheets or crumbrubber, made out of natural latex, used by rubber product manufacturers, aluminiumextrusions, copper formed into wire, etc. Component parts are manufactured items,subassemblies or completely assembled units that are incorporated into the buyer’s finalproduct. Examples: automobile tyres, dash board instruments, motors, batteries, etc.

Many companies do not process or manufacture all the items required in theirproduction. In fact, the trend for some time now has been toward de-integration andoutsourcing. Many materials and component parts are outsourced by manufacturers of finalproduct. For example, nearly 80 per cent of the total number of parts and components ofTelco’s Indica are outsourced (see the case on Indica for details).

Marketing ImplicationsWhether the material or component part is a standardised one or custom made may

have implications for marketing strategy.

In the case of a custom made item, very close interaction between the engineering/production departments of both the manufacturer and the buyer would be beneficial.Standardised items are normally bought through the purchasing department of the buyingfirm on the basis of the product specifications developed by the engineering and productionpeople.

Quality, price and reliability of supply are very important considerations in the selectionof suppliers. Several firms prefer to have more than one supplier of items which are importantand bought in large quantities. Partnering with one or more supplier is not uncommon.

In this age of trends like just in time inventory (JIT), the ability of a supplier to effectivelymeet the challenging demands of the buyer is a critical factor.

Many component parts have two market segments — the original equipmentmanufacturer (OEM) segment and the replacement market or the after market. For example,MRF markets its car radial tyres to OEMs like Maruti and to the replacement market.

While the marketing of components to the OEM segment is normally direct, the saleto the replacement market is often through indirect channels.

For products like truck tyres and spares, there are large business buyers in thereplacement market, like State Road Transport Corporations, where a marketing approachdifferent from that for other customers may be required.


The purchase policy of the OEM, may some times be influenced by the competitivesituation for their products. For example, under the controlled economic regime in Indiawhen the supply of certain two-wheelers was shorter than the demand, some companiessupplied their two wheelers with low quality, low priced tyres.

But today, when the market is very competitive, companies pay due attention to thequality of the component parts and even the type and brand of the tyre used may behighlighted in the promotional campaigns.

Business with the OEM segment may be very important for gaining business in theafter market. For example, MRF highly advertises that its car radials are used as originalproduct by Maruti and several foreign brands of cars in India. It may help the company inat least two ways. That the company is a leading supplier to the OEMs in a highly competitivemarket may give some credibility to its products. Secondly, many customers prefer the samebrand as used originally at the time of replacement. The fact that Sundaram Fastners is aleading supplier of certain component parts to world leaders like General Motors has aprofound impact on the image of the company.

Manufactured material, components and raw materials are also known as enteringgoods.

MRO SuppliesMaintenance, repair and operating supplies get used up in facilitating the operation

of the enterprise but do not become part of the finished product. Examples of maintenancesupplies include cleaning compounds, paint, brooms and light bulbs. Bearing, gears andfilters are examples of repair supplies. Operating supplies include office supplies such aspen, ink, paper, pencil, envelope, etc., lubricants and coolants for factory machinery, fueland lubricants for company vehicles, etc.

Marketing ImplicationsAs MRO supplies are bought by a wide variety of customers, a variety of intermediaries

may be required to reach this broad and large multiplicity of customers. However, verylarge customers may be directly marketed to.

Purchase of MRO suppliers are normally routinised. Organisations prefer to purchasethem from suppliers who are reliable, capable of supplying all the items in a category andare good to deal with. It is, therefore, necessary to ensure that such suppliers deal with thecompany’s products. Agents play an important role in the distribution of many of theseitems. Personal selling is important when certain types of new products are introduced.Company/brand reputation is important in respect of many MRO supplies. This gives someindications of the type of promotional strategy required.

Process MaterialsProcess materials used in the manufacture of a product may be distinguishable in the

final product, like sheet metals, electric and electronic circuit wiring, etc., or indistinguishableslike additives used in lubricants, certain ingredients used in pharmaceutical and food products,etc. Process material also include catalysts.


Marketing ImplicationsProcess materials are also normally bought routinely by the purchasing department of

a firm. Most process materials are demanded across a wide spectrum of industries by a verylarge number of customers and hence, a wide variety of channels is common.

A buyer may lay down specifications, either developed by the buyer or agencies likethe Indian Bureau of Standards. Hence, it is inevitable in such cases that the seller satisfiessuch standards or specifications.

Process materials lose, by and large, their identity in the final product and for veryfew of them there is a replacement market. Therefore, advertising them to the buyers of thefinal product may not be meaningful.

Business ServicesBusiness services cover a broad spectrum like technical service of maintaining equipment,

non-technical services of maintaining the premises like janitorial services and commercialservices like banking, insurance, research, consultancy, etc.

MRO supplies and business services are also known as facilitating goods.

Raw MaterialsRaw materials are one of the most important items of operating expenses. In many

cases, the quality of raw materials affects the quality and cost of the output. Raw materialsmay be primary products or manufactured products. Many primary products also undergosome processing before they are supplied as raw materials to the industry. For example,coconut is converted into copra before supplied to the oil mill. Many food processing unitsuse wheat flour, and not raw wheat, as the raw material.

Marketing ImplicationsFor many raw materials, the customers are very diverse and very large in number and

hence, a variety of channels may have to be used. Large customers, however, may have tobe marketed directly, even when the sale is by indirect channels.

As raw materials account for a large chunk of the cost of production and as the price,and quality of the raw material and the reliability of supply are very important, multiplebuying influences are involved at least in the initial stages of the procurement cycle, in thecase of large organisations.

When a new raw material which substitutes the existing one is to be introduced, directpromotion may be necessary.

Use Based ClassificationGovernment of India uses a use based classification of goods. On the basis of the

nature of the output and its use, industries are classified into basic industries, capital goodsindustries, intermediate goods industries and consumer goods industries. Basic goods, capitalgoods and intermediate goods are essentially industrial goods. As sated earlier, most consumergoods also pass through the process of business marketing.


Table 1.1

Use Based Classification of Goods

Sl. No. Classification Weight in the index of industrial production

1 Basic goods 45.68

2 Capital goods 8.83

3 Intermediate goods 15.69

4 Consumer goods 2.40

Source: Economic Survey 2014-15.

Basic industries are those industries which provide essential inputs for the developmentof other industries and the economy. In other words, these are industries which providebases for development of other industries. For example, the iron and steel industry forms abasis for the development of the engineering industry. Fertiliser is regarded as a basic inputfor the agriculture. Coal, oil and electricity are also regarded as basic industries becausegrowth of modern industry depends on the supply of these vital inputs.

Capital Goods Industries are those industries which produce machinery, equipment ortools. A capital good is one which is instrumental in producing other goods or services. Thecapital goods do not directly serve any consumption requirement. They are used to produceconsumer goods (and other goods) and services. The capital goods industries are capitalintensive in nature, i.e., they require heavy capital investment.

Intermediate Goods are goods which have already undergone manufacturing processbut which form inputs for other industries as material for further processing, part or component.

The Consumer Goods Industries are those industries the output of which serve the finalconsumption requirements. The consumer goods may be broadly classified into ConsumerDurables and Consumer Non-durables.

Consumer non-durables are those goods which are used up at once or within a relativelyshort period, like foodstuffs, cigarettes, soaps, electric bulbs, etc.

Consumer durables, on the other hand, serve the consumers over a relatively longperiod, like car, bicycle, electric fan, television, refrigerator, etc. A distinguishing characteristicof the consumer durables is that their life or service may be extended by repairs.

The following table shows some important industries that come under the differentcategories:

1. Basic Industries:

Mining and quarryingFertilizersHeavy inorganic chemicalsCementIron and Steel basic industriesNon-ferrous basic metalsElectricity


2. Capital Goods Industries:

Hand tools and small tools

Specialised equipment

Machine tools

Agricultural machinery (tractors)

Heavy electrical equipment

Electric motors

Electric cables and wires

Rail road equipment

Heavy vehicles

3. Intermediate Goods Industries:

Cotton Spinning

Jute Textiles

Tyres and Tubes

Synthetic Resins and Plastics

Man-made Fibres

Dye-stuffs

Products of Petroleum and Coal (petroleum refinery products)

Bolts, Nuts, Nails, Screws, Springs, Chains, etc.

Manufacture of Metal

Dry Cells

4. Consumer Goods Industries:

A. Consumer Durable Goods

Electric Fans

Telecommunication Equipment

Motor Cycles and Bicycles

B. Consumer Non-durable GoodsFood ManufacturingTobacco ManufacturingCotton WeavingPaper and Paper ProductsRubber Foot-wearDrugs and PharmaceuticalsSoaps and GlycerineElectric Lamps


Overlap of CategoriesThere are a large number of products which fall into the category of consumer goods

and business goods.

A personal computer used in a house for personal purposes is a consumer good butthe same brand of PC used in an office is a business good. A car tyre bought by an OEMis an industrial good but it is a consumer good when it is bought by an individual. A topexecutive of a company who decides which brand of car be bought for his official use ismaking a business buying decision but when the same person decides about the car for hispersonal (private) use, he is making a consumer buying decision. Several of the variables,or their relative importance, influencing his buying decisions in these two situations wouldbe different.

Many goods which are generally regarded as consumer goods have a sizeable businessmarket.

There are several products which were originally intended to be business goods butwhich later found good demand in the consumer market. For some of them, in due course,the consumer market overtook the business market in size. Van, originally intended to forcommercial deliveries, had become a popular family vehicle.

Marketing ImplicationsThe emergence of new demand patterns have marketing implications. “When consumers

become attracted to business products, responsive marketers may adapt those products tosuit the new found market’s need more closely. A good example of this is the huge consumermarket that now exists for video cameras, which in past years were the domain of commercialtelevision broadcasters.”7

Similarly, there are cases of products originally targeted at the consumer market gainingdemand in the business market. For example, the business market for television has grown.TV has penetrated into hotels, lodges, hospitals, waiting rooms of consultants (includingmedical practitioners) and other organisations, educational institutions, hostels, shops,airports, railway stations, bus stands, buses and so on.

The overlap of categories implies that different marketing approaches are required fordifferent categories. When an industrial product becomes a consumer product, differentsegments may develop within the consumer market and vice versa. Many situations wouldneed product mix modifications. There are, of course, many products which do not requireany modification. In a number of cases, although the product does not need any modification,other variables of marketing mix may have to be modified.

Figure 1.3 in the chapter end Summary depicts the classification of industrial goods.

The Standard Industrial Classification SystemThe Standard Industrial Classification (SIC) refers to the scheme by which industries

and products were systematically classified in the United States so as to easily identify productsby industry, group and subgroup within the industry and other relevant product particulars.


Basicindustry(2-digit)

Majorgroup

(2-digit)

Industrygroup

(3-digit)

Specificindustry(4-digit)

Product(7-digit)

Productclass

(5-digit)

The SIC system enables the identification of groups of business firms that produced thesame type of product.

The SIC coding system worked in the following way: First, the nation’s economy wasdivided into a number of basic industries (such as agriculture, mining, construction, manu-facturing, etc.) and each of this industry was given a two-digit classification code. Next,major groups were identified within each basic industry and was given a specific two-digitcode. (For example, mining industry was divided into major groups such as metal mining,coal mining, oil and gas extraction, etc.). Major groups are then further subdivided intothree-digit industry groups and it proceeded into further details as depicted in figure 1.1.

Fig. 1.1: The SIC System

The U.S. Standard Industrial Classification (SIC) system has been replaced by the NorthAmerican Industry Classification System (NAICS). NAICS was developed jointly by the U.S.,Canada, and Mexico to provide new comparability in statistics about business activity acrossNorth America.

The Industry Classification data are very useful for marketing planning. It is often anexcellent basis on which to segment markets. If the manager understands the needs andrequirements of a few firms within an SIC/NAICS category, requirements can be projectedfor all firms within that category because their requirements will be similar, and potentialsuppliers can evaluate the total market through a detailed analysis of a few companies. TheIndustry Classification data is also useful for identifying new customers. The marketing managercan study and evaluate whether the firms in it could use the marketer’s product or service.8

SIC India CodesInformation on Standard Industrial Classification (SIC) Codes for export import trade,

industrial product classifications, and exim classification list are available from SIC India.com.

This classification is related to the International Trade Centre’s ITC HS (HarmonizedSystem) Classification.

There are millions of trade transactions occurring each year. These transactions areclassified under approximately 8,000 different products. Every item that is exported is assigneda unique 10-digit identification code. The Harmonization Code System (HS-Code) is a systemof progressively more specific identifiers for a commodity.

At the broadest level the SIC code provides a 10 category division structure:

A. Division A: Agriculture, Forestry, and Fishing

B. Division B: Mining

C. Division C: Construction


D. Division D: Manufacturing

E. Division E: Transportation, Communications, Electric, Gas, and Sanitary Services

F. Division F: Wholesale Trade

G. Division G: Retail Trade

H. Division H: Finance, Insurance, and Real Estate

I. Division I: Services

J. Division J: Public Administration

Each division is divided into Major Groups and each Major Group is given a two digitcode. For example, for Division A: Agriculture, Forestry, and Fishing it starts with 01; forDivision B: Mining with 10; for Division C: Construction with 15; for Division D: Manufacturingwith 20 and so on. Each Major Group is divided into a number of Industry Groups whichare identified by a three digit code. Each industry Group is divided into a number of ProductGroups identified by four digit codes. See Annexure 1.1 for more information.

INDUSTRIAL CUSTOMERS

There are a number of categories of business buyers. The purpose of buying and theirbuying behaviour may differ widely.

It is important to understand the characteristics of these different types of businessbuyers because these characteristics have marketing implications. The buying process, quantityof purchase, purchase timing, buying channels, responses to different marketing stimuli, etc.,may vary between the different categories of buyers. They would also represent differentmarket segments calling for different marketing strategies.

At a very broad level, there are two types of business buyers, viz., commercialenterprises and non-commercial organisations.

Commercial EnterprisesThere is a vast variety of commercial buyers ranging from one-man enterprises to giant

corporations. Profit is an essential motive of their buying.

Ownership TypesOn the basis of the type of ownership of the enterprises, business buyers may be

classified as public sector, private sector, joint sector and cooperative sector units. Theownership pattern has important bearing on the buying behaviour. For example, in thepublic sector enterprises, decision-making, generally, is more bureaucratic. The classificationof enterprises on the basis of the nature of the ownership does not, however, mean thatpurchase behaviour of different enterprises within a category are similar. The decision-makingenvironment, however, may vary widely between the public enterprises. The navaratnas, forexample, have more autonomy among the public enterprises. Within the private sector, thedecision-making style may very widely, depending on size of the enterprise, ownership pattern,extent of professionalisation of management, etc.


PurposeOn the basis of the purpose of the purchase, buyers may be classified into manufacturers,

resellers and consumers.

Industrial units which add value by processing the goods they buy are a very importantsegment of the business market. The manufacturing sector in India, for example, accountsfor nearly one-fifth of the GDP.

The growing trend of outsourcing by original equipment manufacturers (OEMs) hassignificantly contributed to the growth of the industrial market. Nearly 1200 of the total ofabout 1500 items which make up the Indica car are outsourced, in contrast to the traditionalstrategy of Telco of manufacturing most of the components in-house. Relationship marketing,explained elsewhere in this book, assumes great significance here.

Another very important component of the business market is the reseller segmentconsisting of distributors, wholesalers and retailers. This broad segment of the business marketalso includes the marketing intermediaries of consumer goods. In other words, this categoryincludes resellers of industrial goods and consumer goods.

Service providers is a very important segment of the business market. Examples includefirms providing DTP service, photocopying service, telecommunication services, medicalservice, banking, insurance, etc. The fastest growing sector in many economies is the services.The developed economies are predominantly service economies in the sense that the servicesector generates the bulk of the employment and income in these economies.

There are many business enterprises which buy goods for in-house consumption, though,they are not used in manufacturing or providing commercial service. Such items includeoffice stationery, office equipment and furniture, furnishings, etc. As pointed out earlier,although, these items may fall under consumer goods in some other situation, marketing ofthese goods to business units is business marketing.

Non-Commercial OrganisationsThe business market also consists of a variety of non-commercial organisations, i.e.,

organisations whose activities are not commercial in nature. They may be grouped into twobroad types, viz., governmental and non-governmental. These include Central and Stategovernment organisations (including departments) and corporations, municipalities andpanchayats and non-commercial organisations under them.

Figure 1.4 in the chapter end Summary provides a summary view of the importantcategories of business buyers.

There is a wide spectrum of non-government organisation (NGOs) engaged in a varietyof activities, like the Red Cross, charitable societies, trusts, etc. Many of them make sizeablepurchases for in-house consumption, free distribution, or for supply at subsidised or reasonableprices.


COMPONENTS OF INDUSTRIAL MARKET

A very brief account of the major sectors of the economy constituting the businessmarket is given below.

Industrial SectorThe fact that the term Industrial Marketing has been traditionally used to refer to Business

Marketing indicates the preponderance of the industrial sector in the business market.

The industrial sector, obviously, is one of the most important constituents of the businessmarket. Industrial marketing encompasses all the input supplies (including capital goods,technology, consultancy and finance) to the numerous units of an enormous variety of this sector.

The industrial sector generates about one-fourth of the GDP of India. The industrialsector consists of the following three important sub-sectors according to Governmentclassification:

1. Manufacturing

2. Mining and quarrying

3. Electricity, gas and water supply

Manufacturing is the largest sector, accounting for over 80 per cent of the incomegeneration in the industrial sector. Electricity, gas and water supply contribute about 10 percent of the industrial sector’s share of the GDP.

Industrial goods marketed to the industrial units range from very high value machineryand equipment to items of relatively insignificant value like certain supplies and consumables,technologically highly sophisticated to very common items, and very specialised items togeneral items.

In short, the industrial sector is a market for all types of the goods described underthe section Classification of Business Goods — capital equipment and investments,manufactured materials and component parts, MRO supplies, process materials, businessservices, and raw materials.

Agricultural SectorAgricultural inputs and bulk of the traded agricultural produce fall within the ambit

of business market.

Business marketing encompass agricultural produce sold to processing units (includinghotels and restaurants). Unprocessed agricultural produce sold to ultimate consumers alsoinvolve business marketing when marketing middlemen are involved in the process.

The agricultural sector is a very diverse one consisting of fishery, animal husbandry,poultry, etc., besides plants and vegetation.

The share of the agricultural sector has been steadily declining in India — a commonphenomenon associated with economic development although, the aggregate value of theoutput of this sector has been rising. The agricultural sector still generates over one-fifth ofthe GDP of India and is the livelihood of a majority of the population.


The business market in the agricultural sector has been expanding due to, inter alia,technological and related developments.

Purchased inputs, like seeds, nutrients/feeds, etc., have grown in importance in theagricultural sector. The popularity of the high yielding varieties of seeds has also helpedincrease the demand for nutrients like fertilizers and plant protective items like pesticidesand insecticides. Demand for agricultural equipment, like tractors, trillers, pump sets, etc.,and implements has been on the increase.

The development of infrastructure in the agricultural sector, like irrigation systems,storage and transportation facilities, naturally creates considerable demand for several industrialproducts like construction materials and equipment. The development of irrigation facilitieswould increase demand for high yielding varieties of seeds, plant nutrients and protectants,and farm equipment and implements. This would, in turn, help the growth of the servicesector related to the agricultural sector like repair shops, shops selling spare parts and supplies,etc. The business of the financial sector to the agriculture would also grow.

The development of fisheries, poultry, animal husbandry and floriculture are more businessoriented, in respect of both the inputs and outputs, than the traditional agricultural sector.

Service SectorThe service sector is the largest sector in most of the economies. It is also the fastest

growing sector in many economies.

The service sector is an enormously wide spectrum. Following are some of the importantclasses within this sector:

Service BoothsThese are shops equipped to sell certain types of services like telecommunication (like

STD/ISD/local calls, fax, internet, etc.), DTP, photocopying, etc. There has been a very fastgrowth of this segment in India. This is an important market segment for a number ofequipment and accessories. The scale of operation of most of them is small.

Repair and Maintenance ServiceAs the industrial market expands, this segment also grows. Repairs and maintenance

service rendered to business units are business products. The capital goods and other goodsneeded to run the repair and maintenance business are industrial goods.

Rental ServiceThere has also been a growth of rental services. More and more products are entering

this segment. Products commonly found in this segment include, furniture, computers, T.V.,VCR, printers, several other equipment and implements, cassettes, publications, etc.

Hotels and RestaurantsThe hotel and restaurant business is growing fast. An increasing trend of eating out is

often associated with economic development. While small hotels and restaurants, generally,depend almost entirely on the consumer market, large, particularly star hotels may havesignificant sales to business and organisations. All purchases by all types of hotels andrestaurants are part of the business market.


TransportCommercial transport is a very important segment of the industrial market. There is

an enormous potential for further development of this sector in India. The new policy ofGovernment of India, which even allows foreign investment in this sector, the expresswaysand other transport infrastructure development programmes should accelerate the developmentof this sector.

As pointed out elsewhere, the outsourcing trend in the automobile industry increasesthe scope of industrial marketing. Relationship marketing has an important place here.

The development of the transport sector will spur the growth of several ancillary services.

The present transport system of the country comprises several modes of transportincluding rail, road, coastal shipping, inland water transport, air transport, etc. Transport hasrecorded a substantial growth over the years both in areas of network and in output of thesystem.

The railways and a significant part of the passenger road transport are in the publicsector.

Firms marketing to the transport sector have to select their segments and deviseappropriate strategies for the different segments.

TradeAlmost the entire trade sector is a business market. As pointed out earlier, even marketing

of consumer goods to the marketing intermediaries is business marketing. The place of thetrade sector in the business market is obvious from the fact that most of the goods, consumerand industrial, pass through intermediaries.

Finance and InsuranceThis sector is also an important market for several business goods. More importantly,

a considerable part of the business of this sector is to the business market. There are specialisedinstitutions to cater to the various needs of the business sector.

Health ServiceHealth service is a sector with enormous growth potential. This is also a market with

very diverse buyer characteristics. There are different systems of medicines with their ownunique characteristics. Organisational types vary from one man clinics/consulting to verylarge and full fledged hospitals, general types to high speciality ones, health resorts,organisations run on charity to corporate firms and so on. The marketing environment inrespect of each type would be different.

Non-Business OrganisationsThe non-business organisations sector forms a significant segment of the business market.

It buys both industrial and consumer goods. This sector encompasses government departmentsand organisations and non-government organisations (NGOs). A variety of organisations existin this sector like hospitals, schools, orphanages, organisations like Red Cross and othersocial service organisations.


International MarketAlthough, the international market for business goods falls within above-mentioned

sectors of the national economies, it deserves a special mention because the growingimportance of this large market.

Business products (both industrial products and consumer products undergoing businessmarketing) dominate the global trade. Even industrial goods taken alone make up a majorpart of the world trade.

Fig.1.5 at the end of the chapter presents a summary view of the components of theIndustrial Market.

SUMMARY

Industrial goods/services are those goods/services which are used (mostly commercially) in theproduction /rendering of goods/services, such as capital goods, raw materials, intermediates and MRO supplies.

Industrial Marketing, also known by such names as Business Marketing, Business to Business Marketing,Commercial Marketing, Institutional Marketing and Organisational Marketing, “consists of all activities involvedin the marketing of product and services to organisations (i.e., commercial enterprises, profit and non-profitinstitutions, government agencies, and resellers) that use products and services in the production of consumeror industrial goods and services, and to facilitate the operation of their enterprises.”

Figure 1.2 outlines the scope of business marketing.

Industrial Market

Marketing of Industrial Goods Marketing of Consumer Goods to:

Business Enterprises Non-Business Organisations

Organisations Organisationsbuying for in-house buying for in-house

Resellers Business Consumers consumption or consumption orbusiness promotion charitable distribution

Fig. 1.2: Dimensions of Industrial Marketing

On the basis of how the goods are used, business goods may be classified as shown in Figure 1.3.


ManufacturedMaterials and

Component Parts

MROsupplies

Processmaterials

Businessservices

Rawmaterials

Overlapcategories

CapitalEquipment

and Investments

Industrial Goods

Fig. 1.3: Classification of Industrial Goods

There are a number of categories of business buyers. The purpose of buying and their buying behaviourmay differ widely. Figure 1.4 provides a summary view of the important categories of business buyers.

Fig. 1.4: Types of Business Buyers

The industrial market consists of several major sectors of the economy, such as (1) the industrialsector consisting of three important sub-sectors according to Government classification: manufacturing;mining and quarrying; electricity, gas and water supply; (2) the agricultural sector which is a verydiverse one consisting of fishery, animal husbandry, poultry, etc., besides plants and vegetation; (3)the service sector which is an enormously wide spectrum; (4) the non-business organisations sector,encompassing government departments and organisations and non-government organisations (NGOs),which buys both industrial and consumer goods. A variety of organisations exist in this sector, likehospitals, schools, orphanages, organisations like Red Cross and other social service organisations.It is depicted in Figure 1.5.

Publicsector

enterprises

Privatesector

enterprises

Cooperativeenterprises

Jointventures

Governmentorganisations Cooperatives

Voluntaryorganisations

large, medium, small and tiny units

Processing enterprises, Industrial/consumer goods resellers, Service enterprises

Industrial Customers

Commercial Organisations Non-Commercial Organisations


Fig. 1.5: Components of Business Market

REFERENCES

1. Frank G. Bingham Jr., Business Marketing Management (Lincolnwood, Illinois: NIC Business Books,1998), p. 5.

2. Cited by Robert R. Reeder et al., Industrial Marketing (New Delhi: Prentice Hall of India, 1997),pp. 6-7.

3. Robert W. Haas, Industrial Marketing Management (New York: Petrocelli/Charter, 1976), p. 2.4. Frank G. Bingham Jr., op. cit., p. 4.5. Andrew C. Gross et al., Business Marketing (Delhi: A.I.T.B.S. Publishers & Distributors, 1998), p. 6.6. Eugene J. Kelley and Lisa R. Hearne, “Management Education and the Broadening Role of Business-

to-Business Marketing,” Report-6-1986, Institute for the Study of Business Markets, College of BusinessAdministration, Pennsylvania State University. [Cited by Michael D. Hutt and Thomas W. Speh, BusinessMarketing Management (Chicago: The Dryden Press, 1989, p. 4)]

7. Andrew C. Gross et al., op. cit., p. 7.8. Michael D. Hutt and Thomas W. Speh, Ibid., p. 149.

REVIEW QUESTIONS

1. Explain the meaning of industrial marketing and examine the relevance of specialised study of IndustrialMarketing.

2. Give an account of the classification of business goods. Examine the marketing implications of eachcategory.

3. Describe the different categories of industrial buyers.4. Describe the important components of the industrial market.5. Write short notes on the following:

(1) Overlap categories of goods(2) Non-business segment of the business market(3) Difference between Industrial Marketing and Business Marketing(4) Standard Industrial Classification.

6. Write very short answers (1 to 3 sentences) to the following questions:(1) Define industrial marketing.

(2) What are business goods?

(3) What is Standard Industrial Classification (SIC)?

(4) What is meant by basic industry?

(5) What are intermediate goods?

(6) What are MRO supplies?

Industrialsector

Agriculturalsector

Servicessector

Internationalmarket

Non-businessmarket

Industrial Market


ANNEXURE 1.1

ITC (HS) CLASSIFICATION AND SIC CODES

SIC Division Structure

Division A: Agriculture, Forestry, and Fishing

Major Group 01 : Agricultural Production Crops Major Group 02 : Agricultural Production Livestock and Animal Specialties Major Group 07 : Agricultural Services Major Group 08 : Forestry Major Group 09 : Fishing, Hunting, and Trapping

Division B: Mining

Major Group 10 : Metal Mining Major Group 12 : Coal Mining Major Group 13 : Oil and Gas Extraction Major Group 14 : Mining and Quarrying of Nonmetallic Minerals, Except Fuels

Division C: Construction

Major Group 15 : Building Construction General Contractors and Operative Builders Major Group 16 : Heavy Construction Other Than Building Construction Contractors Major Group 17 : Construction Special Trade Contractors

Division D: Manufacturing

Major Group 20 : Food and Kindred Products Major Group 21 : Tobacco Products Major Group 22 : Textile Mill Products Major Group 23 : Appare and Other Finished Products Made From Fabris and

Similar Materials Major Group 24 : Lumber and Wood Products, Except Furniture Major Group 25 : Furniture and Fixtures Major Group 26 : Paper and Allied Products Major Group 27 : Printing, Publishing, and Allied Industries Major Group 28 : Chemicals and Allied Products Major Group 29 : Petroleum Refining and Related Industries Major Group 30 : Rubber and Miscellaneous Plastics Products Major Group 31 : Leather and Leather Products


Major Group 32 : Stone, Clay, Glass, And Concrete Products Major Group 33 : Primary Metal Industries Major Group 34 : Fabricated Metal Products, Except Machinery And

Transportation Equipment Major Group 35 : Industrial and Commercial Machinery And Computer

Equipment Major Group 36 : Electronic And Other Electrical Equipment And Components,

Except Computer Equipment Major Group 37 : Transportation Equipment Major Group 38 : Measuring, Analyzing, And Controlling Instruments;

Photographic, Medical And Optical Goods; Watches And Clocks Major Group 39 : Miscellaneous Manufacturing Industries

Division E: Transportation, Communications, Electric, Gas, And Sanitary Services

Major Group 40 : Railroad Transportation Major Group 41 : Local And Suburban Transit And Interurban Highway Passenger

Transportation Major Group 42 : Motor Freight Transportation And Warehousing Major Group 43 : United States Postal Service Major Group 44 : Water Transportation Major Group 45 : Transportation By Air Major Group 46 : Pipelines, Except Natural Gas Major Group 47 : Transportation Services Major Group 48 : Communications Major Group 49 : Electric, Gas, And Sanitary Services

Division F: Wholesale Trade

Major Group 50 : Wholesale Trade — durable Goods Major Group 51 : Wholesale Trade — non-durable Goods

Division G: Retail Trade

Major Group 52 : Building Materials, Hardware, Garden Supply, And MobileHome Dealers

Major Group 53 : General Merchandise Stores Major Group 54 : Food Stores Major Group 55 : Automotive Dealers And Gasoline Service Stations Major Group 56 : Apparel And Accessory Stores Major Group 57 : Home Furniture, Furnishings, And Equipment Stores Major Group 58 : Eating And Drinking Places Major Group 59 : Miscellaneous Retail


Division H: Finance, Insurance, And Real Estate

Major Group 60 : Depository Institutions Major Group 61 : Non-depository Credit Institutions Major Group 62 : Security And Commodity Brokers, Dealers, Exchanges, And

Services Major Group 63 : Insurance Carriers Major Group 64 : Insurance Agents, Brokers, And Service Major Group 65 : Real Estate Major Group 67 : Holding And Other Investment Offices

Division I: Services

Major Group 70 : Hotels, Rooming Houses, Camps, And Other Lodging Places Major Group 72 : Personal Services Major Group 73 : Business Services Major Group 75 : Automotive Repair, Services, And Parking Major Group 76 : Miscellaneous Repair Services Major Group 78 : Motion Pictures Major Group 79 : Amusement And Recreation Services Major Group 80 : Health Services Major Group 81 : Legal Services Major Group 82 : Educational Services Major Group 83 : Social Services Major Group 84 : Museums, Art Galleries, and Botanical and Zoological

Gardens Major Group 86 : Membership Organizations Major Group 87 : Engineering, Accounting, Research, Management, And

Related Services Major Group 88 : Private Households

Division J: Public Administration

Major Group 91 : Executive, Legislative, And General Government, ExceptFinance

Major Group 92 : Justice, Public Order, And Safety Major Group 93 : Public Finance, Taxation, And Monetary Policy Major Group 94 : Administration Of Human Resource Programs Major Group 95 : Administration Of Environmental Quality And Housing

Programs Major Group 96 : Administration Of Economic Programs Major Group 97 : National Security And International Affairs Major Group 99 : Non-classifiable Establishments


Example

Division D: ManufacturingThe manufacturing division includes establishments engaged in the mechanical or

chemical transformation of materials or substances into new products. These establishmentsare usually described as plants, factories, or mills and characteristically use power drivenmachines and materials handling equipment. Establishments engaged in assemblingcomponent parts of manufactured products are also considered manufacturing if the newproduct is neither a structure nor other fixed improvement. Also included is the blendingof materials, such as lubricating oils, plastics, resins, or liquors. The materials processed bymanufacturing establish-ments include products of agriculture, forestry, fishing, mining, andquarrying as well as products of other manufacturing establishments. The new product ofa manufacturing establishment may be finished in the sense that it is ready for utilisation orconsumption, or it may be semi finished to become a raw material for an establishmentengaged in further manufacturing. For example, the product of the copper smelter is the rawmaterial used in electrolytic refineries; refined copper is the raw material used by copperwire mills; and copper wire is the raw material used by certain electrical equipmentmanufacturers.

The materials used by manufacturing establishments may be purchased directly fromproducers, obtained through customary trade channels, or secured without recourse to themarket by transferring the product from one establishment to another which is under thesame ownership. Manufacturing production is usually carried on for the wholesale market,for interplant transfer, or to order for industrial users, rather than for direct sale to the domesticconsumer.

There are numerous borderline cases between manufacturing and other divisions ofthe classification system. Specific instances will be found in the descriptions of the individualindustries. The following activities, although not always considered as manufacturing, are soclassified: Milk bottling and pasteurizing; Fresh fish packaging (oyster shucking, fish filleting);Apparel jobbing (assigning of materials to contract factories or shops for fabrication or othercontract operations) as well as contracting on materials owned by others; Publishing; Readymixed concrete production; Leather converting; Logging; Wood preserving; Various serviceindustries to the manufacturing trade, such as type setting, engraving, plate printing, andpreparing electro typing and stereotype plates, but not blueprinting or photocopying services;Electroplating, plating, metal heat treating, and polishing for the trade; Lapidary work forthe trade; Fabricating of signs and advertising displays.

There are also some manufacturing-type activities performed by establishments whichare primarily engaged in activities covered by other divisions, and are, thus, not classifiedas manufacturing. A few of the more important examples are: Agriculture, Forestry, andFishing. Processing on farms is not considered manufacturing if the raw materials are grownon the farm and if the manufacturing activities are on a small scale without the extensiveuse of paid labour. Other exclusions are threshing and cotton ginning, mining. The dressingand beneficiating of ores; the breaking, washing, and grading of coal; the crushing andbreaking of stone; and the crushing, grinding, or otherwise preparing of sand, gravel, andnon-metallic chemical and fertilizer minerals other than barite are classified in Mining.


Construction. Fabricating operations performed at the site of construction by contractors arenot considered manufacturing, but the prefabrication of sheet metal, concrete, and terrazzoproducts and similar construction materials is included in the Manufacturing Division.Wholesale and Retail Trade. Establishments engaged in the following types of operations areincluded in Wholesale or Retail Trade: cutting and selling purchased carcasses; preparingfeed at grain elevators and farm supply stores; stemming leaf tobacco at wholesaleestablishments; and production of wiping rags. The breaking of bulk and redistribution insmaller lots, including packaging, repackaging, or bottling products, such as liquors orchemicals, is also classified as Wholesale or Retail Trade. Also included in Retail Trade areestablishments primarily engaged in selling, to the general public, products produced on thesame premises from which they are sold, such as bakeries, candy stores, ice cream parlours,and custom tailors. Services. Tyre retreading and rebuilding, sign painting and lettering shops,computer software production, and the production of motion picture films (including videotapes) are classified in Services. Most repair activities are classified as Services. However,some repair activity such as shipbuilding and boatbuilding and repair, the rebuilding ofmachinery and equipment on a factory basis, and machine shop repair are classified asmanufacturing.

Examples

Major Group 20: Food And Kindred Products

Industry Group 201: Meat Products

2011 Meat Packing Plants

2013 Sausages And Other Prepared Meat Products

2015 Poultry Slaughtering And Processing

2011 Meat Packing Plants

Establishments primarily engaged in the slaughtering, for their own account or on acontract basis for the trade, of cattle, hogs, sheep, lambs, and calves for meat to be sold orto be used on the same premises in canning, cooking, curing, and freezing, and in makingsausage, lard, and other products. Also included in this industry are establishments primarilyengaged in slaughtering horses for human consumption. Establishments primarily engagedin slaughtering, dressing, and packing poultry, rabbits, and other small game are classifiedin Industry 2015; and those primarily engaged in slaughtering and processing animals notfor human consumption are classified in Industry 2048. Establishments primarily engaged inmanufacturing sausages and meat specialties from purchased meats are classified in Industry2013; and establishments primarily engaged in canning meat for baby food are classified inIndustry 2032.

Bacon, slab and sliced-mitse Beef-mitse Blood meal Boxed beef-mitse Canned meats, except baby foods and animal feeds-mitse


Corned beef-mitse Cured meats-mitse Dried meats-mitse Frankfurters, except poultry-mitse Hams, except poultry-mitse Hides and skins, cured or uncured Horsemeat for human consumption-mitse Lamb-mitse Lard-mitse Luncheon meat, except poultry-mitse Meat extracts-mitse Meat packing plants Meat-mitse Mutton-mitse Pork-mitse Sausages-mitse Slaughtering plants: except animals not for human consumption Variety meats edible organs-mitse Veal-mitse

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