U N I T

SLM
-1

Organizational customers
and classifying Industrial
products

Dr. Mithilesh
Pandey
 Lecture Outcomes

 Understanding the categories of business

market customers.

 Understanding the classification of

various Industrial goods and institutional
purchasing.
Flipkart launches B2B marketplace for kiranas
amid JioMart’s rise; acquires Walmart’s
wholesale business

 By: Sandeep Soni | 
 Flipkart also acquired the wholesale business of its parent
company Walmart in India. It announced acquiring 100 per cent
interest in Walmart India that owns and operates 28 Best Price
cash and carry wholesale stores offering close to 5,000 items.
 Flipkart seems to be pulling up its socks against the soon-to-be
dominant force in e-commerce – JioMart. Central to the massive
opportunity in the fast-growing e-commerce space are MSMEs
and kirana stores that are increasingly being wooed by every
small and large marketplace.
 Strengthening its connect with small sellers and kiranas, Flipkart
Group on Thursday launched an exclusive B2B marketplace –
Flipkart Wholesale – to enable them to procure goods in
categories including grocery, general merchandise, or fashion
along with offering schemes and incentives.
 Along with the launch, the company, which currently leads the
online retail market along with Amazon, has also acquired
wholesale business of its parent company Walmart in India.This
would allow Flipkart to benefit from Walmart’s wholesale
capabilities.
 Categories of Business Market Customers

OEMs
Commercial
Firms Wholesalers
Retailers

Central State
Governments
Government Government

Educational Civic SocietiesHealthcare

Institutions
Institutes Nonprofits Other
Business Market Customer
Commercial Enterprises

Three categories of Commercial

Customers:

◦ Users
◦ OEMs
◦ Dealers and distributors
Users
Users purchase industrial products or
services to produce other goods or services
that are, in turn, sold in the business or
consumer markets.

Example: Tata Motors buys machines to

produce automobiles that are sold to
consumers and businesses. Tata Motors is a
user.
 Producers
Profit oriented companies

Produce products - OEM’s and Subcontractors

E.g. Intel produces microchips

OEMs

Original Equipment Manufacturers

Individuals and organizations that buy
business goods and incorporate them
into the products that they produce for
eventual sale to other producers or to
consumers. Example: Robert Bosch &
Foxconn.
Governments
 Central and State Government and local
bodies

 Generally use the bidding approach to

purchase goods and services

 Purchase up to 1/3 Gross Domestic

Product (GDP)
Institutions
 This is the nonprofit segment of the market that does
not seek to achieve normal business goals such as
ROI, %share of market or profit

 Market includes universities, hospitals, schools,

religious bodies, NGOs, foundations, etc.
 Classifying Goods for the Business Market

Classify industrial goods

by asking the following: Source: Adapted from
Philip Kotler,
How does the good or Marketing
service enter the Management:
production process? Analysis, Planning,
and Control, 4th ed.
How does it enter the
cost structure of the
firm?
 A Framework for Business Marketing Management

Business marketing strategy

is formulated within the
boundaries established
by the corporate
mission and
objectives.
 Established Sectors:  Indian B2B
Auto & auto components:
•India is already the world’s largest market for two wheelers, three wheelers
& tractors. It has scale and extensive Tier-1 & Tier-2 vendor ecosystems. It’s
best suited to further entrench itself into the global supply chains of other
OEMs to support new consumer trends & cost-effective innovation. 
Medical Devices & Healthcare:
•India is the world’s numero uno vaccine supplier and the third largest
generic drugs producer, but ranks 14th in value. This is a good opportunity
for upward movement in GVCs and to capture significant global market
share. A combination of investment in R&D and attracting new medical
devices companies for production will enable this path.
 Electronics/ ESDM: From an importer
to now the world’s second largest
mobile manufacturer, it has led to
extensive vendor & suppliers’
development. The strategic intent to
further expand into ESDM(2) space is
amply clear now with announcement of
3 schemes (PLI, SPECS and EMC 2.0)
(3). A 4-6% cost advantage is a
significant one in low margin & high
scale manufacturing.
 Discussion

How B2B online marketplaces could

transform indirect procurement
Bearing in mind that category boundaries are not always sharp,
we currently see four types of marketplace. Each is defined by
the nature of its wares and services, as well as by who holds
contractual and warranty responsibility for them.


Product-focused marketplaces often focus on

commodities like office supplies, furniture and equipment,
and packaging. Amazon Business and Alibaba are probably
the best-known names, but the category also includes
ThomasNet and Global Sources Direct.
 Time-and-materials marketplaces, which typically offer
freight services, travel services, IT and technology,
temporary labor, and facilities management. Two well
known examples are SAP Fieldglass and Concur, the
expense and travel management site.
https://www.youtube.com/watch?v=wu9od-GdrDY #Procurement
Scope-of-work marketplaces offer services such as
marketing, telecoms, utilities, rent and real estate,
insurance, and professional services (such as legal and
consulting).
Corporate-spinoff marketplaces. The final category of
marketplaces has evolved from formerly captive platforms
that large companies developed for their own supply
networks, and have grown to serve other companies as
well.
The implications of online B2B marketplaces

 Online B2B marketplaces offer several general benefits

to business. Notable are greater transparency in product,
service, and supplier availability—as well as in pricing
and purchasing terms. Hours and time zones are
irrelevant, making marketplaces truly global.
 And, perhaps most significantly, they provide CPOs
with the means to offload the tactical, often repetitive
work that dominates procurement (especially in indirect
categories), improving their management so they can
focus on more strategic activities.
How will marketplaces evolve?
 Just as the growth of B2B marketplaces will reshape the
procurement function and the role of the CPO, so, too,
will procurement influence the evolution of
marketplaces.
 We envision CPOs eventually partnering with the
marketplace to find goods and services, forming buyers’
consortia among peers, and even developing entire
ecosystems with suppliers and peers that more
effectively serve companies’ needs.

- Mckinsey & Company (2019)

Trends in B2B Procurement:
Government entities
India to store crude oil in US
 For one, India will have to pay a rental for
hiring the storages in the US. This rental
will be on top of the international price for
oil.
• PTI  July 20, 2020, 10:41 IST
 New Delhi: India plans to store its crude oil
in US strategic petroleum reserves for use not
just during emergencies but also for trading to
capture any price advantage, officials said.
India and the US on July 17 signed a
preliminary agreement for cooperating on
emergency crude oil reserves, including the
possibility of India storing oil in the US
emergency stockpile.
Defense procurement of fuel and
lubricant’s
Question : Tata Motors is suppling vehicle to
Indian Army is an example of

A. Commercial customer
B. None of these
C. Institutional customer
D.Governmental customer
Any Questions?