industrial markeing mms- sem- i

7/27/2019 Industrial Markeing MMS- Sem- I

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Industrial marketing which somemarketing experts Fred Webster and

Jerry Wind have described as a

Sleeping Giant, has been the subjectof very little research.

Despite the fact that it generateshigher volumes of sales thanconsumer marketing.


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Internet has revolutionized industrialmarketing. It has helped bring downthe communication costs.

E-procurement and e-marketplaceshave gained popularity amongorganizational buyers.


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Nature of competition has undergone a

sea change in the industrialmarketplace.

Industrial marketing has reached a

stage where we can say, The BusinessNetwork is the Business Strategy.

Today, competition is between value-

chain partnerships rather than betweenindustrial firms.


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Industrial marketing is the marketing of

products and services to businessorganizations.

Business firms buy products and services tosatisfy many objectives like production of

goods and services, making profits, reducingcosts, and so on. Opposite to consumermarketing is the marketing of products andservices for their own consumption.

It includes manufacturing companies,government undertakings, private sectororganizations, educational institutions,hospitals, distributors, and dealers.


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Industrial marketing consists of all

activities involved in the marketing ofproducts and services to organizations(i.e., commercial enterprises, profit and

not-for-profit institution, governmentagencies and resellers) that useproducts and services in the production

of consumer or industrial goods andservices, and to facilitate the operationof their enterprises.


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Areas Industrial Markets Consumer MarketsNature ofdemand

Derived (it is dependupon consumer goods)

Direct

Price Complex pricingpoliciesProducts can be leasedCompetitive biddingEvery transaction isimportant for anindustrial marketer

Simple pricingpoliciesProducts can beleasedList price sellingSingle transactionmay not influenceprofit margin


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Areas Industrial Markets Consumer MarketsServiceCharacteristics Service, timelydelivery andavailability veryimportant

Service, delivery,and availabilitysomewhatimportantChanneldistribution

More directFewerintermediaries/middlemen

IndirectMultiple layers ofintermediaries

PromotionalCharacteristics Emphasis onpersonal selling Emphasis onadvertising andsales promotion


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Areas Industrial Markets Consumer MarketsBuyerBehaviour

Involvement of variousfunctional areas in bothbuyer and supplierfirmsPurchase decisions aremainly made onrational/performancebasisTechnical expertiseStable interpersonalrelationship betweenbuyers and sellers

Involvement of familymembersPurchase decisionsare mostly made onphysiological/social/psychological needsLess technicalexpertiseNon-personalrelationship


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Areas Industrial Markets Consumer MarketsDecisionMaking Quality is checked bythe customer

Informed buyerCustomer is aprofessional in decisionmakingLess emotion involvedin decision makingCustomers takeimpersonal decisionsMore number ofinfluencersMore emphasis isplaced on negotiationskills and the negotiationprocess is time

Few quality tests areconducted by theconsumersRelatively ignorantbuyersConsumer is relativelyan amateur in decisionmakingIrrational decisions arepossibleEmotion is present indecision makingConsumers takepersonal decisionsNegotiation is lessimportant


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Demand characteristics:-The nature of demand for industrialproducts is derived, i.e. demand for

industrial goods depends on thedemand for consumer goods.


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Market Characteristics:-While the number of customers ofconsumer products and services is verylarge, the number of customers of industrialproducts and services is very small. But thissmall number of customers is responsiblefor large scale as well as repetitive buying.


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Product Characteristics:-Industrial products include bothstandardized and tailor-made products.Standardizedproducts aremanufactured on the basis ofspecifications developed bymanufactures of products and services

and meant for general use andapplication. Tailor products are thosethat are manufactured to customerdesigned specifications. They are verycom lex and technical.


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Price Characteristics:For standardized industrial products, Pricesare governed by price list. Customersnegotiate on these prices and get a betterdeal.Commercial terms & conditions such aspayment terms, delivery terms, deliveryschedules, delivery, quantity per shipment,fright and insurance are negotiated.Many firms and public sector follow a systemof Rate Contract wherein the price ofproducts and terms of business are fixed for aspecific period of time.


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Promotion characteristics:Product characteristics that industrialmarketing calls for a close and sustained pre-and post-sale interaction between suppliersand customers. This can be achieve through

strong personal selling.The role of advertising and sales promotionare either to make customers aware or remind

them about purchasing becomes redundant(unnecessary) in industrial marketing.


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Behaviour characteristics:Industrial buyers are knowledgeable,

technically sound and skilled in negotiations.They need good pre-sales and post-salessupport from the suppliers.Pre-sales: Is in the form of providing timelytechnical details and drawings, makingsuggestions, prompt handling of their queriesor clarifying their doubts, timely submission ofoffers etc.

Post-sales: It includes courtesy calls, informingcustomers of changes in design, companynews, advice to buy spares, timely supply ofspares and service and training.


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Decision making unit in B2B, markets is

highly complex or at least it has thepotential to be so.

Ordering products for low value and low

risk (paper clips)may well be theresponsibility of the office junior.

However purchase of a new plant that is

vital to a business may involve a largeteam who makes their decision over aprotracted period.


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Buyers as more rational than theirconsumer .

B2B buyers has to make a profit

each month. They are buying a product for thepurpose of ROI (return on

investment). B2B buyers buy products Whatthey want, not what they Need.


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Purchase of an industrial productfrequently requires a qualified expert.

Industrial products, frequently have tobe integrated into wider systems and asa results have very specific requirements

and need intimate, expert examinationand modification.


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It is difficult to imagine a turbine

manufacturer or commercial websitedesign buyer having a look at three orfour products and then choosing on

simply because it looks nice.No, It involved a whole host oftechnical, productivity and safety

issues, whilst the choice of websitemight be based on its integration into awider marketing campaign.


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Behavioral or needs vary less than that of aconsumer audience. Whims (impulse),insecurities, indulgences (excess)and so on arefar less likely to come to the buyers mind when

the purchase is for a place of work rather thanfor oneself, the buying decision involvesnumerous colleagues, work place norms, timeetc.

Need based segments:- Price-focused segment

Quality and brand-focused segment

Service-focused segment

A partnership-focused segment


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The important features of B2B markets is theimportance of personal relationship.

A small customer base that buys regularlyfrom the B2B supplier is relatively easy to

talk. Sales and technical representatives visit the

customers.

People are on first name terms.

Personal relationships and trust develop.

It is not unusual for a B2B supplier to havecustomers that have been loyal and

committed for many years.


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Shift form sellers market to buyers market: Many industrial products such as steel, cement,

transport vehicles, turbines, telephone cables,tractors, computer hardware, several bulk drugsand chemicals and the like, Indian markets have

now turned from sellers market to buyersmarket.

This has happen due to rise in production,excess capacity in certain sectors and liberal

imports. Become more conscious about quality and cost.

Customer orientation is a consequences of shiftin the demand supply situation.


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A concept of application engineering (identifying

new application of the existing products isemerging fast in this sector.

Improved product quality: quality assurancerather than quality control has become the order

of the day. ISO 9000 certification is an indicator of growing

industrial concern.

About 85% production in industrial machines andmachine tool sectors in India is now from the ISO9000 certified firms.(According to J.S. Panwar, BeyondConsumer Marketing)


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Up gradation of technology: In order toimprove quality and reduce cost many firmshave upgraded their systems and technologies.

Steel Authority of India (SAIL), earmarked 210billion to be spent between 1994 and AD 2001

for modernization of its plants, which the firmhas already spent in its first phase ofmodernization completed 1994.

Tisco has spent Rs. 50 billions to modern tomodernize its Jamshedpur plant.


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Customer service: service has become athrust area for several well-knownindustrial firms in the country.

Some lesser known firms have been

benchmarking themselves against theservice quality of Xerox, Wipro andToyota.

Firms like Kirolskar Engines, Lucas- TVS,Cummins Ltd, Larsen & Toubro (L&T)and Xerox are setting examples withtheir In service lies success motto.


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Increased Marketing Interaction withR&D: Firms are trying to produce moreuser friendly goods with the help ofinputs from marketing.

Relationship Marketing: Industrialmarketing is building relationship withthe consumer and dealers.

Trust is an integral part of buyersdecision on making major investmentsin the sellers products, so it has to be

first priority of the marketer.


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Diversification: Firms are seekingdiversification mainly to become multi-product, multi-market organizations andexploit the untapped opportunities that

exist in the allied on new areas. Some ofthe examples of successful diversificationof Indian firms are listed below:-


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Escorts-the manufacturer of tractors, bikes,shock absorbers, railway coupling equipment,etc., have ventured into production of floatingdry docks.

Sunderam Clayton, manufacturers ofautomobile ancillaries, air brake systems, etc.,are now moving into railway signal equipmentmanufacturing.

BPL-Sanyo, better known as an entertainmentelectronics and home appliances firm is nowmoving into high-reach satellitecommunication equipment and diagnostic

systems.


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Reliance Industries has successfully diversifiedinto telecommunication business.

Telco (now Tata Motors) has diversified intopassenger car segment.

Videocon is entering into real estate andconstruction business.


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Nirma chemicals setting up turnkey powerprojects in Gujarat.

Diversification might improve thebottom lines of firms if they do theirhomework well and support new

products with sound marketingstrategies.


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Top management persons:It consists of managing director, director,president, vice-president or general manager.

Technical persons (or functions)The technical persons are design engineers,production manager, maintenance manger,

quality control manager, R&D manager, andindustrial engineers.


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Buyers/purchasers (or purchase/MaterialsDepartment):They are senior executives or mangers orpurchase officers or assistants.They coordinate with technical persons, topmanagement, accounts or finance person in

organization.

Accounts/Finance persons (or Department):-While finalizing commercial terms such as

modes of payment, assurance of bankguarantees, financial approval of capitalpurchases, issuing payments to suppliers,and so on plays a very important role.


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Marketing function:When a purchase decision has an impact onthe marketability of a firms product,marketing people become influencers in thebuying decision process.

E.g.:A firm manufacturing and marketing electricmotors had a change its packing due to

damages caused to the product intransportation. This in turn affected thesatisfaction level of the customers.


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Thank You

industrial markeing mms- sem- i

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