1

INDUSTRIAL MARKETING

Dr. Vinosh Peter K.V.

Case StudyYou have just been hired as a product manager with profit responsibility for your company brand of Industrial robot. In preparation for developing a marketing plan, you decide to learn more about the buying behavior of Industrial buyers in your market. QuestionHow would you go about setting objectives for this study? Discuss.

2

Buyer Behavior In industrial marketing, the buying process is more difficult

as compared to consumer marketing. The purchase decisions in industrial marketing are based on many factors, such as compliance with product Specifications product quality, availability, timely supply, acceptable payment and other commercial terms cost effectiveness, after-sales service, and so on rather than on social and psychological needs.

The buying decisions generally take a longer time and involve many individuals from technical, commercial/materials, and finance departments. After the initial offer made by a seller, there are negotiations and exchange of information between both the prospective buyer and the seller’s organization.

3

Therefore, inter-organisational contacts take place and interpersonal relationships are developed. The relationships between the sellers and buyers are highly valued and they become stable in the long run because Of a high degree of interdependence. Changes are few and occur relatively slowly. Buyers charge problems in searching out and qualifying suppliers. The cost of selecting a supplier who cannot meet delivery requirements or who delivers an unsatisfactory product can be high.

Thus, the purchasing firm must be certain of a potential supplier's technical, administrative, and financial capabilities. In contrary, in consumer marketing the relationship between a buyer and a seller is non-personal. Consumers change their purchasing habits frequently and the buying decisions are always based on physiological, social and psychological needs of the members of a family household.

4

MEANING OF INDUSTRIAL MARKETINGMEANING OF INDUSTRIAL MARKETING Industrial marketing is the marketing of goods

and services from one business to another. Industrial marketing is also known as B2B

(business to business) marketing

Business Marketing” or “Industrial Marketing” are used interchangeably

5

Industrial Marketing is the marketing of the products and services to business organizations.

Business organization include manufacturing companies, government undertakings, private sector, educational institution etc.

6

B2B And B2CB2B And B2C

The Consumer Market (B2C) and the Business Market (B2B) at Dell, Inc.

B2B

Customers:

B2C

Individuals & Households

BusinessesGlobalLarge corporationsSmall & Medium sized businesses

InstitutionsHealthcareEducation

GovernmentFederalStateLocal

SelectedProducts:

PCsPrintersConsumer ElectronicsSimple Service Agreements

PCsEnterprise StorageServersComplex Service Offerings

Differences between Industrial and Consumer MarketingDifferences between Industrial and Consumer Marketing

Bases Industrial Market Consumer Market

Marketcharacteristics  

Geographicallyconcentrated,Relatively fewer buyers

Geographicallydisbursed,Mass markets

Productcharacteristics 

Technical complexity,Customized

Standardized

ServiceCharacteristics 

Service, timely deliveryand availability veryimportant 

Service, delivery, andavailability somewhatimportant

Decisionmaking 

Observable stages,Distinct

Unobservable,Mental stag

     

Why study industrial marketing Why study industrial marketing ??

The “ Historical weakness in the firms” has been the lack of marketing orientation. Which has resulted in

9

A failure to provide proper guidance and stimulation for research and development of new products.

A failure to exploit and develop markets for new products.

An inability to define new methods for promoting products to customers in the face of major increases in the cost of media advertising and personal selling.

A failure to innovate in distribution and other areas to keep up with changing requirements of industrial customers doing business on a multinational basis.

10

An inability to refine and modify product positioning.

A tendency for product managers and higher levels of management to approach problems in the same old way.

11

FEATURES OF INDUSTRIAL FEATURES OF INDUSTRIAL MARKETINGMARKETING

FEWER; BUT LARGER MARKET: Business buyers will be very less as compared to

consumer buyers; but they purchase in bulk or more quantities.

CLOSE RELATIONS: Relation between seller and buyer have to be kept

very close and professional. Because once the relations are build; can’t be changed easily as it reflects huge profit.

12

COMPLEX BUYING PROCESS: very complex procedure is adopted by business

buyers; because before purchasing, the approval is required from different officials and authorities.

CONTINUOUS SALES CALLS: To finalize the deal, it requires constant follow-

ups and continuous sales calls.

13

FEATURESFEATURES

EXPERTISE SELLING SKILLS: sharp selling skill is required to sell the product to industrial

buyers. As they are purchasing in bulk, they will not be easily convinced. Deep product knowledge is required.

INFLUENCES: To finalize the product, different authorities and officials

will interfere and influence the decision to purchase the product.

14

FEATURESFEATURESGEOGRAPHICALLYCONCENTRATED

BUYER:. Most agricultural output comes from a

relatively small member of states/(Country). This geographical concentration of producers helps to reduce the costs of selling

15

IMPORTANCE OF INDUSTRIAL MARKETINGIMPORTANCE OF INDUSTRIAL MARKETING

MAJOR SHARE OF REVENUE: Major share of revenue is generated by selling the product

to business buyers as they purchase in bulk therefore it is important to take care of business deals.

LESS EXPENDITURE: as the business buyer are very few, no much expenditure is

required to reach and to contact them.

16

IMPORTANCEIMPORTANCE

LESS PROMOTIONAL EFFORTS: Free gifts, demonstration etc is not required; because the

product is not to be shown to mass audience.PERMANENT CUSTOMERS: Once the relations are built, business buyers will purchase

the products for longer period of time. Therefore the future is secured if existing buyers are satisfied properly.

17

18