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INDUSTRIAL MARKETING B2B MARKETING: OVERVIEW
Understanding Industrial markets
Overview of Industrial Market
Nature and scope of B2B Markets
Industrial Market Vs Consumer Market Market Structure
Understanding Industrial markets
Industrial Market Geographically conc. Fewer buyers (relatively) Big buyers ( small number of large buyers)
Consumer Markets Geographically dispersed Mass markets Free Market (large number of buyers)
Industrial Market Vs Consumer Market Market Structure - Example
Understanding Industrial markets
Industrial Market ( Rutile for Paints) Major ten cities. Fewer buyers (example 500) Oligopolistic buyers with clout To access international market (Asian, Nerolac, ICI etc.)
Consumer Markets (paints) Even in small villages Mass markets ( 1 billion ) Small customers normally competition is within the country.
* Less of formal processes. *Purchasers are experts & focus is more on performance/service. * Formal processes. *Family involvement & focus more on product per se.Industrial Market Vs Consumer Market Buyer Behavior Understanding Industrial markets Industrial Market *Evaluated for functionality rational/task motive to buying. *Higher interaction with the supplier. *Nor personal relationship with the supplier. Consumer Market *Social / psychological factors are important. 4 .
* Less of formal processes. negotiate pay & forget. select. *Want to buy LG only (because neighbor has) *Go to a shop.Example Understanding Industrial markets Industrial Buyer for AC *Evaluated for functionality ( evaluation by tech committee) *Purchase through tendering Process & brand less important. 5 .Industrial Market Vs Consumer Market Buyer Behavior . Customer for AC Should look good & match the décor. *Discuss technical details. *Formal processes of documentation etc. price negotiation etc.
delivery and availability is somewhat important.Industrial Market Vs Consumer Market Products Understanding Industrial markets Industrial Market * Technical complexity and customized. * Service. 6 . Customer Markets * Standardized. *. Service. delivery and availability is very important.
can wait for a Specific color / size. Understanding Industrial markets Customer for Samsonite soft Luggage * Standardized product range to select from. 7 . Service. delivery and availability is somewhat important. *.Example Samsonite Outsourcing soft luggage * Each component is as per Samsonite specification.Industrial Market Vs Consumer Market Products . * Service. delivery and availability is very important as it affects supply chain of the company.
Consumer Market * Unobservable mental stages. 8 .Industrial Market Vs Consumer Market Decision making Understanding Industrial markets Industrial Market * Distinct observable stages * Multiple influencers and decision makers. not very clear pattern.
Customer * Low involvement buying and impulse purchase (the exact choice criteria difficult to identify) & varies from situation to situation. procurement etc. agreement by contractor.K. selection. 9 .Example Understanding Industrial markets Industrial Buyer ± Soaps for Workers canteen * Need identification. purchase departments negotiation & placing order. from the workers union.Industrial Market Vs Consumer Market Decision making . * O.
more direct & fewer linkages between seller and buyers. Consumer Markets * Indirect and multiple linkages 10 .Industrial Market Vs Consumer Market Distribution channel characteristics Understanding Industrial markets Industrial Markets * Shorter.
11 . Virtually no interaction with company. may even be serviced by company employee or a regular basis.Understanding Industrial Market Vs Consumer Market Industrial Distribution channel characteristics -Example markets Hotel buying Cold Drinks * Supplied directly by the distributor. Customer for Cold drinks * Normal distribution style of distributor to retailer to customer.
Example : You plan an adv. campaign to highlight decals and generate customer flow. Consumer Markets * Emphasis on mass market promotion.Industrial Market Vs Consumer Market Promotion Understanding Industrial markets Industrial Markets * Emphasis on personal selling or one to one dealing. Example : Selling fridges with decals.O. 12 . You go and deal with Coke or Pepsi H.
* Sharing of cost data & budgeting of acceptable profits in many cases. 13 . Consumer Markets * Normally MRP & MOP * Concept of list price & its implementation.Industrial Market Vs Consumer Market Pricing Understanding Industrial markets Industrial Markets * Competitive bidding & multistage negotiation.
* Sharing of production and overhead cost data with CSD and price based on cost + margin.Industrial Market Vs Consumer Market Pricing . 14 . Consumer Markets for Rum * Normally MRP & MOP * Concept of list price & its implementation in the trade.Example Understanding Industrial markets Industrial (CSD purchase Of Rum ) * Competitive bidding & selection on basis of L1.
Product characteristics : Specific private labels. Buyer characteristics : Technical evaluation / rational process / multiple buying influencers. Market characteristics : Very few of them and they are big in size and have centralized purchasing. 15 .Understanding A big reseller can be treated as a Industrial Industrial Buyer markets Example: Shoppers Stop / Ebony / Kids Kemp for an apparel manufacturer. Purchase : Not for consumption but for business.
if they get better price. Channel characteristics : Direct service by the manufacturer. If one design clicks. Economics of demand : Based on actual consumer off-take of the products and hence derived. Price characteristics : Very hard on negotiation.Understanding A big reseller can be treated as a Industrial Industrial Buyer markets Example: Shoppers Stop / Ebony / Kids Kemp for an apparel manufacturer. it straight goes to profits. it is stocked more in anticipation. 16 .
( relatively narrow scope ).Organizational Customer Type of purchasing organization Commercial Enterprise Understanding Industrial markets 1. 17 . Industrial Dealers & Distributors ± Essentially their objective is to trade on the items. they can make the vehicle & fit headlights later. OEM ± These consumers use the products as component of their own output. ( Maruti as a user of headlights ). 3. The stakes are high as their final output depends on your product. 2. In emergency. Users ( consumers ) ± They are the final consumers of the product and their total operation depends on you. No coal => No Steel. Example: Eastern Coal Fields for Tisco.
Tender.Organizational Customer Type of purchasing organization Government agency Understanding Industrial markets 1. L1 etc. Public accountability ± everything by rule books as far as documentation. 18 . 2. Standard procurement processes ± Registration.
less of technical evaluation. Characteristics : Normally one time deals. 3. DSP cooperative buying suitcases for their members. Tisco giving its workers. XIM-B purchasing air-conditioners for faculty offices. watches as Diwali gifts. non ± specialist buyers. large orders. 2. 19 .Organizational Customer Type of purchasing organization Institutions ( Private & Public Sector ) Understanding Industrial markets 1.
Raw materials ( natural gas.) 2. Component parts ( switches. HDPE etc. 20 . distributors. steel sheets ) 3.Organizational Customer Based on Type of products purchased Materials and parts Understanding Industrial markets 1. motors or customized gears ) Characteristics : Normally large custom made orders are sold By the manufacturers & standard products by industrial. Manufactured materials ( copper wire.
21 . Installations ( buildings. Accessories ( PC. because of extensive interaction required and long negotiation time required. the manufacturers deal directly with the customer & accessories are sold by industrial.) 2. distributors.Organizational Customer Based on Type of products purchased Capital Items Understanding Industrial markets 1. machinery etc. computers. Office furniture) Characteristics: Normally major installations.
22 . Services ( maintenance. Supplies ( soaps.) 2.) Characteristics : Normally industrial distributors are used & services are provided by the individual contractors ). canteen etc. stationery etc.Organizational Customer Based on Type of products purchased Understanding Industrial markets Supplies and services 1.
AMC etc. 5. Maintenance : Ease of operation. Finance : Long & short term financial implication. 23 . payment terms. installation needs. 6. 4.Characteristics of Organizational Procurement Multiple Influences Understanding Industrial markets Example : Procurement of Injection Moulding Machine 1. 3. Purchase department : Price. 7. R & D : Designs the moulds which are to be used. skills to be imparted. Quality Assurance : Responsible for output consistency. availability of spares. 2. Production : Output levels. delivery terms. HRD : Manpower implications.
foreign exchange implication. delivery records . price factor. inventory carrying cost etc.Characteristics of Organizational Procurement Technical sophistication Example : Procurement of Rutile for paints Understanding Industrial markets 1. Material Planning : Exact forecasting of demand. payment terms etc. are planned so as to optimize the profitability of the organization. factoring of international prices Vs domestic prices. 2. 24 . Economic order quantity : The quantity to order. Supplier rating : Based on the the quality reports. the suppliers are rated and 3. frequency of ordering etc.
Concept of optimization w. Value Analysis : The option of using a lesser quantity of costly Rutile for getting the same output level by change of formulation is explored.t constraints 25 . In absence of the raw materials. whether any alternative can be used is worked out.Characteristics of Organizational Procurement Technical sophistication Example : Procurement of Rutile for paints Understanding Industrial markets 4. is worked out before decision making. How the option of airlifting impact cost etc.r.
Political interference : 3. Large number of buying center : Government departments are everywhere. contracts : a) Rate contracts b) DRDO / ISRO Dev.Characteristics of Organizational Procurement Government purchases Understanding Industrial markets 1. A lot of them purchase locally. Job cost + effort cost c) 131 Orders Skills required are specialized 26 . Specified govt. 2.
influences 27 .Industrial Marketing Environment Understanding Industrial markets Buyer Seller Interface Publics Macro Environment Govt.
M. / Dlrs. Components Equipment Suppliers Manufacturer¶ rep Dist / Dlrs Transporters Warehousing firms Mktg.Industrial Marketing Environment Buyer seller interface Understanding Industrial markets Govt. Research firms Compt. Dist. Labour Capital R. Mafg. Bankers & insurers Commercial Enterprises Industrial Distributors Market segments Buyers Facilitators 28 .
Financial publics ± FI / Stockbrokers / Individual Stock Holder ( Stock prices. CNG vehicles. confidence in company ) 2.Industrial Marketing Environment Publics Understanding Industrial markets 1. General publics ± MacDonald's coating French fries with beef tallow Business serves the society 29 . Independent press ± Impact on reputation of company ( Dhabol power corporation ) 3. Public interest groups ± Environmentalists ( Euro II . Narmada bachao) 4.
Bhopal gas tragedy. Changes the cost base of most oil based companies. ³Right to Know´ Companies have to furnish details of the hazardous products made & used by them.Industrial Marketing Environment Macro Environment Understanding Industrial markets 1. 30 .Increased demand for oil led to increase in prices of oil in the world markets. 2. Government policies like subsidizing diesel at the cost of petrol. Also changed the demand pattern of automobile ( petrol to diesel ). Economics . Ecological influences .The concern for the environment so emission norms are stringent & industry has to adjust. changes in the law to use MIC as an intermediary.
Bihar and Orissa have the concentration of steel plants. Politico / Cultural influences ± Hire and fire policy of west Vs militant trade unionism & job protection in India. Technological influences ± Typewriters manufacturers had to shift market focus. 4.Industrial Marketing Environment Macro Environment Understanding Industrial markets 3. water & lime stone deposits for setting up. MP. change products etc after PC¶s and word processors became common. Physical environmental Influences ± Steel plants need iron ore. 31 . 5. .
Lifting of Liquor ban in A. needs the loan so it is likely to sign the treaty. Influencing Govt. ( a lot of lobbying ). 32 . The govt.Industrial Marketing Environment Macro Environment Understanding Industrial markets 6.P. CNG buses for Delhi «. Government influences ± Anticipating governments action: WTO treaty signing and IMF loans linkages for govt. actions: Lobby for reduction in excise duty (to create level playing field).
) 33 . water supply. employment.Dhabol Power Corporation came up with the very good adv telling the good the plant has brought about in the area. school. Comparative advertising . Aggressive pricing (coal based power plants Vs Gas based power plants) c. plus electricity generation cost (compared with other plants etc. Competitive aggression a. Create Product differentiator (Bonding power of cement Gujrat Ambuja Cement ± compressive strength) b.Environment Management Strategies Independent Strategies Understanding Industrial markets 1.
c. Industry promotion ± Doodh.Mohali. Competitive pacification a. they do not spoil the trade. focus on end users ). b. Improved competitive relations . 34 . Egg & LPG campaign. Price Umbrella¶s ± The transporter¶s union finalizing rates for each destination ex.Environment Management Strategies Independent Strategies Understanding Industrial markets 2.(Auto companies do not fight on discount to trade @4%. ( Increase the pie rather than fight for the same pie).
Corporate Image advertising ± ISO 9000 Accreditation. Voluntary environmental control ± ISO 14000 Accreditation Making green products & advertising it. This help them charge higher & get business.Environment Management Strategies Independent Strategies Understanding Industrial markets 3. b. Commitment to interest groups ± Archies cards giving part of institutional revenue to fund the NGO¶s. c. 35 . Building Public Opinion a.
36 . reduction in excise etc. Political / Legal a. Issue advertising through the direct paid media or even influencing the media to highlight the issue ( may or may not be funded directly ). Steel Industries lobbying for more development work.Environment Management Strategies Independent Strategies Understanding Industrial markets 4. Directly lobbying with the govt. b. & law enforcers.
Co-optation : Absorption of relevant Publics on board of directors. 37 . Coalition : Industry association ( Specially used to lobby with the government ) FMA decision to have max 7 years warrantee on fans. Contracting : Allwyn is part of Electrolux. b. but supplies refrigerators to LG. IIMC & XLRI directors in the board of directors of XIM. c.Environment Management Strategies Co-operative strategies Understanding Industrial markets a.
Environment Management Strategies Strategic Maneuvering Understanding Industrial markets a. 38 . b. May be the idea is to be part of a high growth industry which has good future potential. Domain Selection : Focusing on areas of strong competitive advantage. Cray Supercomputers ICI Worldwide Light chemicals with high margins. Diversification : Reliance into telecom sector.
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