Industrial Marketing

Business Markets, Products & Environment

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Antilock Braking / Tire manufacturersSupplies to Ford/ Fiat/ Suzuki/ TataParticipate in designHuge volumesFor trucksVolumesCar MechanicAvailabilityPriceDiscountFitmentInsurance companyStatistics on failures because of tires

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Product is the sameBut can you market it the same way?No. value propositions are differentProf SKBU studentsPGDMSP Jain collegeSame business marketing has to be marketed

differently

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Why learn classification?

What will you get classifying customers?You begin to understand the

business environment we operate

Why categories products?Help us to understand competitive

environmentLooking inward?

We know our internal affairs

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Industrial customers- Business market classification

Commercial enterprisesreflect a segment of “ FOR PROFIT” Actual user- Harley Davidson buying capital goodsOEM –Intel and Dell

Dell is an OEM and Intel a supplier to OEResellers / Value added resellers

intermediaries / merchantsInstitutions

Hospitals, prisons, schoolsGovernment Customers

ONGC, BHELRailways, State electricity

Cooperatives – AMUL, NIRMAOverlap categoryFacilitators

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What are the possible traits of these segments?

Commercial enterprisesreflect a segment of “ FOR PROFIT” large and medium organizations could have buying

centersMaterial planning, Vendor rating, EOQ could be in placePurchase managers are professionalsActual user- Competitive environment

Harley Davidson buying capital goodsOEM –Co- branding

will squeeze a supplier . Why?Resellers arithmetic is different

Profits and sales volumeflexible payment terms and credit facility

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What are the possible traits of these segments?

Government customersDGS & DCentralized sometimesProduct registrationDeputation of inspectors for vendor ratingTenders in National news paperSupply of spares for longL1, L2 L3sealed biddingBid & performance securityPreference for say SSI, why?

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Institutional markets…Schools,hospitals,prisons,nursing homes

Profit perhaps may not be the buying objective

Cost minimization may not be the threshold

Low budget the traits

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Classification of Goods in Business Markets

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ENTERINGENTERINGExpense accountExpense account

Raw MaterialsRaw MaterialsFarmFarmOreOre

ManufacturedManufacturedComponent matlComponent matlComponent partsComponent parts

FOUNDATION FOUNDATION Depreciation accountDepreciation account

Land Land BuildingBuildingMachinesMachines

AccessoriesAccessoriesFork liftFork liftDesk, furnitureDesk, furniture

FACILITATING GOODS expense or voucher accountFACILITATING GOODS expense or voucher account

Lubricants , PaperLubricants , Paper

Business servicesBusiness servicesR & M , Legal, AccountingR & M , Legal, Accounting

Raw Materials

enter the production process with little or no alteration – natural gas, Iron Ore , Steel , CementMarketed either as user or OEM customerGas for Coke Ovens – UserFruits for Fruit Processing – OEM

Manufactured Material and component partsSome amount of processing – Latex into RubberCopper into wiresAluminum into extruded shapesHDPE into molded partsComponent Parts could be Switches, Gears which are installed directly into products

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How do you market them?Most component parts and materials are standardized – why?Normally purchased in large quantitiesContractual basis by OEMWhat kinds of channel ?However, some components / parts are custom madeWhat is co-creation of value ?New product development – how is it differentIf Customer createsIf supplier createsTyres in a Car – How to market and decide on a channel ?

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Capital GoodsUsed in the production processBig ticket items Consists of Installations and accessory equipmentsInstallationsGenerators, Lathes, Furnaces, Computers and custom made equipmentsAccessoriesEnhances the functioning of InstallationUPS / Printers for a computers

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UPS – TVS ElectronicsSells UPS through TECH SPECIFICIt has National distributors / Area distributorsAllows distributors to carry competitors productsWhy would they do so?

Installations / Capital GoodsDirect channelbut should have pre sales & after sales serviceProduct is the central forcePersonal selling –paramount importanceengineering and product design supportInitial price, distribution, Advt play lesser role

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Industrial ConsumablesLubricants, Grease , Paper, Printer ribbon etcDealers and distributors

       

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Industrial Buying ReciprocitySplit the orderUse of Internet – biddingOutsourcingBuying for supplier

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Industrial customers purchasing orientation

1.Buying orientation Short term focus Follow lowest price Gains power by commoditization and multi

sourcing Buyers avoids risk for the fear of criticism

2.Procurement orientation Strategic focus Collaborative relationship with supplier Work closely with other functional areas

3. SCM orientation Deliver value to end users Outsource non core activity Support collaborative relationship with major

suppliers

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Classifying Business market environment

Internal Publics- free lampFinancial Publics- stakeholders meetingIndependent press- RILPublic interest group- Mac switch to paper trays

Physical environment- endowment Production uncoupled with employment

Ecological – CFC

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Classifying Business market environment

Technological environmentCopper/ optic fiberCarburetor / MPFIVacuum technology / TransistorsVLSI/ Microprocessor / ICComputer to furnitureComplementary technology

Competitive environmentPURE COMPETITIONmany buyers and sellers , no single entity strong to call shots, not differentiated – RMMONOPOLISTICMany buyers and sellers, can be differentiated, Branding, Advt and PS

importantOLIGOPOLISTICVery few sellers, very sensitive to each others strategyAuto/ airline/ cell phonePURE MONOPOLY

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Classifying Business market environment

Demographic environmentBangalore – Builders

Natural EnvironmentAluminum substituting trees

Geographic environmentBorderlessDeath of distances

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