Principles of Marketing

Author: Robert G Medina

Industrial Goods- industrial goods are those goods used in the production of other goods. They
are categorized into the following.

Types of industrial goods

Installation - this term refers to industrial product with long life are generally expensive and
they form part of the major capital equipment of an industrial firm. Example: Building
generators computer elevator and others.

Accessory Equipment - these are industrial goods that are used as aids in the production
process. Example: Lift trucks, type writer and office desks.

Raw Materials - These are unprocessed industrial hoofs that will become part of another
product. Raw materials are of two types (1) farm product and (2) natural product. Farm
products are those grown by farmers, while natural product are those which occur by nature.
Example of Farm products: Palay, tomatoes, eggplant, coconut and milk. Example of natural
product: Fish, lumber, gold, diamond, coal and oil.

Component parts and materials - These are the processed industrial goods that will still be
used and become an actual part of the finished product. Component product are exemplified
by paper for further processing unto printed magazine textile into dresses and flour into bread.
Component parts are exemplified by tire mounted motor cars, string in a violin and knobs on
television.

Supplies - These are items that are used as aids in the operating process but do not become
part of the finished product. Among the examples are pencils ink paper clips fasteners and
others.

Service - these are expense items that assist the operations. Among the examples are
maintenance service for general housekeeping, security service, and consultancy service.
Characteristics of Industrial Goods
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1. Heavy investment in Industrial goods
The production of industrial goods calls for heavy capital investment. Most of the companies
involved in the production of industrial goods raise capital by issuing shares and debentures
and also by resorting to borrowing from financial institutions.
2. Complex nature of products
Industrial goods always appear to be complex in view of their technical nature. It is not possible
for a layman to assess the value of such goods. One has to have technical knowledge to be able
to assess them.

3. Derived demand for Industrial goods

The demand for industrial goods is a derived demand. i.e., it is influenced by the demand for
the goods they help to manufacture. For example. The demand for a soft drink making plant
will be determined by the demand for soft drink.

4. Limited number of Buyers

When compared to consumer and agricultural goods, the number of buyers of industrial goods
is limited. Such buyers are also found in certain regions. For example, most of the buyers of
machines needed for making cotton cloth are found in and around Coimbatore in Tamilnadu.

5. Inelastic demand
The demand for industrial goods is relatively inelastic, i.e., it is not affected by changes in price.

6. Buying is always a group process

Purchase of consumer or agricultural goods can be undertaken by an individual. But in the case
of industrial goods, a group or a team is generally involved in the purchase. The team may
consist of engineers, financial experts and others.

7. Higher purchase value of Industrial goods

As industrial goods are very highly priced, each purchase involves a very high amount. This is in
contrast to consumer and agricultural goods where the amount involved in each purchase is
much less.

8. After-sale service of Industrial goods-This is something which is always important in the

marketing of industrial goods. The seller must ensure regular repair and maintenance service to
the buyer.
Abibuag, Juan Miguel R. (Presenter) Prof. Marife Agustin Acierto

Yoro, Edward D. Product Management

Nacionales, Rhellen John S.

BSBA MM 3-2