BUSINESS MARKETING

BY PROF. ARUN SAXENA

ITM , NAVI - MUMBAI

DEFINITIONS OF MARKETING

MARKETING IS THE MANAGEMENT PROCESS THAT

IDENTIFIES, ANTICIPATES AND SATISFIES

CUSTOMER REQUIREMENTS PROFITABLY

(THE CHARTERED INSTITUTE OF MARKETING )

DEFINITIONS OF MARKETING

THE RIGHT PRODUCT, IN THE RIGHT PLACE, AT THE RIGHT TIME, AND AT THE RIGHT PRICE ( ADCOCK ET AL ) )

MARKETING IS A SOCIAL AND MANAGERIAL PROCESS BY WHICH INDIVIDUALS AND GROUPS OBTAIN WHAT THEY WANT AND NEED

THROUGH CREATING, EXCHANGING AND

OFFERING PRODUCTS OF VALUE WITH OTHERS KOTLER

WHAT IS A PRODUCT ?
WE DEFINE A PRODUCT AS ANYTHING THAT

CAN BE OFFERED TO A MARKET FOR

ATTENTION , ACQUISITION , USE OR CONSUMPTION

THAT MIGHT SATISFY THE WANTS AND NEEDS

OF A CUSTOMER OR A CONSUMER.

WHAT IS SERVICE

ACTVITIES ,BENEFITS OR SATISFACTION

WHICH ARE OFFERED FOR SALE OR

PROVIDED IN CONNECTION WITH THE

SALE OF THE GOODS.

BUSINESS MARKETING IT IS A MARKETING OF PRODUCTS OR SERVICES

TO ORGANISATIONS RATHER THAN TO HOUSE HOLDS OR INDIVIDUALS.

THE PURCHASES ARE MADE

NOT FOR SELF CONSUMPTION BUT
FOR ACHIEVING ORGANISATIONAL OBJECTIVES

OR TO FACILITATE THE OPERATION OF

AN BUSINESS ENTERPRISE .

BUSINESS MARKETING
THE INPUTS ARE USED IN PRODUCTION OF FINISHED PRODUCTS OR USE AS COMPONENTS FOR OTHER

PRODUCTS OR SERVICES OR FOR RESALE.

IT IS A SUBSET OF MARKETING MANAGEMENT AS IT DEALS WITH STANDARD AND CUSTOMISED

PRODUCTS AND SERVICES.

IT SERVES THE LARGEST MARKET OF ALL.

BUSINESS MARKETING MANAGEMENT

MANY LARGE FIRMS CATER EXCUSIVELY TO BM CUSTOMERS AND NEVER DIRECTLY INTERACT WITH THEIR ULTIMATE CONSUMERS. SOME FIRMS PARTICIPATE IN BOTH THE CONSUMER MARKET AND THE BUSINESS MARKETS. MARKET SENSING AND CUSTOMER LINKING IS THE KEY FOR SUCCESS.

BUSINESS MARKETING MANAGEMENT

PARTNERING FOR INCREASED VALUE.

CREATING

THE VALUE

PROPOSITION.

MARKETING'S CROSS FUNCTIONAL RELATIONSHIPS.

SALIENT FEATURES OF BUSINESS MARKETING

NO. OF BUYERS ARE SMALLER

LARGE BUYERS VOLUME WISE

GEOGRAPHICAL CONCENTRATION OF BUYERS IS GREATER.

DERIVED DEMAND
IN ELASTIC DEMAND FLUCTUATING DEMAND

STIMULATING DEMAND

SALIENT FEATURES OF BUSINESS MARKETING

INTERRELATIONSHIP WITH CUSTOMER ( ST & LT). PROFESSIONAL PURCHASING. SEVERAL BUYING INFLUENCES. MULTIPLE SALES CALLS. LONG PROCESS AS SO MANY FORMALITIES. DIRECT PURCHASING.

SALIENT FEATURES OF BUSINESS MARKETING

HIGHLY TECHNICAL & PROFESSIONAL PURCHASING. RECIPROCITY. LEASING AND RENTING . ACCOMPANYING SERVICES VERY IMPORTANT. EMPHASIS ON PERSONAL SELLING.

CLASSIFICATION OF CUSTOMERS .
1) COMMERCIAL ENTERPRISES
USERS / OEMs / DEALERS AND DISTRIBUTORS.

2) GOVERNMENTAL ORGANISATIONS
DEFENCE / NON DEFENCE

3) INSTITUTIONS
SCHOOLS / HOSPITALS / HOTELS / MALLS

Classifying Goods for the Business Market

Classifying industrial goods by the following questions: How does the good or service enter the production process? How does it enter the cost structure of the firm?

Source: Adapted from Philip Kotler, Marketing Management: Analysis, Planning, and Control, 4th ed. (Englewood Cliffs, N.J.: PrenticeHall, 1980), p. 172, with permission of Prentice-Hall, Inc.

PROCESS OF BUSINESS MARKETING.

IDENTIFYING CUSTOMERS / PROSPECTS PRE SALES DISCUSSION. SUBMISSION OF BUDGETORY OFFERS. FOLLOW UP VISITS I , II , III. ARRANGING FOR DEMONSTRATION / TRIAL. PRICE NEGOTIATIONS. OBTAINING ADVANCE & ENTERING AGGREMENT

CHASING FOR TIMELY SUPPLIES.

DELIVERY OF GOODS. COLLECTION OF PAYMENT.

INSTALLATION AND COMMISSIONING.

AFTER SALES SERVICE, WARRANTY / GURANTEE FOR THE PERFORMANCES.

BUSINESS MARKETING
NO. OF BUYERS ARE SMALLER.
VERY CLOSE / STABLE / LONG TERM RELATIONSHIP WITH THE CUSTOMERS. DECISION MAKING PROCESS INVOLVES DIVERSE GROUP i.e. SO MANY INFLUENCERS.

CONSUMER MARKETING
NO. OF BUYERS ARE COMPARATIVE LARGE.
COMPARATIVELY INFREQUENT CONTACT & FOR SMALL DURATION. INDIVIDUAL OR HOUSEHOLD UNIT MAKES DECISION.

DISTRIBUTION NETWORK IS ALMOST DIRECT AND RELATIVELY SHORT.

NO. OF INTERMEDIARIES CHANNELS ARE MORE TO REACH TO CONSUMER.

BUSINESS MARKETING
BIDDING TYPE OF PRICING FOR UNIQUE ITEMS OR ELSE STANDARD PRICE LIST.
PRODUCTS ARE TECHNICAL IN NATURE .ACCOMPANYING SERVICES VERY IMPORTANT.

CONSUMER MARKETING
STANDARD PRICE LIST AND OR PRINTED PRICES.
PRODUCTS ARE STANDARD . SERVICE IMP. BUT RELATIVELY LESS.

LEASEING AND RENTING IS NOT LEASING AND RENTING IS MOST SO PREVALENT. PREVALENT. EMPHASIS ON PERSONAL SELLING / PPT / SEMINAR.
EMPHASIS ON ADVERTISING IS MORE.

BUYING SITUATIONS FOR BUSINESS MARKETING

ROUTINE ITEMS NEW SPECIFICATIONS NEW ITEMS SYSTEMS BUYING - TOTAL SOLUTION

SYSTEMS CONTRACTING

BUYING MOTIVES FOR BUSINESS MARKETING

INPUTS TO PRODUCTS OR SERVICES PROFIT MAKING STATUTORY REQUIREMENTS CUSTOMER SERVICE

EXPERIMENTAL / TRIAL / R&D

BUYING CENTRES / BUYING INFLUENCE FOR BUSINESS MARKETING.

INITIATOR USERS SENSE THE NEED - ACTUAL USES THE PRODUCTS

INFLUENCERS EXERTS THE INFLUENCE ON PD DECIDERS . APPROVERS . BUYERS - GIVES FINALLY YES OR NO - AUTHORIZES TO INITIATE ACTION - COMPLETES THE FORMALITIES

. GATE KEEPER - REGULATE THE INFORMATION

-- ALSO INFLUENCERS, ENVIORNMENTAL FACTORS. ORGANISATIONAL FACTORS , INTERPERSONAL , INDIVIDUAL

BUYING ORIENTATIONS FOR BUSINESS MARKETING. BUYING

DISCRETE TRANSACTION FOCUS ON PRICE MULTISOURCING SHORT TERM RELATIONSHIP

PROCUREMENT
QUALITY IMPROVEMENT COST REDUCTION FEW SUPPLIERS LIMITED SUPPLIER INVOLVEMENT

BUYING ORIENTATIONS FOR BUSINESS MARKETING.

3) SUPPLY CHAIN
STRATEGIC VALUE ADDITIONS ACTIVE INVOLVEMENT OF SUPPLIER

PARTNERSHIP WITH SUPPLIER

SHARING SAVINGS EQUITABLY INFORMATION. USE OF INTERNET BUILD TO ORDER.

SCOPE & CHALLENGES OF BUSINESS MARKETING.

EXTERNAL LINKAGES DERIVED DEMAND INTERNAL LINKAGES EMPHASIS ON TECHNOLOGY.

COMPLEX BUYING

PROCESS.
CONCENTRATED CUSTOMER BASE.

HIGH LEVEL OF
CUSTOMIZATION. ORDER FULFILLMENT MECHANISM.

MANAGEMENT CHALLENGES FOR BUSINESS MARKETING.

NEW PRODUCT COMMERCIALIZATION. MARKET SEGMENTATION. PRODUCT POLICY / PRICING. CHANNEL OF DISTRIBUTION. CROSS FUNCTIONAL & INTERDEPARTMENTAL COORDINATION. MANAGING SOCIAL RESPONSIBILITY.

SEGMENTATION
ITS A PROCESS OF DIVIDING THE TOTAL MARKET FOR A PRODUCT OR SERVICE INTO SEVERAL SEGMENTS OR DISTINCT GROUP OF BUYERS. EACH GROUP OF BUYERS OR SEGMENTS IS HOMOGENOUS AND MAY REQUIRE SEPARATE BENEFITS FROM THE PRODUCT, SEGMENTATION IS ORGANISING CUSTOMERS INTO MEANINGFUL GROUP FOR EASE IN TARGETING AND PRODUCT POSITIONING.

HIGH-GROWTH COMPANIES SUCCEED BY

SELECTING A WELL-DEFINED GROUP OF POTENTIALLY PROFITABLE CUSTOMERS.

DEVELOPING A DISTINCTIVE VALUE PROPOSITION.

FOCUSING MARKETING RESOURCES ON ACQUIRING, DEVELOPING, AND RETAINING PROFITABLE CUSTOMERS.

PROCEDURE FOR SEGMENTATION

MARKETING RESEARCH

ANALYSIS ( IDENTIFY SEGMENTS )

PROFILING ( OUTLINES OF SEGMENTS )

FIVE CRITERIA FOR EVALUATING POTENTIAL MARKET SEGMENTS

1.MEASURABILITY
1.ACCESSIBILITY 1.SUBSTANTIALITY 1.COMPATIBILITY
1. RESPONSIVENESS

B2B SEGMENTATION VARIABLES

APPLICATION GEOGRAPHICAL REGION

INDUSTRY IN WHICH CUSTOMER PARTICIPATE,

SIZE OF THE ACCOUNT. BUYER BEHAVIOUR.

TECHNOLOGY USED.

SEGMENTATION BENEFITS
1. THE MARKETER BECOMES MORE ATTUNED TO THE UNIQUE NEEDS OF CUSTOMER SEGMENTS. 2. FOCUSES PRODUCT DEVELOPMENT EFFORTS, DEVELOPS PROFITABLE PRICING STRATEGIES, SELECTS APPROPRIATE CHANNELS OF DISTRIBUTION. 3. PROVIDES GUIDELINES THAT ARE OF SIGNIFICANT VALUE IN ALLOCATING MARKETING RESOURCES.

SEGMENTATION - APPLICATION
ELECTRIC MOTORS MICRO MOTORS FRACTIONAL HP MOTORS MEDIUM SIZE MOTORS LARGE MOTORS DRIP PROOF MOTORS SUBMERSIBLE MOTORS EXPLOSION PROOF MOTORS

SEGMENTATION AIR COMPRESSOR

INDUSTRY

- CONSTRUCTION

APPLICATION

- ENGINEERING PROCESS ( ) GARAGE / SERVICE WORKSHOP WATER WELL DRILL

- SMALL / MEDIUM / LARGE - SCREW TYPE ROTARY VANE POSITIVE DISPLACEMENT

CAPACITIES TECHNOLOGY

SEGMENTATION - HELICOPTER
BY SECTOR - PRIVATE PUBLIC INSTITUTIONS SIZE OF SHIPMENTS LOW / MEDIUM / LARGE

BY APPLICATION

MOVE PEOPLE MOVE GOODS EXPLORE / SURVEY / INSPECTION /

A Framework for Business Marketing Management

Business marketing strategy is formulated within the boundaries established by the corporate mission and objectives.

BUSINESS MARKETING STRATEGY ELEMENTS OF BM STRATEGY

* MARKET SELECTION & PRODUCT PLANNING. * PRODUCT PRICING * PRODUCT DISTRIBUTION SYSTEM * MARKETING COMMUNICATONS * PRODUCT OR TECHNICAL SERVICES * PLANT LOCATION

MARKET SELECTION & PRODUCT PLANNING

* DEMOGRAPHIC * GEOGRAPHIC * PRODUCT APPLICATION

* SEGMENT STRATEGIES * INDIVIDUAL ACCOUNT

PRODUCT PLANNING CHOICES

- WILL THE PRODUCT LINE CONSISTS OF MATERIALS., COMPONENT OR END PRODUCTS ? - WILL THE PRODUCT DESIGNS BE STANDARD OR CUSTOMIZED ?
- WILL IT SPAN A RANGE OF PRICE POINTS OR CONCENTRATE AT THE LOW END OR PREMIUM PRICE LEVEL ? - WHAT WILL BE EACH PRODUCT;S FUNCTIONAL SPECIFICATIONS ?

CONSIDERATIONS RELEVANT IN PRODUCT PLANNING -DOES THE PROPOSED PRODUCT LINE SERVE A
CUSTOMER NEED THAT THE SELLER CAN PROFITABLY FILL ? - IS THE PRODUCT DIFFERENTIABL FROM COMPETITIVE OFFERINGS ? - DOORS TO NEW CUSTOMER ? ENHANCE PRESENT CUSTOMER / REPUTATION / RELATIONSHIP/ CANNABALIZATION SALES.

PROFIT OPPORTUNITIES ARE GREATEST FOR DIFFERENTIATED PRODUCTS.

AREAS OF EVALUATION
- THE STAGE OF MARKET GROWTH.
- ORGANIZATIONS BROAD GOALS AND MISSION.

- FIRMS SWOT ANALYSIS

- COMPETITOR ANALYSIS.

- DEMAND ANALYSIS.
- POSSIBILITY OF SIGNIFICANT SHARE.

OBJECTIVES

PRICING

* TO GAIN MARKET SHARE

* TO DISCOURAGE COMPETITOR

* TO DRIVE OUT COMPETITOR.

* TO MEET COMPETITOR'S PRICING.

* IF PRODUCT LINE THAN TO BANK ON OTHER

DISTRIBUTION
SALES FORCE & EXTERNAL INTERMEDIARIES
DIRECT SALES

THROUGH DISTRIBUTOR

CAPTIVE DISTRIBUTOR

SALES AGENT

COMMUNICATION
PERSONAL SELLING TRADE TELE MARKETING INTERNET