INDUSTRIAL MARKETING

Lecture Notes for Industrial Marketing

By CA Yatish Vernekar
THE MARKETING MIX
The Marketing Mix
The Marketing Mix
The tools available to a business to gain the
reaction it is seeking from its target market
in relation to its marketing objectives
7Ps Price, Product, Promotion, Place,
People, Process, Physical Environment
Traditional 4Ps extended to encompass
growth of service industry
Price
Price
Pricing Strategy
Importance of:
knowing the market
elasticity
keeping an eye
on rivals
Product
Product
Methods used to improve/differentiate
the product and increase sales or target sales more
effectively to gain
a competitive advantage e.g.
Extension strategies
Specialised versions
New editions
Improvements real or otherwise!
Changed packaging
Technology, etc.
Promotion
Promotion
Strategies
to make the consumer aware of the
existence of a product
or service
NOT just advertising
Place
Place
The means by which products and services
get from producer
to consumer and where they can be
accessed by the consumer
The more places to buy the product and the
easier it is made to buy it, the better for the
business (and the consumer?)

People
People
People represent the business
The image they present can be important
First contact often human what is the lasting
image they provide to the customer?
Extent of training and knowledge
of the product/service concerned
Mission statement how relevant?
Do staff represent the desired culture
of the business?

Process
Process
How do people consume services?
What processes do they have to go through to acquire
the services?
Where do they find the availability
of the service?
Contact
Reminders
Registration
Subscription
Form filling
Degree of technology
Physical Environment
Physical Environment
The ambience, mood or physical presentation of
the environment
Smart/shabby?
Trendy/retro/modern/old fashioned?
Light/dark/bright/subdued?
Romantic/chic/loud?
Clean/dirty/unkempt/neat?
Music?
Smell?

The Marketing Mix
Blend of the mix depends upon:
Marketing objectives
Type of product
Target market
Market structure
Rivals behaviour
Global issues culture/religion, etc.
Marketing position
Product portfolio
Product lifecycle
Boston Matrix

SOCIETAL ROLE OF
MARKETING
Societal Concept

Societal concept holds that the
organization's task is to determine the
needs, wants, and interests of target
markets and to deliver in desired
satisfaction more effectively and
efficiently than competitors in a way
that preserves or enhances the
consumer's and society's well being.
Build social & ethical considerations
into marketing practices.
Types of Marketing Channels
Marketing channel: system of marketing
institutions that promotes the physical flow of
goods and services, along with ownership title,
from producers to consumer or business user; also
called a distribution channel
Marketing intermediary: wholesaler or retailer
that operates between producers and consumers or
business users; also called a middleman
Wholesaler: marketing intermediary that takes
title to goods and then distributes these goods
further; also called a jobber or distributor
Direct Selling
Direct channel: marketing channel that moves
goods directly from a producer to ultimate user
Direct selling: strategy designed to establish
direct sales contract between producer and final
user
Channels Using Marketing
Intermediaries
Producer to wholesaler to retailer to consumer
Producer to wholesaler to business user
Producer to agent to wholesaler to retailer to
consumer
Producer to agent to wholesaler to business user
Producer to agent to business user


Dual Distribution: Network that moves
products to a firms target market through
more than one marketing channel

Reverse Channels: Channels designed to
return goods to their producers

Channel Strategy Decisions
Selection of a Marketing Channel
Factors which impact the selection of a
marketing channel include:
Market factors
Product factors
Organizational factors
Competitive factors
DISTRIBUTION
Channel of Distribution - a group of
interrelated organization that directs the
flow of products from producers to ultimate
consumers
Marketing Intermediary - an individual or
organization in marketing channel that
provides a link among producers, other
channel members, and final consumer

Distribution Overages
Intensity Distribution - market coverage in which
all available outlets are used for distributing a
product
Selective Distribution - Market coverage in which
only some of the available outlets are used for
distributing a product
Exclusive Distribution - Market coverage in which
one outlet is used in specific geographic area for
distributing a product

MARKET SEGMENTATION
What is Market?
PEOPLE
PEOPLE
BUT- Not just ANY people, they have to have
Willingness to buy
Purchasing power [money]
Authority to buy
Types of Markets
Consumer Goods & Services
Industrial Goods & Services
Market Segmentation
With large country
Many different types of people

It is too difficult to create a product that will
satisfy every body, that is why we focus on
the segment of the total market.
Market Segmentation

Definition
Grouping people according to their similarity
related to a particular product category
Market Segmentation
Characteristics
Age
Gender
Geographic
location
Income
Spending pattern

Marital status
Education
Mobility
Demographics
Cultural
background
Market Segmentation
4 commonly used basis for segmentation
Descriptive
Geographic location
Demographic

Behavioral
Psychographic
Benefits
Market Segmentation
Geographic location- based upon where
people live [historically a popular way of
dividing market]

Demographic- based upon age, gender and
income [very often used]
Market Segmentation
Psychographic/ lifestyles- based on peoples
opinions, interests, lifestyles.

Benefits- based on the different expectation
that customer have about what a product/
service can do for them.
PRODUCT DEVELOPMENT
Stages in New- Product
Development
Expensive, time consuming, and risky.
Only one third of the new products
become success stories.
Each step requires a go or no go
decision
Process of Developing New Goods &
Services
Commercialization
Test marketing
Product development
Concept development & business analysis
Screening
Generate new product ideas

PRICING STRATEGY
PRICING
Price - the value that buyer exchange for a
product in the marketing transaction
Pricing Objective:
Market share
Profit
Return on Investment
Status Quo

Pricing Decision and Methods
Factors in Pricing Decisions:
Price and non-price competition
Supply and demand
Consumer perception of price
Pricing Methods:
Cost-Oriented Pricing - Mark-up Pricing
Demand-Oriented Pricing - Break event point
Competition Oriented Pricing

Pricing Strategies
Marketing Concepts
Marketing is the process of planning and executing
the conception, pricing, promotion, and
distribution of idea, goods, and service to create
exchanges that satisfy individual and
organizational objective

Marketing Mix is the combination of products,
price, promotion, and distribution, used to satisfy
the needs of the target market





Product
Variety
Quality
Design
Features
Brand Name
Packaging
Services

Price

List price
Discounts
Allowances
Credit Terms

Promotion

Advertising
Personal Selling
Sales Promotion
Public Relations


Place
Channels
Coverage
Assortments
Locations
Inventory
Transportation
Logistics

Target
Costumers

Intended
Positioning
Marketing Mix
Marketing Activities
Product:
Develop new products
Modify existing
products
Test-market products
Select brand name
Package product

Pricing:
Establish price
objectives
Conduct cost
analysis
Analyze
competitors price
Set actual prices

Marketing Activities
Promotion:
Determine types of
promotion
Design the advertising
massage
Selecting advertising
media
Schedule the
advertisements
Distribution:
Select wholesalers and
retailers
Establish procedures
for handling and
moving products
Find the best locations
for plants, warehouses
and retail outlets
Market
Market is people with the authority, financial
ability, and willingness to purchase a
product
Types of Market:
Consumer market - for personal use
Industrial market - to use in the production
or resell

Target Marketing
Target market - a group of people that has similar
wants and needs which a firm directs its marketing
activities
Undifferentiated approach one marketing mix
for a product to the total market
Market Segmentation approach the division of
the total market into segment with marketing mix
directed to different segment

Market Segmentation
Market segment division of heterogonous market
into homogonous market based on different
characteristics
Segmentation Based:
Geographic bases - city, region
Demographic bases - sex, race, marital
Psychographics - a persons attitude, lifestyle
Product-related - brand loyalty
PRODUCT
Product - a good, service or idea, including all
attributes provided in an exchange between buyer
and seller

Product Classification:
Consumer goods products purchased by
consumers for personal use
Industrial goods product purchased by
companies to produce other products
Classifying Goods
Consumer Goods:
Convenience good
inexpensive and
regularly consumed
Shopping goods
moderately expensive
and infrequently
Specialty goods
expensive and rarely
Industrial goods:
Raw material
Components parts
Equipment and
installations
Services

Product Line and Product
Mix
Product Line - a group of related products
that are considered a unit because of
marketing, technical or use similarity
Product Mix - the total group of product
offer sale, or all of the firms product lines
Product Differentiation creation of
product or product image that differs from
existing product to attract consumers
Product Attributes
Brand - a name, sign, symbol, design, or
combination a companys product to
distinguish it product from others
Packaging - the development of a container
and graphic design for a product
Labeling - the display of important
information on a product package

PRICING
Price - the value that buyer exchange for a
product in the marketing transaction
Pricing Objective:
Market share
Profit
Return on Investment
Status Quo

Pricing Decision and Methods
Factors in Pricing Decisions:
Price and non-price competition
Supply and demand
Consumer perception of price
Pricing Methods:
Cost-Oriented Pricing - Mark-up Pricing
Demand-Oriented Pricing - Break event point
Competition Oriented Pricing


Pricing Strategies
Pioneer pricing leadership pricing in the market
Price skimming setting an initial high price to
cover new product cost and generate a profit
Penetration pricing setting an initial low price to
establish a new product in the market
Psychological Pricing setting an initial high
price to respond irrationally consumers
Price Discounting Price reduction offered as an
incentive to purchase

PROMOTION
Promotion - the communication of favorable,
persuasive information about a firm or product in
order to influential buyers
Promotional Objectives:
Informing
Increasing sales
Stabilizing sales
Positioning the product
Building a public image

The Promotion Mix
Promotion Mix - the combination of advertising,
personal selling, sales promotion, publicity used to
promote a specific product


Advertising
Non-personal communication to a target audience
through a mass medium, such as TV, Radio,
newspapers, or magazines, and outdoor display

Types of Advertising:
Primary-Demand Advertising: for all products
Selective Brand Advertising: for specific products
Institutional Advertising: create public image


Advertising Promotion
Advertising Media variety of
communication devices for carrying
massage to potential customers
Direct Mail delivery massage directly to
customer places
Internet Advertising put the massage into
website or mailed directly to customer
email

Personal Selling
Person-to-person communication with one or
more prospective customers in order to make sale
Telemarketing using telephone to perform the
personal selling process
Types of Salespeople:
Order Getter
Order taker
Support salespeople


Sales Promotion
An activity that offers customers or marketing
intermediaries direct incentives for purchasing a
product
Type of Sales Promotion:
Coupon: reduces the price of a product by stated
amount at the time of purchase
Rebate: an extra discount
Free Sample
Contest: consumer compete for prizes
Trade show


Publicity and Public Relation
Publicity - a non-personal form of
communication transmitted in news story
form and not paid for directly sponsor

Public Relations - a set of communication
activities designed to create and maintain a
favorable public image for firm


Special
Events
Written
Materials
Public
Service
Activities
Speeches
News
Audiovisual
Materials
Corporate
Identity
Materials
Web Site
Major Public Relation Tools
Promotional Strategy:
Push Strategy: promotion of a product to
wholesaler or retailers in the marketing
channel, who in turn promote the product to
consumers
Pull Strategy: promotion of a product
direct to consumers to stimulate strong
consumer demands
DISTRIBUTION
Channel of Distribution - a group of
interrelated organization that directs the
flow of products from producers to ultimate
consumers
Marketing Intermediary - an individual or
organization in marketing channel that
provides a link among producers, other
channel members, and final consumer

Type of Marketing Channels:
Consumer Products:
Producer-consumer: plant and flower, services
Producer-retailer-consumer: automobile, furniture
Producer-wholesaler-retailer-consumer: e.g.
convenience goods
Producer-Agent/broker-wholesaler-retailer-
consumer: e.g. consumer products

Type of Marketing Channels
Industrial Products:
producer-industrial user: heavy
equipment and machinery
producer-wholesaler-industrial
user: tools and automotive parts


Distribution Overages
Intensity Distribution - market coverage in which
all available outlets are used for distributing a
product
Selective Distribution - Market coverage in which
only some of the available outlets are used for
distributing a product
Exclusive Distribution - Market coverage in which
one outlet is used in specific geographic area for
distributing a product

Wholesaling
The marketing activities of intermediates who sell to retailer,
industrial users, and other wholesalers.

Types of Wholesalers:
Merchant Wholesaler: takes ownership of goods and the
risks associated with ownership
Sales Branch: a manufacture-owned wholesaler that take
title to products, risks, and provides service
Agent: a wholesaler hired by a buyer or seller on a
permanent basis and paid commissions
Broker: a wholesaler who bring together buyers and seller
on temporary basis

Retailing
The marketing activities involved in selling products
to final consumers for personal or household use
Department Store: a large retailer organized into
separate departments and offering a full line of
services and wide product mix
Supermarket: a large self-service retailer that stock
a wide variety of groceries and a limited
assortment of nonfood products

Retailing
Catalog Showroom: a form of warehouse show-
room where customers select products from
catalogs sent to customers homes or available in
the store
Direct Marketing: non-store retailing that uses
non-personal media to introduce products to
consumers who then purchase the product by mail,
telephone, computer, or TV

Physical Distribution
Those activities that involve the movement of
products through marketing channels from
manufacturer to customer, including:
Transportation: shipping goods to customers by rail, air,
truck, water, and pipeline
Warehousing: the receiving, storing, and shipping
activities involved in the physical distribution of goods
Order Processing: the receipt and preparation of an order
for shipment
Material Handling: the physical handling of products
during transportation and warehousing

Basic Channels of Distribution
Manufacturers/products
Agents/brokers
Wholesalers/distributors
Retailers
Retailers
Consumers and organizational end users
Typical Distribution of Drugs
Manufacturers
Marketing Agents
Retailers/Wholesalers/Distributors
Private
GPs/specialists
Group
Procurement
Office
Retail
Pharmacy
Public Hospitals / Institutions