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Industrial markets present different types of challenges and opportunities as compared to consumer markets Industrial Markets are markets for products and services, local to international, bought by businesses, government bodies and institutions for incorporation ( ingredient material or components), for consumption( process material, consulting services), for use( installations or equipment)or for resale.
Industrial Demand
Derived Demand Demand in Industrial markets is derived from consumer demand. Nylon Spin Yarn Weave FabricClothes Changes in consumer demand will effect the Industrial market. Inventory problems can occur if final demand is over or under what was forecasted.
Industrial Demand
A small percentage change in consumer markets leads to much greater changes in industrial markets. There can be dramatic shifts in the demand curve. In recession the demand for capital goods will fall and in recovery the sales will be stimulated. There are swings in demand. Small changes in consumer buying attitudes are closely watched
Cross-Elasticity of Demand
It is the responsiveness of sale of one product to a price change in another This has a significant bearing on marketing strategy In the construction industry, sales of steel will be effected by the price of a close substitute Aluminium The larger the number of substitute resources available, the greater the cross-elasticity of demand for a particular resource
Industrial Customers
1.Commercial Enterprises Users Original Equipment manufacturers Dealers and Distributors 2. Government Organisations 3. Institutions
Commercial Enterprises
Users purchase industrial products or services to produce other goods or services that are sold in business or consumer markets. Machine tools is an example of such a purchase. Products purchased by users are not incorporated into final product, hence different from OEMs as explained below. Original Equipment Manufacturers ( OEMs)Enterprises like Maruti, Xerox purchase industrial goods to be incorporated into products that they produce, classification is OEM. They are generally the large volume users of goods and services
Commercial Enterprises
Dealers and Distributors They are commercial enterprises that purchase industrial goods for resale( in basically the same form) to users and OEMs. They accumulate, store and sell a large assortment of goods to industrial users. They ensure that their customers have timely access to the goods. They play an important strategic role
Overlap of Categories
These three categories are not exclusive. The classification is based on the intended purchase the product serves to the customer User will purchase a capital item for the manufacturing process but is an OEM when purchases products like radios to be installed in the car Purchases are expected to enhance profit making ability and understanding of buying criteria of various categories is required
Marketing Requirements: The marketing strategy is related to the goods sub classification Standardised parts and materials are purchased in large quantities by OEMs on contractual basis Custom made parts will require a large amount of interaction with purchase and engineering department Industrial distributors can be used when selling to smaller OEMs or users
Influence of Government
Government laws and regulations play an important role and affect all the participants Matters like funding, interest rates and taxes, standards, research and environmental issues are of great importance to the activities of companies International trade regulations are also part of Government interface Companies generally act through associations and bodies with regard to general matters but must take suitable action regarding their own priorities
Overview
The current industrial environment which is rapidly changing requires development and implementation of suitable strategies Market research, technological innovations, assessing political and regulatory developments and evaluating social change are some measures Independent, Cooperative and Strategic manoeuvring strategies can be utilised
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