Industrial marketing (or business to business marketing) is the marketing of goods and services by one business to another.

Industrial goods are those an industry uses to produce an end product from one or more raw materials

buying-center concept
The buying-center concept is the idea that in businesses and organizations, many people with different roles and priorities participate in PURCHASING decisions. Unlike consumer buying, where the consumer, alone or with assistance or influence from acknowledged opinion leaders, makes his or her own purchase decisions, in business buying a group often determines which PRODUCTs or SERVICES are purchased. The typical business buying center will include a variety of participants: - initiators: people who start the purchase process by defining a need - decision makers: people who make the final decision - gatekeepers: people who control the flow of information and access to individuals in an organization - influencers: people who have input into the purchase decision - purchasing agent: the person who actually makes the purchase order - controller: the person who oversees the budget for the purchase - users: people who use the product or service

Buying situations in the industrial marketing.

Buying situations varies to the large extent in the industrial marketing compared to the consumer markets. The negotiation process and vendor evaluation stages will not be there if company wants ton purchase the same material from the existing suppliers. Therefore in this section we are discussing the different situation involved in the business buying. Industrial marketing usually involves three different types of buying situations. They are (1) New Task (2) Straight rebuy and (3) Modified rebuy. (1) New task: The stage in which an organization is purchasing a major product for the first time. Therefore company will be having more number of people involved in the decision making. In this situation seller try to meet all the buying participants of the organization and convince them. This will be resulted in higher uncertainty and cost for the seller. (2)Straight rebuy: In this situation organization follow routine step of informing sellers about their requirements and supply specifications. This is the easiest situation in the organization buying. Company already has the list of suppliers, it gets the information from the floor about their requirements and the same is conveyed to the supplier..

(3)Modifies rebuy: In this stage buyer wants either product modification, price modification, terms modification or suppliers modifications. For example, a company X is buying Rs 100,000 worth of iron materials from company Y every month. Company would like to reduce the cost of Iron Ore.

Factors That Influence Organizational Buying Decisions

written by: Sidharth Thakur edited by: Ginny Edwards updated: 7/30/2011 If your organization is a B to B organization, you must consider the factors that influence organizational buying decisions, when developing your marketing plans and sales strategies. To know more about these factors, keep reading. Organizational buying is much more complex than consumer buying, and thus deserves to be studied separately. The entwined interpersonal relationships and the multiple communication processes between the organizational members, involved in the buying decision process, are some of the major contributors to this complexity. The list of affecting factors isnt limited to these; there are many more important determinants. Lets take a look at what factors influence organizational buyers and their buying behavior. But before that wed just like to divert your attention to why organizational buying is so different.

Unique Features of Organizational Buying

1. Organizational buying is mostly a multi-person activity, and thats true for more than 90% of the organizational buying. Decisions for some of the bigger purchases may have participants from a range of departments and from different management levels. Think about the purchase of new software it may require a collective decision made by end users and people from the IT, finance and administration departments. 2. 3. When organizations make purchases there is always a meticulous formal process that precedes the actual purchasing. Organizational buying decisions are never made at the spur of a moment. The buying decision making is stretched and this drag can even be a year long, when it comes to critical purchases.

External Environmental Factors

As a major constraint under which a business operates, the external environment impacts nearly every aspect o f a business, including its buying decisions. Heres a list of the external elements that affect organizational buying. Economic Conditions: The fluctuations in the money markets and the interest rates have a major impact on the buying strategies. The interest rates and organizational buying have an

inverse relation; in most cases, an increase in the interest rates may bring about a drop in the buying. Regulatory Changes: Any changes in the corporate laws, rules and regulations will also influence how, when and what the organizations buy. There are also regulatory changes that may affect only a particular industry and accordingly the related organizations will change their buying patterns to stay in-line with the new regulations. Political Environment: A change of the government or policy has a direct impact on the economic scenario, and this ultimately translates into a shift in the organizational buying patterns as well. Social Environment: Societies and cultures are ever evolving, and every business has to change its practices and procedures to meet up with the societal changes. For instance with the rise in the number of animal lovers, pure leather suppliers have seen a slump in their business. The clothing and footwear manufacturers have shifted to artificial leather suppliers. This points out how the social environment can affect the buying patterns of organizations. Competition: Todays business is all about beating competition and staying ahead. So when an organization's competitors move on to a newer product or service, or if they get to enjoy a competitive edge because of their suppliers, it's very likely for the organization to change its trends too and thus its buying pattern will change accordingly. The external environment is the first of the four major factors that influence organizational behavior as shown in this diagram which you can click on to enlarge.

Internal Organizational Factors

More than the external factors, its the internal organizational factors that influence organizational buying. These internal factors are the: Organization's Goals and Objectives: The goals and objectives of an organization are major determinants as to how and what the organization will purchase. An organization that wants to capture a bigger chunk of the market by selling cheaper stuff is more likely to look for suppliers who can supply larger quantities at a low price. However, a company whose goal is to deliver quality products may have a very contrasting buying pattern, and they will focus more on the quality issues than on the price advantage. Organizational Structure: Hierarchical and management structures vary from one organization to another. While some organizations have a well established purchase department, others may assign this job to the HR or Administration department. There are also organizations where the purchase decisions must be taken collectively by all concerned departments. The organizations also have well-defined guidelines as to which purchase

decisions can be made by which management level. The internal setup and how authority and responsibility flow through it, play an important role in the organizational purchasing. Policies and Procedures: How the purchase order is routed, depends on the organization's policies. How does the buying procedure begin, who will participate and who has the ultimate authority to decide on the purchase are all dependent on the policies and procedures of the organization. Some organizations preferto invite public bids, while others may contact only the few suppliers on their list. There are also budgetary policies that have a say in the purchase decisions, for instance while some organizations may have a flexible policy to make purchases as and when the need arises, others may have to wait till the allocation of the annual or biannual budget. Technological Levels: Whenever making new purchases, organizations take into consideration their current technology. Some purchases are meant to replace the current technology with a newer version, so their buying decision will be influenced by what level of technology they currently own. Also, organizations try to ensure that all new purchases being made are technologically compatible with their existing technology. So, one way or the other an organization's existing technology has a major influence on its future purchases. Manpower Skills: Whether the organization has the skilled manpower to make proper and optimum use of the new purchases being made, especially equipment and machinery, is another issue that influences organizational buying.

Interpersonal and Individual Factors

Since organizational buying decisions are never a one person affair, interpersonal relationships among the decision makers plays a vital role in this type of buying. Participation and Authority: In organizational buying situations, there are always redefined rules as to who can participate in the purchase decision and who is the ultimate deciding authority. Interpersonal Conflict: Interpersonal conflicts and conflicts of interest amongst the decision makers often results in delays and changes. Thus, the kind of thinking and the kind of relationship the decision makers share have a major role to play in corporate buying. Education and Awareness: The educational background of the decision makers and their level of awareness have a major bearing on what type of purchases they will make. Risk Taking Ability: If the buying committee constitutes high risk takers, they will not be averse to the idea of choosing the latest technology or new suppliers. While on the other hand, decision makers with a low risk taking tolerance are more likely to stick to proven and tested technology or to well known and well established suppliers. Individual Factors: Individual factors such as age, cultural background and social status, of

the members on the buying team, also influence the buying decisions.

Situational Factors
In this final section well take a look at some of the situational factors that can inf luence organizational buyers. Time Factor: Sometimes, organizations dont have all the time to follow the detailed buying procedure. If the organization needs a replacement for equipment that broke down suddenly, it may decide to place its order with some existing supplier or a supplier that is at close proximity. Current Financial Situation: If the organization is crunched for cash, it may decide to place its order with one of its existing supplier who offers extended credit. Also, if the organization cannot spare out enough money for a certain purchase, it may opt for a readily available cheaper version that fits into its budget. Availability: Some buying decisions can wait while others cannot, thus if the supplier cannot make available the exact product by the desired date, the organizational buyers may shift to a new supplier or to a more readily available alternative. Special Offers: Special offers being given by a supplier may also be one of the situational factors affecting the buying decision. As a supplier, now that you know what factors influence organizational buyers, you can work up your business to business sales strategies to manipulate organizational buying activities and thus procure more orders for your supply business. Industrial market segmentation is a scheme for categorizing industrial and business customers to guide strategic and tactical decision-making, especially in sales and marketing. While government agencies and industry associations use standardized segmentation schemes for statistical surveys, most businesses create their own segmentation scheme to meet their particular needs. The goal for every industrial market segmentation scheme is to identify the most significant differences among current and potential customers that will influence their purchase decisions or buying behavior, while keeping the scheme as simple as possible (Occam's Razor). This will allow the industrial marketer to differentiate their prices, programs, or solutions for maximum competitive advantage. di Webster describes segmentation variables as customer characteristics that relate to some important difference in customer response to marketing effort. (Webster, [1] 2003) He recommends the following three criteria: 1. Measurability, otherwise the scheme will not be operational according to

Webster. While this would be an absolute ideal, its implementation can be next to impossible in some markets. The first barrier is, it often necessitates field research, which is expensive and time-consuming. Second, it is impossible to get accurate strategic data on a large number of customers. Third, if gathered, the analysis of the data can be daunting task. These barriers lead most companies to use more qualitative and intuitive methods in measuring customer data, and more persuasive methods while selling, hoping to compensate for the gap of accurate data measurement. 2. Substantiality, i.e. the variable should be relevant to a substantial group of customers. The challenge here is finding the right size or balance. If the group gets too large, there is a risk of diluting effectiveness; and if the group becomes too small, the company will lose the benefits of economies of scale. Also, as Webster rightly states, there are often very large customers that provide a large portion of a suppliers business. These single customers are sometimes distinctive enough to justify constituting a segment on their own. This scenario is often observed in industries which are dominated by a small number of large companies, e.g. aircraft manufacturing, automotive, turbines, printing machines and paper machines. 3. Operational relevance to marketing strategy. Segmentation should enable a company to offer the suitable operational offering to the chosen segment, e.g. faster delivery service, credit-card payment facility, 24-hour technical service, etc. This can only be applied by companies with sufficient operational resources. For example, just-in-time delivery requires highly efficient and sizeable logistics operations, whereas supply-on-demand would need large inventories, tying down the suppliers capital. Combining the two within the same company - e.g. for two different segments - would stretch the companys resources.

The market research process involves a round of separate stages of data interpretation, organization and collection. These stages could be considered as a benchmark of market research, but it depends on an organization how they have encapsulated their strategies to follow this process. Hence some of the interlinked stages could be conducted repeatedly and some of the stages can also be omitted. Given below is a typical market research process which is depicted stage-wise: Defining the Problem or Need- The starting phase is always identifying the reason or problem for which research is to be conducted. This includes collecting of relevant initial information and how this information will affect decision making process. It also includes defining problems after discussing with decision makers of the organization. Once the problem is defined precisely and the need of research is discussed, the further process could be conducted in an efficient manner. Determining who will do the research- Once the initial stage of defining the problem

and the need of research is done, it is important to determine who will do the research and what will be the approaches to resolve these problems. This involves creating a problem solving framework and analytical models after discussing it organization experts. In this sample case studies are created according to the defined framework by enforcing the relevant information and secondary data. Picking out the appropriate methodology- A specific methodology is entailed by the research professional after identifying the specific needs and exploring the case studies. It may include a combination of specific approaches like telephone survey, web or email survey, one-to-one interviews, secondary research etc. This methodology acts as a blueprint of research process and following basic steps: Methods for collecting and preparing quantitative information. Determining the need of this information. Scaling and measuring procedures. Designing sample Questionnaire. Formulating case studies and sampling process. Planning information analysis

A marketing decision support system (sometimes abbreviated MKDSS) is a decision support system for marketing activity. It consists of information technology, marketing data and modeling capabilities that enable the system to provide predicted outcomes from different scenarios and marketing strategies, so [1] [2] answering "what if?" questions. A MKDSS is used to support the software vendors planning strategy for marketing products. It can help to identify advantageous levels of pricing, advertising spending, [3] and advertising copy for the firms products. This helps determines the firms marketing mix for product software.

Sales Forecasting
Author: Jim Riley Last updated: Sunday 23 September, 2012
Introduction Sales forecasting is a difficult area of management. Most managers believe they are good at forecasting. However, forecasts made usually turn out to be wrong! Marketers argue about whether sales forecasting is

a science or an art. The short answer is that it is a bit of both. Reasons for undertaking sales forecasts Businesses are forced to look well ahead in order to plan their investments, launch new products, decide when to close or withdraw products and so on. The sales forecasting process is a critical one for most businesses. Key decisions that are derived from a sales forecast include: - Employment levels required - Promotional mix - Investment in production capacity Types of forecasting There are two major types of forecasting, which can be broadly described as macro and micro: Macro forecasting is concerned with forecasting markets in total. This is about determining the existing level of Market Demand and considering what will happen to market demand in the future. Micro forecasting is concerned with detailed unit sales forecasts. This is about determining a products market share in a particular industry and considering what will happen to that market share in the future. The selection of which type of forecasting to use depends on several factors: (1) The degree of accuracy required if the decisions that are to be made on the basis of the sales forecast have high risks attached to them, then it stands to reason that the forecast should be prepared as accurately as possible. However, this involves more cost (2) The availability of data and information - in some markets there is a wealth of available sales information (e.g. clothing retail, food retailing, holidays); in others it is hard to find reliable, up-to-date information (3) The time horizon that the sales forecast is intended to cover. For example, are we forecasting next weeks sales, or are we trying to

forecast what will happen to the overall size of the market in the next five years? (4) The position of the products in its life cycle. For example, for products at the introductory stage of the product life cycle, less sales data and information may be available than for products at the maturity stage when time series can be a useful forecasting method. Creating the Sales Forecast for a Product The first stage in creating the sales forecast is to estimate Market Demand. Definition:

Market Demand for a product is the total volume that would be bought by a defined customer group, in a defined geographical area, in a defined time period, in a given marketing environment. This is sometimes referred to as the Market Demand Curve.

Cost-based pricing | Competition-based pricing | Customer-based pricing | Tips for successful pricing | Resources | Glossary The pricing method you select provides direction on how to set your product price. The way you set prices in your business will change over time, for many reasons. As you learn more about your customers and competition, you may decide to change your pricing method. Use changes in the industry or the development stage of your product as an indicator that its time to review your pricing strategy. There are three basic methods to price your product: cost-based pricing competition-based pricing customer-based pricing Cost-based pricing is where the price includes the cost of ingredients and cost of operating the business. include a profit percentage with product cost add a percentage to an unknown product cost blend of total profit and product cost Competition-based pricing is where the price covers costs (cost of raw materials

Pricing methods

and the cost of operating the business) and is comparable to the competitors price.

price is the same as the competition set price to increase customer base seek larger market share through price Customer-based pricing, also known as value-based pricing, is a system where the price is based on the customer demand or need for the product. If the product is unique or innovative, a value-based price may help create a demand for the product or service. use price to support product image set price to increase product sales design a price range to attract many consumer groups set price to increase volume sales price a bundle of products to reduce inventory or to excite customers
Customer relationship management (CRM) is a model for managing a companys interactions with current and future customers. It involves using technology to organize, automate, and [1 synchronize sales, marketing, customer service, and technical support.

Types/variations [edit]
Sales force automation [edit]
Sales force automation (SFA) uses software to streamline the sales process. The core of SFA is a contact management system for tracking and recording every stage in the sales process for each prospective client, from initial contact to final disposition. Many SFA applications also include insights into [citation needed] opportunities, territories, sales forecasts and work flow automation.

Marketing [edit]
CRM systems for marketing track and measure campaigns over multiple channels, such as email, search, social media, telephone and direct mail. These systems track clicks, responses, leads and deals.

Customer service and support [edit]

CRMs can be used to create, assign and manage requests made by customers, such as call [2] center software which help direct customers to agents. CRM software can also be used to identify and reward loyal customers over a period of time.

Appointments [edit]

Appointment CRMs automatically provide suitable appointment times to customers via e-mail or the web, [citation needed] which are then synchronized with the representative or agent's calendar.

Small business [edit]

For small businesses a CRM may simply consist of a contact manager system which integrates emails, [citation needed] documents, jobs, faxes, and scheduling for individual accounts. CRMs available for specific markets for professional markets (legal, finance) are frequently touted for their event management and relationship tracking opposed to financial return on investment (ROI).

Social media [edit]

Social media is the modern form to build customer relationship. Some CRMs coordinate with social media sites like Twitter, LinkedIn, Facebook and Google Plus to track and communicate with customers [3] who share opinions and experiences about their company, products and services. Once you have identified the trends through social media a business can make more accurate decisions on what products to supply to the society.

Marketing Management Article Series Organization buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. Some of the characteristics of organizational buyers are: 1. Consumer market is a huge market in millions of consumers where organizational buyers are limited in number for most of the products. 2. The purchases are in large quantities. 3. Close relationships and service are required. 4. Demand is derived from the production and sales of buyers. 5. Demand fluctuations are high as purchases from business buyers magnify fluctuation in demand for their products. 6. The organizational buyers are trained professionals in purchasing. 7. Several persons in organization influence purchase. 8. Lot of buying occurs in direct dealing with manufacturers.
Organizational Buying/Purchasing/Procurement Process

Steps in the Process Problem recognition General need description

Product specification Supplier search Proposal solicitation Supplier selection Order routine specification Supplier performance review