Industrial

Marketing
 What is
Marketing
 Marketing is the science and art of
identifying, creating, and delivering value
to satisfy the needs of a target market at a
profit. Marketing identifies unfulfilled
needs and desires. It pinpoints which
segments the company is capable of
serving best and it designs and promotes
the appropriate products and services
Marke
ting
 Marketing is often performed by a
department within the organization. This is
both good and bad. It’s good because it
unites a group of trained people who focus
on the marketing task. It’s bad because
marketing activities should not be carried
out in a single department but they should
be manifest in all the activities of the
organization.
 Marketing :
DEFINITION
Marketing is the social process by which individuals
and groups obtain what they need and want through
creating and exchanging products and value with
others. (Kotler)

Marketing is the management process that identifies,

anticipates and satisfies customer requirements
profitably
The Chartered Institute of Marketing
(CIM)
 What is Industrial
Marketing
 Industrial marketing is also referred to as
business to business (B2B) marketing or
business marketing or organizational
marketing. Industrial marketing is the
marketing of products and services to
business organizations. Business
organizations include manufacturing
companies, educational institutions,
hospital, distributors and dealers.
 Classification Of
Industrial Product
Industrial products and services are classified into three broad groups.

(1) Material andParts

These goods enter the product directly

 Raw Material ( Basic Products like iron ore, crude oil, fruits, vegetables )

 Manufactured Items ( Acids ,fuel oil, steel, chemicals)

 Components Parts ( semi finished parts like bearings ,TV Tubes , small
motors , tyres)

 Subassemblies ( semi finished goods like exhaust pipe in motorcycle)

 (2)
A capital good is Capital
a durable good (is a good that does not quickly

Items
wear out) that is used in production of goods or services. These
goods are used in production process.

 Light equipment or accessories ( Hand tools, computer

terminals.)

 Installations or heavy equipment's ( machines , turbines)

 Plant and building ( Offices ,plants, warehouses, parking lots ,

housing, which are real estate property)
 (3) Supplies
and Services
These goods /services support the operations

 Supplies – These are operating maintenance

supplies like fuels , packaging materials, lubricants,
paints, electrical items

 Services – Companies need a wide range of services

like Legal ,auditing, advertising, courier, marketing
research agency
 Difference between Industrial
Marketing & Consumer Market
Sr. Areas Industrial Consumer market
No Marketing

1 Market Characteristics Geographically Geographically disbursed

concentrated
Mass market
Relatively fewer buyer
buyers

2 Product Characteristics Technical complexity Standardized

Customized
3 Service Characteristics Service, timely Service, timely delivered &
delivered & availability availability somewhat
very important important
 Difference between Industrial
Marketing & Consumer Market
Sr. Areas Industrial Marketing Consumer market
No

4 Buyer Involvement of various Involvement of family

Behaviour functional areas in both members
buyer & supplier firms
Purchase decisions are
Purchase decisions are mostly made on
mainly made on physiological/social/
rational/performance physiological needs
basis
Less technical expertise
Technical expertise
Non-personal relationship
 Difference between Industrial
Sr.
Marketing
Areas
& Consumer
Industrial
Market
Consumer market
No Marketing

5 Channel Characteristics More direct Indirect

Fewer Multiple layers of

intermediaries/middlem intermediaries
en
6 Promotional Emphasis on personal Emphasis on
Characteristics selling Advertising

7 Price Characteristics Competitive bidding & List prices or maximum

negotiated prices retail price (MRP)

List prices for standard

products
 Characteristics of Industrial
Market Customers
 Industrial Market customers comprise commercial
enterprises, institutions and governments.
HCL Computers customers can be Air India, Delhi
University and State Governments
 A single purchase by an industrial customer may be
far larger than individual customers.
An individual may purchase one unit of Microsoft
software or an upgrade but Citibank may buy 1000
 Characteristics of Industrial Market Customers

 The demand for industrial products is derived from the

ultimate demand for consumer products.
Increase in demand for housing will stimulate demand for
wood for making furniture and numerous other related
products.

 Relationships between industrial marketers tend to be close

and enduring.
HCL Computers relationship with some key customers spans
decades
 Characteristics of Industrial
Market Customers
 Buying decisions by industrial customers often
involve multiple buying influences rather than a
single decision maker.
A textile producer will evaluate various textile
machinery companies before buying from any
particular company. Purchasing, engineering,
material management and other division members
may be involved in this purchase
 Industrial
Customers
1. Commercial Enterprises
2. Government Organisations
3. Institutions
 FEATURES
&
IMPORTANCE OFINDUSTRIAL
MARKETING
 FEATURES OF INDUSTRIAL
MARKETING
 FEWER; BUT LARGER MARKET:
Business buyers will be very less as compared to
consumer buyers; but they purchase in bulk or more
quantities.
 CLOSE RELATIONS:
Relation between seller and buyer have to be kept
very close and professional. Because once the
relations are build; can’t be changed easily as it
reflects huge profit.
 COMPLEX BUYING PROCESS:
Very complex procedure is adopted by business
buyers; because before purchasing, the approval is
required from different officials and authorities.

 CONTINUOUS SALES CALLS:

To finalize the deal, it requires constant follow-ups
and continuous sales calls.
 EXPERTISE SELLING SKILLS:
Sharp selling skill is required to sell the product to
industrial buyers. As they are purchasing in bulk,
they will not be easily convinced. Deep product
knowledge is required.
 INFLUENCES:
To finalize the product, different authorities and
officials will interfere and influence the decision to
purchase the product.
 DERIVED DEMAND
The demand for industrial goods is ultimately derived
from the demand for consumer goods. Thus animal
hides are purchased because consumers buy shoes,
purses, and other leather goods. If the demand for
these consumer goods slackens, so will the demand
for all the industrial
 IMPORTANCE OF INDUSTRIAL
MARKETING
 MAJOR SHARE OFREVENUE:
Major share of revenue is generated by selling the
product to business buyers as they purchase in bulk
therefore it is important to take care of business
deals.
 LESS EXPENDITURE:
as the business buyer are very few, no much
expenditure is required to reach and to contact them.
 LESS PROMOTIONALEFFORTS:
Free gifts, demonstration etc is not required; because
the product is not to be shown to mass audience.
 PERMANENT CUSTOMERS:
Once the relations are built, business buyers will
purchase the products for longer period of time.
Therefore the future is secured if existing buyers are
satisfied properly.
INDUSTRIAL
BUYING
BEHAVIOU
R
INDUSTRIAL BUYING
BEHAVIOUR
Meaning:

Industrial buying behavior refers to the study

of the motives and actions of, and influences upon,
industrial buyers while engaged in the purchasing of
goods and services
 Factors Influencing
Buying Behaviors
There are number of external and internal factors that directly or
indirectly effect organizational buying behavior. Economic factors are
considered very important role in buying. Other factors are political
influencers that are dominant. Organizational buying is also situational
and situations play an important role. Most thinkers feel that these
influencers can be grouped under four major headings.
External
Environmental
Factors
Under this heading we have social,political,legal,cultural,economic
factors that interact with each other, for example they could be power
shortages, credit squeezes, political and economic changes, which govern
many of the rules regulations. The shortage of raw materials leads excessive
tariffs and taxes for a particular item. These affect the buyer behavior and the
industry has to adapt itself to these changes.
Organization
al Factors
 An organization is purposefully created and deliberately structured to
attain specific objectives. These objectives and polices differ in every
organization. Every organization had a climate and culture of its own.
The organization is interested in selling its products to the industries
that have a “buying center” or, a group of people who have the
authority to buy. The marketer of industrial products thus wants to
know who constitutes this “power center”,
Interpersonal
Factors
The buying center consists of a number of persons who are involved in
buying. It is an inter Personal activity. Those people come from various levels
of the organization . They have different backgrounds, different expiries,
different values and considerations. They play different roles and make the
buying more complex. In some cases this leads to a conflict, which has to be
solved, and uniformity and harmony is made to prevail between members
involved in buying.
IndividualFactors
The buying center consists of individual factors such as, income,
education, job, position and risk taking.
PARTICIPANTS IN
BUYING PROCESS
Buy
er
 Formal authority to sign contracts

 Member of purchasing department

 Influences the vendor selection

 Not in technical details

 Main criteria: price + terms and conditions of the
contract
Us
er
 Person working with the product

 Interested in benefits and unobstructed function of

the product to buy

 Large knowhow and preconceived opinion

Influe
ncer
 A person with high technical knowledge and
practical experience

 definition of minimum requirements on

technical or company standards
Gatek
eeper
 Controls the flow of information within the buying center

 Assistant of decision maker

 Influence by preparing the decision and the relevant
documents
Deci
der
 Right to say yes or no

 Mightiest person

Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
Initiator
 Person who brings new ideas and solutions into
the company

Rajnish Kumar
Accman Institute of management
PGDM-MKT (2011-13)
BUYING
SITUATIONS
 BUYING
SITUATIONS
The business buyer faces many decisions in making a purchase. The
number depends on the buying situations.

 Complexity of the problem being solved.

 Newness of the buying requirement.

 Number of people involved

 Time Required
 buying
 situations
Straigtht rebuy – routine decision, repetitive in
process (energy, office supplies, raw

B2B
materials, wood, cigarettes), component suppliers for the automotive industry –
little or no new information

 Modified rebuy – more complicated but less sophisticated: cars, trucks, computers,
consulting – modified rebuys are often treated too uncautious

 New task – calls for thorough research – industrial plant – highest level of
uncertainty. Strategic new tasks are of extreme strategic and financial importance
(aircrafts, military equipment, infrastructure) – re-evaluation of alternatives and
search for new information and new alternatives
 Buying

phases
Problem recognition

 General need description

 Product specification

 Supplier search

 Proposal solicitation

 Supplier selection

 Order routine specification

 Performance review
 Stages of decision in
B2B procurement
Backhaus developed
 distinguish a 5widely
between phases of usable model to
procurement
  Preliminary application (initiation phase)
  Tenderproposal
  Negotiation
  Processing of order
  Warranty and services
THANK YOU…
PRESENTED BY
ANAND MURALI