Chapter 1

The Unique Nature of Industrial

Marketing
 Industrial Marketing
Also called: Business-to-Business (B2B)
and Organizational Marketing.
Definition: the creation and
management of mutually beneficial
relationships between organizational
suppliers and organizational customers.
Customer can be private firm, public
agency, or nonprofit organization.
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 The Marketing Concept

Creating value for customers with goods

and services that address organizational
needs and objectives.

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 Marketing Concept
Three major components:
All company activities should begin with,
and be based on, the recognition of a
fundamental customer need.
A customer orientation should be integrated
throughout the functional areas of the firm:
production, engineering, finance, R&D.
Customer satisfaction is viewed as the means
to long-term profitability goals.

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 Strategic Focus Grid

High

Follower Interact

Customer
Focus

Isolate Shaper

Low

Low Technology Focus High

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 Market Orientation
Acquire intelligence from the external
environment.
Disseminate that intelligence throughout
the organization.
Respond to the intelligence: take action.
(Kohli and Jaworski 1990, Journal of Marketing)

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 Marketing Mission Statement

State in terms of meeting customer needs,

not in terms of products or technologies.

Marketing Myopia (Levitt 1960 HBR)

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 Marketing Activities
 Identify customer needs
 Research customer behavior
 Divide market into manageable segments
 Develop new products/services
 Establish/negotiate prices
 Deliver, install, service products
 Ensure adequate and timely supply of products
at correct place
 Allocate resources across product lines
 Communicate with customers
 Evaluate/control marketing programs 8
 Marketing Mix
Limited number of variables under
Marketing’s control to create position
that is attractive to the target market
segment.
Four Ps
Product
Price
Promotion
Place (Distribution)
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 External Environment
Characterized by:
Degree of Stability
Complexity
Diversity
Hostility

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 External Environment
Six Environments
Technological
Economic
Social/Cultural (Customer)
Political/Legal
Natural/Climatic
Competitive

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So what’s different about B2B?
Marketing Concept
Marketing Mix
Market Segmentation
Product Life Cycle

All apply in both B2C and B2B.

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So what’s different about B2B?
The technical characteristics of the
product are important.
These products directly affect the
operations and economic health of the
customer.
The customer is an organization rather
than an individual consumer, or family.

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 Five Major Differences
Between B2B and B2C

Products/Services being marketed

Nature of demand
How the customer buys
Communication process
Economic/Financial factors

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 Products/Services
More complex
Functional vs. Symbolic Attributes
Large unit dollar value/Large quantities
Custom/Tailored
Various Stages from raw material to
finished goods.
Foundation, Entering, Facilitating Goods
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Raw Material Extraction

Material Processing

Manufacturing
Parts/Subassembly

Facilitators
Assembly

Distribution

Wholesale/Retail Trade

Final Consumers
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Firms in Production Chain
 Nature of Demand
Derived
Joint/Shared
Concentrated
Inelastic

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 How Customer Buys
Group Process
Formal
Lengthy
Loyal
Decisions based on risk and opportunity

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 Communication
Personal selling more important than
mass paid advertising
Support sales with other promotional
activities: advertising in trade journals,
catalogs, trade shows, direct mail, WWW.
Message focused on technical, factual,
and descriptive content.
Multiple audience members.
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 Economic/Financial Factors
Competition oligopolistic
Power/Dependency relationships
Reciprocity:Doing business with
companies that do business with them.
Economic variables: interest rates,
inflation, business cycle

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