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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.

3 .The Marketing Concept Creating value for customers with goods and services that address organizational needs and objectives.

engineering. the recognition of a fundamental customer need. A customer orientation should be integrated throughout the functional areas of the firm: production.Marketing Concept Three major components: All company activities should begin with. and be based on. Customer satisfaction is viewed as the means to long-term profitability goals. R&D. finance. 4 .

Strategic Focus Grid High Follower Customer Focus Isolate Low Low Interact Shaper Technology Focus High 5 .

Journal of Marketing) 6 . (Kohli and Jaworski 1990. Respond to the intelligence: take action.Market Orientation Acquire intelligence from the external environment. Disseminate that intelligence throughout the organization.

Marketing Mission Statement State in terms of meeting customer needs. not in terms of products or technologies. Marketing Myopia (Levitt 1960 HBR) 7 .

Marketing Activities Identify customer needs Research customer behavior Divide market into manageable segments Develop new products/services Establish/negotiate prices Deliver. 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 . install.

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) 9 .

External Environment Characterized by: Degree of Stability Complexity Diversity Hostility 10 .

External Environment Six Environments Technological Economic Social/Cultural (Customer) Political/Legal Natural/Climatic Competitive 11 .

So what’s different about B2B? Marketing Concept Marketing Mix Market Segmentation Product Life Cycle All apply in both B2C and B2B. 12 .

or family.So what’s different about B2B? The technical characteristics of the product are important. 13 . The customer is an organization rather than an individual consumer. These products directly affect the operations and economic health of the customer.

Five Major Differences Between B2B and B2C Products/Services being marketed Nature of demand How the customer buys Communication process Economic/Financial factors 14 .

Symbolic Attributes Large unit dollar value/Large quantities Custom/Tailored Various Stages from raw material to finished goods.Products/Services More complex Functional vs. Facilitating Goods 15 . Foundation. Entering.

Raw Material Extraction Material Processing Manufacturing Parts/Subassembly Assembly Distribution Facilitators Wholesale/Retail Trade Final Consumers 16 Firms in Production Chain .

Nature of Demand Derived Joint/Shared Concentrated Inelastic 17 .

How Customer Buys Group Process Formal Lengthy Loyal Decisions based on risk and opportunity 18 .

trade shows. WWW. and descriptive content. 19 . direct mail. factual.Communication Personal selling more important than mass paid advertising Support sales with other promotional activities: advertising in trade journals. Multiple audience members. catalogs. Message focused on technical.

business cycle 20 . inflation. Economic variables: interest rates.Economic/Financial Factors Competition oligopolistic Power/Dependency relationships Reciprocity:Doing business with companies that do business with them.

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