MID TERM ASSIGNMENT

Presented by: Adeel Ahmed Khwaja Salman Shakir Madiha Anwar Waqas Mahmood Chaudry

it still may not be the wisest decision to consider a lowered price as a strategy to induce an increase in demand. This is because as opposed to consumers. Furthermore. It is a strong enough inclination to follow this relationship’s teachings and lose out on valuable market share and profitability. in the form of CRM. Creation of value is still one of the strongest tools which sell . Financial exchange also assumes a more central role in industrial marketing. The levels of exchange mentioned play important but uniquely distinct roles in consumer and industrial markets. financial and social exchange takes place in both the consumer and industrial market. financial exchange. It is arguable these exchanges play a greater role in the industrial marker due to its oligopolistic nature as opposed to the fragmented consumer market. building brand equity and lifetime customer value. From a strict marketing point of view. it is shown how falling demands of tin can be augmented by reduced prices. Yet what is to be understood is that the buyers. They would soon realize the importance of moving on to something as advance and reliable as aluminum. businesses use these products as components in their operations and thus having complete information about the product becomes a critical factor in business markets. Products such as exclusive luxuries enjoy a positive relationship between price and quantity demanded. industrial buyers tend to bulk buy. Unsurprisingly. the extension of credit and discounts strengthen and reinforce the buyer/seller relationship. Even though elements of social exchange are visible in consumer marketing as well. information flow is of extreme significance in the industrial market because the goods and services being exchanged are technical and require loads of information before a purchase decision is reached. industrial or mass. Q2 Will a price decrease be an effective marketing strategy if the demand for an industrial product decreased consumer demand? Justify your answer according to the article “You can market steel” The fundamental principle of the inverse relationship between price and demand goes around for most products in the market yet “most” is the key word to be noticed. However for some products who do have the orthodox negative relationship. keep the product in the maturity stage (product life-cycle) and keep the product running as a cash cow (BCG matrix). would grow in awareness. In the case study that studies the marketing techniques related to steel. reduced pricing strategy would be effective “only” in the case of milking out the last drops of profits remaining in the market or selling off the last of the remaining stocks that are lying around as scrap in the inventory. a seller may want to sustain the business.Q1 In the marketing of goods and services information. Do you see any significant differences in these exchanges between the two markets? Explain your answer. Since businesses in the industrial markets are co-dependent due to the supply chain linkage. However he would need to develop a Unique Selling Proposition or a measure of value creation. a fact that makes information. For a product lurking around in the last stages of its product life-cycle. Business is all about trusting each other and forming mutually beneficial long term relationships. financial and social exchanges more important than a single consumer.

Supplier involvement is encouraged especially with regards to materials. Q7 How can business market managers define their markets and monitor the competition? Business market managers have the primary role of defining the basic question as to what is the target market is or “who” are their potential customers. . value-adding operation. if price is the most significant variable in the consumer buying decision then it is safe to assume that the price factor overrides all other considerations. Contrarily there are other customers that are more sensitive to product quality and reliable delivery and are willing to pay premium prices for it. In the case of steel. psychographic and geographic basis. Procurement Orientation: In the second type of purchasing orientation buyers aim for quality improvements and cost reductions by developing two-way relations with major suppliers and looking for cost savings through better management. and product design. Therefore. it is in the firm’s interest to focus its efforts on creating and delivering value. This segmentation would be based on demographic.products and services which are on the verge of becoming obsolete. This would then define the target market of the entire business. namely commoditization. where they treat the product as a commodity and display sensitivity only to price. Q3” Marketing to industrial firms is enhanced through the understanding of value analysis”. and multi-sourcing where several suppliers are made to compete for the company's business. value is created through effective segmentation by matching the product offering to the consumer demand and buying decision. For instance. Supply Chain Management Orientation: Here the purchasing function is further enhanced to incorporate a more strategic. inventory. Do you agree or disagree? Explain why?( hint: you can market steel ) Value analysis is the term coined to denote the mechanism through which value may be added to a product. Long-term contracts with major suppliers are preferred to ensure the steady flow of material. Purchasing executives work closely with marketing and other executives to build a seamless supply chain management system that extends from the purchase of raw materials to the timely delivery of finished goods. The “product” would then define what is the basic problem that their business needs to address. which is a homogenous product. This explains why the “value oriented” advertising campaign of Pakistan Post launched two years ago has still sustained Pakistan Post even after it was becoming obsolete. simply by giving customers what they demand. Buyers utilize two tactics to this end. A complete idea of the potential customers would consequently lead to segmentation. Q5 Briefly explain how each purchasing orientation effects a suppliers ability to create and deliver value to the customer as well as gain equitable return? There are 3 types of purchasing orientations:Buying Orientation: Under this orientation purchasers have a short term focus evidenced in the desire to attain the lowest prices from suppliers for a given level of quality. or in other words.

in a commercial organization ‘price’ is an insignificant factor. Government if more concerned with their project and how they can complete it as soon as possible without keeping any regard of the needs of suppliers. whosoever presents a proposal that can provide standard quantity at the least price wins the bid. A specific department is created and CIO is appointed which is Competitive intelligence Officer. This quantitative and qualitative analysis would help a business manager analyze its competitors and help make certain strategies. There is a price-bidding. They focus on establishing life-long relations with their suppliers. Commercial buyers focus more on quality. strategies are studied and future actions are predicted. long term strategy and the industries nature. The commercial organizations work that way because they want to keep their supplies happy and satisfied – for them it’s not just that one project. • Also. OEM’s 3. The methods employed to make the purchase. relatively. the suppliers/vendors might have to wait for months before they are paid for their materials/services – reason for that being the great amount of paper work and formalities. They have different preferences and expectations off the seller and work in totally different ways. Q8 How does the government purchasing differ from purchasing by commercial organizations? If you were selling in both the commercial market and government market could you employ a single market strategy? Why? Government purchasing differs from commercial organization purchasing in a lot of ways. buying behavior is analyzed. . • In a government deal. quality): • In order to purchase material under the government set-up. commercial buying can be classified into three categories: 1. a single marketing strategy cannot be employed for both the scenarios. Strategic maneuvers also include measures like the Competitive Profile Matrix in which critical success factors are made the basis of a quantitative comparison of the business with competing firms. tender notices are given out in newspapers.Monitoring competitors would then be based on the organization’s objectives. preferences (price vs. Some businesses can venture into professional competitive intelligence. Industrial Distributors 2. Users All in all. while dealing with a commercial organization the suppliers get quick payments. monitoring competition would only be limited to small numbers and that exclusive image to be the part of an elite niche would be maintained by brand building campaigns and reminding elements. relationships with suppliers. Competitor’s behavior is studied. in-time delivery etc. If the industry has high barriers to entry. On the contrary. On the other hand. trade discounts/allowances and other incentives.

The competitive. seriously curtailing a supplier’s chances of replacing a competitor as manufacturer’s supplier of choice. thus. zero-sum nature of business markets makes firms risk averse. . It is this stability that enables manufacturers to forecast their sales and operations well in advance while at the same time being assured of a steady supply of the required components on preestablished and agreed upon terms and conditions.Q9 How would the desire for stable relationship in the industrial marketing affect a firm’s ability to sell its products to a manufacturer currently buying from another source? In B2B markets stable relationships are considered to be of at least as much importance as the product itself because buyers prefer stability and reliability in their supply chains.

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