BUSINESS / INDUSTRIAL MARKETING.

By Prof. Raghavendran.V

Business Marketing.... Module 1, Prof Raghavendran.V

Business Marketing.... Module 1, Prof Raghavendran.V

Now, Why we have study or know about Industrial Marketing?? Any answers..

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We need study BM due to.

Lack of marketing orientation like Failure of R&D of the new products. Failure to exploit & develop markets for new products. Failure to innovate in distribution & keys areas of marketing. Inability to refine & modify the product positioning.
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Define Business Marketing.

Business marketing is referred as Industrial marketing or B2B marketing or organizational marketing. It is defined as marketing of products & services to business organizations. Business organizations include Manufacturing companies, PSUs, Pvt companies, Educational institutes, hospitals, distributors, and dealers.
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INDUSTRIAL MARKETING Vs CONSUMER MARKETING Diff.

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Task for both BM & CM

Target markets. Finding out needs & wants of the target markets. Developing products and its services. Evolving marketing strategies to reach and satisfy target customers, better and faster than competitors.

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Differences are
BM.. a) Geographically concentrated. b) Technical complexity. c) Customized. d) Service, timely delivery and availability is very important

CM. a) Geographically distributed. b) Standardized. c) Service, delivery and availability is somewhat important. Cont

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Difference follows..
e) Involvement of various functional areas in both buyer & supplier firms. f) Purchase decisions are mainly made on rational/ performance basis g) Technical expertise h) Stable relationship b/w buyer & d) Involvement of family members. e) Purchase decisions are mostly made on physiological/ social/ psychological needs. f) Less technical expertise. g) Non- personal Business Marketing.... Module 1, Prof Raghavendran.V relationship.

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Difference follows
i) More direct. j) Fewer middlemen. k) Emphasis on personal selling. l) Competitive bidding & negotiable prices. m) List prices for standard products. h) Indirect. i) More layers of Middlemen. j) Emphasis on advertising. k) List prices or MRP of the product.

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Characteristics:
Market

characteristics Product characteristics Distribution channel characteristics Promotional characteristics Price characteristics
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Industrial Demand
Demand for industrial products & services does not exist by itself. It is derived from the ultimate demand for consumer goods. So therefore we can say that Industrial demand is derived demand.
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Joint demand & Cross elasticity of demand

Joint demand occurs when one industrial product is useful if other products also exists. Elasticity is the change in demand from a change in price. Percentages are used to measure the relative changes. Demand is inelastic when the percentage change in quantity demanded is less than change in prices
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Demand is unitary, if the percentages changes in price is matched by an equal percentage of quantity.

Demand is elastic if the percentage change in quantity is than percentage change in price. This concept is very important to understand the relationship between P & Q sold.
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Assignment time:

Explain the economics of industrial demand, with suitable examples. Minimum two examples should be citied in each category.
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Resellers Market:
Resellers, like industrial firms, do not purchase goods and services for personal consumption, but so to facilitate the operations of the business. That is everything that is purchased is purchased to make a profit .

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Assignment time:
Brief out the resellers market with following characteristics. Market Product Buyer Channel Promotional Price
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The industrial marketing concept

The IM concept involves more than facilitating exchange with these customers, it is philosophical point of view that has its basis the formation of the partnership between buyer and supplier for the purpose achieving the organizational goals of the both.

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Given the nature & purpose of the industrial products, a seller literally becomes a part of buyers technology, productivity, end market satisfaction, and profit plan in short total corporate strategy.

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The Marketing Concept

Creating value for customers with goods and services that address organizational needs and objectives.

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Marketing Concept

Three major components:

All company activities should begin with, and be based on, the recognition of a fundamental customer need. A customer orientation should be integrated throughout the functional areas of the firm: production, engineering, finance, R&D. Customer satisfaction is viewed as the means to long-term profitability goals.

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Strategic Focus Grid

High

Follower
Customer Focus

Interact

Isolate
Low Low High

Shaper

Technology Focus
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Assignment time:
How would the desire for stable relationship in the industrial market affect a firms ability to sell its products to a manufacturer currently buying from another source?
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Type of Industrial Markets

Mainly classified into 4 types and they are 1. Commercial enterprises 2. Government customers 3. Institutional customers 4. Cooperative societies.

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Types of Industrial customers

Industrial Dealer Commercial enterprises OEM

Users

Public Sector Government Customers

Industrial Customers

Govt Undertakings

Public Institutional customers Pvt

Manufacturing Cooperative societies Non Manufacturing

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Classification of Industrial Products

Industrial Products Material Parts Capital Items Supplies & Services

Raw Materials

Light Equipments

Supplies

Manufactured Materials

Installations or Heavy equipment

Services

Component Part

Plant and Building

Subassemblies
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Organizational Procurement characteristics

Supply Chain Management orientation Buying Orientation
Component & subassembly suppliers Finally assembly manufacturer

Raw Material Supplier

Intermediaries

Consumers

Procurement Orientation

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Buyer orientation
Purchasing firm with buying orientation has narrow and short term focus. The buyers, in these firms, follow the practices under.. 1. Lowest price 2. Gain power 3. Risk

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Procurement orientation
Purchasing firm has a strategic focus and it is proactive, to achieve these objectives the company adopts following practices. 1. Collaborative relationship with major suppliers. 2. Working closely with other functional areas
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Supply Chain Mgmt orientation

Role of purchasing is further expanded to become more value-adding, and strategic operations. It focuses on 1. Deliver Value to end users 2. Outsource Non-core activities 3. Support Collaborative Relationships with major suppliers

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Purchasing in commercial Enterprises

Goods & services are purchased by commercial enterprises depends on the nature of the business, the size of the firm, and the volume, variety, and technical complexity of the products purchased. 1. Multiple influencers 2. Technical sophistication 3. Value analysis
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Value analysis developed by GE A. Selection B. Information gathering C. Function definition D. Generation of alternatives E. Evaluation of alternatives F. Presentation G. implementation
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Purchasing in Government units

A.

B.
C.

Widely dispersed markets Complicated procurement laws Understanding government contracts

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Institutional & Cooperative societies Purchasing.

Includes the practices of Commercial enterprises and Government.

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Industrial Environment
Industrial Buyers and Suppliers operate in dynamic environment which changes continuously. Much emphasis discussion on environment are about ecological environment like air, water pollution & conserving natural resources.
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Types of Environment
Water, power, manpower, labor& transport

Environment

Customers & Competitors, Suppliers

Ecological & Physical

Internal (S&W)

External (O&T)

Air & water pollution, solid waste disposal

Location, R&D, Production facilities, HR, Finance, Marketing, Brand

Macro
TEMPLE-SD

Micro

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Strategies for managing industrial environment

Effective use of market variable such as 4Ps are not adequate for the survival & success of firms. Following steps are needful for the dynamic in nature and they are.. 1. Collecting information on customers & competitors 2. Analyzing trade and govt publications. 3. Carrying Market Research & Economic forecasting within or
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Strategies will help company for the following:

Understanding

changes in customers Monitor the competitors actions & strategies. Technological innovations Changes in TEMPLE effect Identify the demand of the customers and market. Changes in environmental factors
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Types of strategies
Independent

strategies Cooperative strategies Strategic planning

Backward integration Forward integration Horizontal integration

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Case let..

End of Module one

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