Understanding Industrial

Markets :
Its Nature, Systems and
Environment

Value Chain Flow

Raw Material, Spare Parts and
Semi finished Material

Manufacturing
Industries
OEM --- Other Indust.
Sale of Capital Goods, Supplies and
Consumer Goods to Households,
Govt., Business & Insts. And Exporters

Nature of Industrial
Marketing
Three Broad Divisions of Economy
Extractive
Industries

Manufacturing
And Allied
Industries

Consuming
Units

Product Flow Diagram

Extractive
Industries
Farms
Mines
Forests
Fisheries

Manufacturing
And Allied
Industries
Manufacture/
Setup/Create/
Sale to
Other
Manufactures

Consuming
Units
Households
Govt.
Other
Business
Users
Exporters

ENVIRONMENAL TIERS

Customers
Macro

Interna
l
Competitor
s
Industr
y

Macro

Types of Environment

Ecological and physical

- Air and Water Pollution
- Solid Waste Disposal

- Conserving Natural
Resources

Internal

External
-

Micro

MICRO / MACRO ENVIRONMENT

Suppliers

Substitutes

COMPANY

Buyers

Rival Firms
New Entrants

Governments Role

Regulating Agencies

Laws / Policies

Programme Funding

Research Funding

Import / Export Regulation

Levying Taxes

Controlling Interest Rates

Providing Social Programmes

Environment Scanning

Gathering and Monitoring

Information

On Customers and Competitors

through Marketing and Sales

Staf

Analyzing Trade and Govt.

Publications

Carrying out Market Research

and Market Forecasting

Environment Monitoring

Understand Changes in
Customer
Needs

Monitor Competitors Actions

and
Strategies

Identify Technological
Innovations

Changes in Govt. Policies, Laws

and

Changes in Major Customers

Gordon E.Miracles
Qualitative Categorization
Cost of
Product
Significance
to
The Buyer
Technical
Complexity

VL
VH
VL
VH

VL
VH

Technological
Change
Frequency
After Sales
Service

VL
VH

VL
VH

Gordon E.Miracles
Qualitative Categorization
Purchase
Frequency

VL
VH

Speed or
Rate
of Usage
Variety of Needs
to be Satisfied

VL
VH

VL
VH

Extent of Eforts
to Get the
Product

VL
VH

Some Examples
Very Low
Stone

Iron Ore, Coal, Lime

Low

Alumina, Pig Iron,

Kerosene Oil

Medium

Tire and Tubes

High
Compressors,

Very High

Motors,
Pumps, Bulldozers
Fork Lifts, Lathe

Classification of
Industrial Products

Major Equipments and materials

Accessory Equipments

Fabricating or Component Parts

Process Material

Operating Supplies

Operating services

Major Equipments and

Materials
Large Machines or Other Tools
Charged to Capital Account
Two types :1. Multipurpose or Standard
machines example Dyes in
Stamping Machine
2. Special Duty or Single Purpose
Machine : Grinding Machine

Accessory Equipments
Machinery used in Auxiliary
Capacity
Cost is Generally Charged to Current
Expenses
Horizontal Demand
Small lathe
Fractional Horse power motors
Small Tractors
Fork Lifts

Fabricating or Component
Parts
The work is carried on by a series of
plants, often under diverse
ownership, each performing a single
operation or homogeneous group of
operations on the material.
Example:Batteries and tires in automobile
industry

Fabricating or Component
Parts
On the Basis of Specifications
Long Term Supply Commitment
Uniformity and Reliability of Quality
Strict Delivery Schedule
Retain Their Identity in Finished
Products
Large Replacement Market

Process Material
Form an Un-Distinguished Part of
Finished Product
Broken up and Dissipated in the
Production Process
Catalyst
Binding agents
Flavours
Preservatives

Operating Supplies
Do not Become Part of Finished Product
Continuously Worn out or Used up
Needed by Many Diferent Industries
Bought in Small Quantities
Purchased in a Routine Manner
Standardized
MRO (Maintenance, Repair and
Operating) Items

Operating Supplies
Paints
Soaps
Oils
Greases
Pencils
Type Writer
Stationary paper etc

Operating services
Building Maintenance
Auditing
Legal Services
Courier Services etc

Major Industrial
Suppliers

Machine Tool Manufacturers

Mill Industries Steel,

Aluminum,
Pulp, Copper

Processing Plants, Refineries

Fabricators, Spare Part

Suppliers

Thank You