Industrial Marketing

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Industrial Marketing consists of all
activities involved in the marketing of
products and services to

organizations
( i.e., commercial enterprise, profit and not-
for-proft-institutions , government
agencies, and resellers)

that use products and services in

production of consumer or industrial goods
and services and to facilitate the operation
of their enterprises 2
 ! Contrasts
WAS IS
Tall Towers Low-rises
Paper Silicon
Meetings ad nausean eGroups as needed
Planning,planning, planning Doing.Testing.Adjusting.Fast.

We worship Stability We groove on Wild & Wacky

“Mind my rank” “Mind my ability to
contribute”
Ninety percent of all work is Microprocessors do most
drudge work drudge work
Workin’ with the “same old Constantly expanding one’s
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gang” network of teammates
 ! Contrasts
WAS IS
Well-defines Shifting
organizational organizational
borders alliances
Products last for Products last for
years weeks
Accounting Innovation
Employees Talent 4
Industrial versus Consumer Marketing
Industrial Markets Consumer Markets
Market •Geographically •Geographically
Structure concentrated dispersed
•Relatively few buyers •Mass markets
•Oligopolistic •Monopolistic
Competition Competition
Products •Technical complexity •Standardized
•Customized •Service, delivery
and availability
•Service, delivery and
important
availability very
important 5
Industrial versus Consumer Marketing
Industrial Markets Consumer Markets
Buyer •Functional •Family
behavior involvement involvement
•Rational/task •Social/psychologica
motives predominate l motives
predominates
•Technical expertise
•Less technical
•Stable relations
expertise
•Interpersonal
•Nonpersonal
relationships
relationship
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•Reciprocity
Industrial versus Consumer Marketing
Industrial Markets Consumer Markets
Decision •Distinct, observable •Unobservable,
making stages mental stages
Channels •Shorter, more direct, •Indirect, multiple
fewer linkages linkages
Promotion •Emphasis on •Emphasis on
personal selling advertising
Pricing •Competitive •List prices
bidding, negotiating
on complex purchases
•List price on
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standard items
 Value Creation Selling
1 You as a seller and your organization devote
large amounts of time and energy.

2 You use capabilities and tools that you’ve

never used before to understand how your
customers do business and how you can help
them improve that business.

3 You’re going to make it your business to know

not only your customers but also your
customers' customers.
 Economies of Industrial Demand
Derived Demand : is the single most important
force in the marketing of industrial goods and
services.

Joint Demand : It occurs when one product requires

the existence of others to be useful.

Cross Elasticity of Demand : Responsiveness of the

sales of one product o a price change in another
The Process Exchange in the Industrial
Market

Product Quality
Exchange Maintenance Customers
Suppliers Service
The Process Exchange in the Industrial
Market

Information Technical
Exchange Economics Customers
Suppliers
The Process Exchange in the Industrial
Market

Financial Credit
Exchange Leasing Customers
Suppliers
The Process Exchange in the Industrial
Market

Social Trust
Exchange Interpersonal Customers
Suppliers Relationship
 The Reseller’s Market
Resellers purchase goods and services to facilitate the
operation of their businesses.

Everything that is purchased is purchased to make profit.

Wholesalers and retailers are treated as a n element of the

marketing mix (place or distribution) rather than as
served market.

These firms represent a sizable and important Buying

Group whose behavior is similar to Industrial Buyers
 Industrial Customers
Commercial
Enterprises

Industrial
Distributors Government
Agencies

Profit/non profit
institution
Industrial Customers ( Products Purchased)
Commercial
Enterprises

Users Original Equipment

Manufactures
(OEM)

Lubricants, coal, Steel, cement,

hand tools, brooms, generators, motors,
paper and batteries, plastics,
management farm products, raw
consulting services materials
Industrial Customers ( Products Purchased)
Government
Agencies

Airplanes,
computers, desks,
guns, paint, pencils
and legal services
Industrial Customers ( Products Purchased)
Profit/nonprofit
institutions

Surgical appliances
and supplies, X-rays
tables, soap and
window cleaning
services
 Classification of Industrial Products

Materials Capital Supplies and

and Parts Items Services

Raw materials Installations Supplies

Manufactured Accessory Business
materials and equipment services
parts
Apple iPod(Gross Margin v/s Cost)
We help people
find their way
 Marketing Strategies over Various Buying
Situations & Phases
Phases New Task Modified Rebuy
Problem Anticipate problem; In supplier; maintain
Recognition quality/service
use advertising and
standards : out
creative people to
supplier :watch for
convince buyers of
developing trends
problem-solving
capabilities

Solution Provide detailed In supplier and out

Determination products/service supplier : stress
information to capability, reliability,
decision makers and problem solving
capabilities 22
 Marketing Strategies over Various Buying
Situations & Phases
Phases New Task Modified Rebuy
Determining Provide detailed In supplier and out
needed item product/service supplier : stress
information to capability,
decision makers reliability, and
problem solving
capabilities
Searching for In supplier : In supplier : watch
and maintain for problems ;
qualifying dependability;
out supplier :
supplier
out supplier : demonstrate ability
demonstrate ability to perform task23
to perform task
 Marketing Strategies over Various Buying
Situations & Phases

Phases New Task Modified Rebuy

Analyzing Understands details Understands
proposals of customer details of customer
problem/needs ; problem/needs ;
make timely make timely
proposals proposals

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 Marketing Strategies over Various Buying
Situations & Phases
Phases Straight Rebuy
Problem In supplier : maintain close relationship
Recognition with users and buyers;
Out suppliers : convince firm to reexamine
alternatives

Solution Same as phase 1

Determination

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 Marketing Strategies over Various Buying
Situations & Phases
Phases Straight Rebuy
Determining Same as phase 1
needed item
Searching for Same as phase 1
and qualifying
supplier

Analyzing Make timely proposal

proposals

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 Conflicts Marketing /Engineering
Marketing Engineering
Responses Responses
New They don’t give us We’re limited in what
Products products we can we can design because
Design sell. we have to keep it
simple for marketing
By the time we get
them to design
they are obsolete.
Breadth We need more We have too much
of the variety variety now.
Product
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Line
 Conflicts Marketing /Engineering
Marketing Engineering
Responses Responses
Product •Our line looks •Our line does not
Appearance so inferior need a lot of fancy
window dressing

Product •Why can’t •Neither the customer

Problems engineering nor our marketing
make workable department understand
products the product and how it
is supposed to work.
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 Conflicts Marketing /Engineering

Marketing Engineering
Responses Responses
Product •The information •The information that
Promotion we get from marketing includes is
engineering is so so exaggerated. We
dull and could get sued for false
technical that no advertising.
one would read it

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 Conflicts Marketing /Engineering
Marketing Engineering
Responses Responses
Packaging It looks so cheap Trying to package so
& functions so many products and hold
poorly that it costs down is extremely
makes our difficult.
products hard to
sell.
Quality Why can’t we We must design so
have reasonable many products with
costs. numerous options that
it is hard to maintain
quality and keep costs
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down.
 Conflicts Marketing /Engineering
Marketing Engineering
Responses Responses
Technical We need a We don’t have enough
technical expert manpower to hold the
to soothe hand of some pet
customers even customers of
they really do not marketing
have a problem
Warranty Engineering Marketing wants us to
always goes by pay the full amount of
the book, they every claim, even an
don’t understand invalid one
that you have to
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bend a little.