Industrial Marketing

Session 1

Reading Material
Books
1) Principles of Marketing by Kotler and Armstrong ,
12th edition ( Chapter 6)
2) Industrial Marketing : Analysis, Planning & Control
by Reeder, Brierty & Reeder
3) Industrial Marketing
by Krishna K. Havaldar
4) Industrial Marketing
by Hill, Alexander, Cross
5) Industrial Marketing
by Dr. Milind T. Phadtare

6) Industrial Marketing by Francis Cherunilam

7) Industrial Marketing by Robert Dodge
8) Industrial Marketing by Govindrajan
9) Industrial Marketing : Ghosh
Internet : Google, etc.
Proquest
Industrial Marketing Management (Journal)
available on ScienceDirect

Industrial Marketing /
Organizational Marketing /
Institutional marketing
Industrial Marketing is B2B
(Business to Business)
A firm does business with other firm
Consumer Marketing is B2C
( Business to Consumer)

Definition
Industrial marketing consists of all
activities involved in the marketing
of products and services to
organisations, that use products and
services in the production of
consumer or industrial goods and
services, and to facilitate the
operation of their enterprises.

Differences between
Industrial Marketing and Consumer Marketing

Attribute

Industrial Marketing
(Business Mktg.)(B2B)

Consumer Marketing
(B2C)

Nature of
demand

Derived

Direct

Market
characteristics

Few buyers
Buyer location concentrated

Large no. of buyers.

Buyers widely scattered

Product

Standardized as well as customised

Usually Standardized

Price

Non-standard, bidding, negotiation,

as well as standard

Standardized with price list

Place
(Distribution)

Usually channel length small

Usually channel length long

Promotion

Emphasis on Personal selling

Mainly Advertising,
sales promotion

Marketing Mix

Contd
Differences between
Industrial Marketing and Consumer
Marketing

Attribute
Consumer
Behaviour

Industrial Marketing
(Business Mktg.)(B2B)

Buying in large quantity,

Usually loyal to a brand,
Buyer technically
knowledgeable,
Rational buying,
Strong interpersonal
relationship,
Service, delivery and
availability very important

Consumer Marketing
(B2C)

Buy in Small quantity,

Brand switching,
Buyer technically not
knowledgeable
Rational and impulsive
buying
Family involvement
Service, delivery and
availability of limited
importance

Contd
Differences between
Industrial Marketing and Consumer
Marketing
Attribute

Industrial Marketing
(Business Mktg.)(B2B)

Consumer Marketing
(B2C)

Product
specifications

High order

Not of high order

Information
exchange

Intense interactions, post sales

contacts of very high importance

Limited interactions.
Post-sales interaction very rare

Financial
exchange

Price, operating expense and

commercial terms of high
importance

Price, operating expense and

commercial terms of limited
importance

Social exchange Sustained cordial relations

necessary.

Sustained cordial relations not

essential

Economics of Industrial
Demand

Economics of Industrial
Demand
1) Derived demand
2) Joint demand
3) Cross-elasticity of demand

1) Derived demand
Derived from ultimate demand for
consumer goods and services.
Example : If demand for flats (consumer
good) is there, there will be demand for
cement, reinforcement bars, sand, etc.
Forecasts of ultimate consumer demand
determines the levels of demand
throughout the entire industrial pipeline.

2) Joint demand
When one product requires the existence of
others to be useful. If one product is not available,
demand for other product is not there.
Reason : Most products require several
component parts or ingredients.
Example : Concrete : aggregates, cement, sand
Furniture : Ply wood, fevicol
Buyers prefer same supplier to sell all items

3) Cross-elasticity of demand
The responsiveness of sales of one product to
a price change in another.
Example : Quantity of Steel demanded is
related to price of close substitute aluminum.
Windows in homes : wood, aluminum, steel

Classification of Industrial
products and services
Materials
and parts

Capital
items

Raw materials Installation/

(eg. Sand)
Heavy
equipment
Manufactured
materials
Accessories /
(eg Light
cement)
equipment
(eg.

Supplies
and
services
Supplies
(eg.
Stationery)
Services
(eg. Legal
services)

What does the buyer look for

while purchasing

Attributes considered for

Purchase Decision making
1) Product attributes : features that add value
or reduce cost, over and above meeting
specifications, example fuel efficiency for
a diesel generator.
2)

Economy attributes : Purchase price

and Commercial terms and conditions.

3) Supplier attributes : Reliability, Reciprocity

(barter),
Technical capability, Financial capability,
acquaintance with supplier, location of
supplier, infrastructure of a supplier

Business Buyer Behaviour

Organizational Buying
Behaviour
is a complex process and involves many
persons, multiple goals and potentially
conflicting decision criteria.
Members of the buying centre are
motivated by a complex interaction of
individual and organizational goals.
Their relationships with one another
involve all the complexities of
interpersonal interactions.

Differences in Buying
Behaviours
Organisational
Consumer Buying
buying
Process of buying

Well defined and

systematic prepurchase and
purchase process is
adopted

Some thinking is
there, but process
usually sub-conscious
and less systematic

Members of buying
process

Members come from

diverse professional
backgrounds

Decision taken by
people who may not
have in-depth
knowledge about
product

Purchasing frequency
and service levels

Repetitive , requiring
lot of after-sales
service, compared to
consumer behaviour

Usually not repetitive

Usually does not
require after sales
service

Seen earlier in
Consumer Buyer Behaviour

A model of Business Buyer Behaviour

The environment
Marketing
stimuli

Other
stimuli

Product

Economic

Price

Technological

Place

Political

Promotion

Cultural
Competitive

The buying organization

The buying center

Buyer response

Product or
service choice
Supplier choice

Buying
Decision
process

Order Quantities
Delivery terms

(Interpersonal and
individual differences)
(Organizational influence)

Service terms
Payment

Types of suppliers

Types of suppliers

In-supplier

Out-supplier

1) In-suppliers :
those suppliers who have done
business with the purchasing firm.
2) Out-suppliers : suppliers who have
not yet done any business with the
firm.

Purchase situations
1) Straight re-buy repeat order
In supplier is better placed than out-supplier.

2) Modified re-buy change product type/

specifications/ pricing/ commercial terms and
conditions/ make/ dealer
usually due to dissatisfaction, changed wants,
availability of new products
if arising from dissatisfaction, of customer, Outsupplier is better placed than in-supplier.
3) New task educate the customer
In-supplier better placed than out-supplier