Chapter 3

Marketing of Industrial Goods

 Meaning of Industrial Goods
Machinery, manufacturing plants,
materials, and other goods or component
parts for use or consumption by other
industries or firms.

Demand for industrial goods is usually

based on the demand for consumer goods
they help produce (called derived demand).
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They are classified as
(1) Production goods, that enter the
production of a final product, such as the
raw materials and component parts, or
(2) Support goods, that assist in the
production process, such as fixed equipment
and machinery, instruments, jigs, tools, etc.

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 Types of Industrial Goods
Installations Installations are major capital items that
are typically used directly in the production of goods.

Accessory Equipment Goods that fall into the

subcategory of accessory equipment are capital items
that are less expensive and have shorter lives than
installations. Examples include hand tools, computers,
desk calculators, and forklifts. While some types of
accessory equipment, such as hand tools, are involved
directly in the production process, most are only
indirectly involved.
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 Contd
Raw Materials Raw materials are products that are
purchased in their raw state for the purpose of
processing them into consumer or industrial goods.
Examples are iron ore, crude oil, diamonds, copper,
timber, wheat, and leather.

Fabricated Parts and Materials Fabricated parts are

items that are purchased to be placed in the final
product without further processing.

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 Industrial Marketing
Also called: Business-to-Business (B2B)
and Organizational Marketing.
Definition: the creation and management
of mutually beneficial relationships
between organizational suppliers and
organizational customers.
Customer can be private firm, public
agency, or nonprofit organization.
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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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 Marketing Mission Statement

State in terms of meeting customer needs,

not in terms of products or technologies.

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 Marketing Activities
Identify customer needs
Research customer behavior
Divide market into manageable segments
Develop new products/services
Establish/negotiate prices
Deliver, install, service products
Ensure adequate and timely supply of products
at correct place
Allocate resources across product lines
Communicate with customers
Evaluate/control marketing programs
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So whats different about B2B?
Marketing Concept
Marketing Mix
Market Segmentation
Product Life Cycle

All apply in both B2C and B2B.

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So whats different about B2B?
The technical characteristics of the
product are important.
These products directly affect the
operations and economic health of the
customer.
The customer is an organization rather
than an individual consumer, or family.

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 Five Major Differences
Between B2B and B2C

Products/Services being marketed

Nature of demand
How the customer buys
Communication process
Economic/Financial factors

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 Products/Services
More complex
Large unit dollar value/Large quantities
Custom/Tailored
Various Stages from raw material to
finished goods.

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Raw Material Extraction

Material Processing

Manufacturing
Parts/Subassembly

Facilitators
Assembly

Distribution

Wholesale/Retail Trade

Final Consumers
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Firms in Production Chain
 Nature of Demand
Derived
Joint/Shared
Concentrated
Inelastic

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 How Customer Buys
Group Process
Formal
Lengthy
Loyal
Decisions based on risk and opportunity

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 Communication
Personal selling more important than
mass paid advertising
Support sales with other promotional
activities: advertising in trade journals,
catalogs, trade shows, direct mail, WWW.
Message focused on technical, factual,
and descriptive content.
Multiple audience members.
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 Economic/Financial Factors
Competition oligopolistic
Power/Dependency relationships
Reciprocity:Doing business with
companies that do business with them.
Economic variables: interest rates,
inflation, business cycle

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