Industrial Marketing | Marketing | Sales

INDUSTRIAL MARKETING

INDUSTRIAL PRODUCT (Defn)
It is the Product or Service which is offered to Manufacturing, Trading or Service Organisations or to Professionals or Professional Institutions for their use in functioning towards their business objective/s.

Marketing Application & Practices

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INDUSTRIAL MARKETING

INDUSTRIAL MARKETING (Defn)
It refers to the process of marketing such industrial products or services

HOW IS IT DIFFERENT ?
(a) (b) Focused more on relationship Approach differs for each market

Marketing Application & Practices

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INDUSTRIAL MARKETING

INDUSTRIAL PRODUCTS

◦ Core Product : functional performance ◦ Augmented Product : peripheral product
 Additional features  Packaging  Sales Promotion  Before / After Sales Service  Company Reputation  Availability / Reliability of delivery commit.  Prices

Marketing Application & Practices

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INDUSTRIAL MARKETING

CLASSIFICATION OF INDUSTRIAL GOODS
◦ Equipments :
Equip organisations for their stated purpose

◦ Materials & Supplies :
Used in Production for resale

◦ Services :
Facilitate the functioning of the organisation

Marketing Application & Practices

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INDUSTRIAL MARKETING
Includes all organisations that acquire goods & services used in production of other products or services that are sold, rented or supplied to others  E.G. Manufacturing, mining, banking, construction, transportation, finance, communication etc.  Key characteristics

1.Few buyers 2.Larger buyers 3.Close supplier – customer relationship

Marketing Application & Practices

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INDUSTRIAL MARKETING – CUSTOMERS

Various types :
1.Producers of goods & services 2.Middlemen 3.Government units 4.Non-profit organisation

Are they different from end consumer ?
◦ Less emotional ◦ Focus is economy
Marketing Application & Practices 6

INDUSTRIAL MARKETING

MARKET SEGMENTATION
It refers to offering different products, prices, distribution, promotion and / or support services to different customer segments ◦ When all elements of Marketing Mix are differentiated for each market segment, you have a perfect Segmentation strategy.

Marketing Application & Practices

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INDUSTRIAL MARKETING

MARKET SEGMENTATION OF INDUSTRIAL PRODUCTS
1. What is brought ?
      Type of Product Range of Product – Full Line / Niche What need does the Product satisfy Std Product / variance / Non – Std Capital Goods / Consumables High Value / Low Value

Marketing Application & Practices

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INDUSTRIAL MARKETING

MARKET SEGMENTATION OF INDUSTRIAL PRODUCTS
2. Who buys it ?
 Offices / Manufacturing Industries / Service Industries / Professionals  Type of Industry / Service  Geographical location  Customer – Govt / Public / Private  Size of Customer  Heavy User / Light User
Marketing Application & Practices 9

INDUSTRIAL MARKETING

MARKET SEGMENTATION OF INDUSTRIAL PRODUCTS
3. Why is it bought ?
 Price – Lowest / Value for Money / Premium Product  Technology – Latest / Proven  Aspects determining Customer’s perception of quality e.g. Aesthetics, Durability etc

Marketing Application & Practices

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INDUSTRIAL MARKETING

1. 2. 3. 4. 5. 6. 7. 8.

INTERNAL CUSTOMERS

Operators ( ease of use) User dept (Up time) Maintenance dept ( less / no maintenance) R & D dept ( Technology ?) Materials / Purchase (Cost / delivery) Finance dept (actual cost) Personal ( how safe is product) C.E.O. ( value for money)

Marketing Application & Practices

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INDUSTRIAL MARKETING

1. 2. 3. 4. 5.

Buying chain members
Gatekeeper/s Influencer/s Decision maker/s Buyer / purchaser User

The composition of above members is also known a buying center Period for purchase in Industrial marketing varies from a day to several months
Marketing Application & Practices 12

INDUSTRIAL MARKETING

THE BUYING PROCESS
1. Recognition of Need – receipt of requisition 2. Make or Buy Decision 3. Purchase
 From • On • On  From • On • On • On single supplier
the basis of past purchase the basis of fresh negotiations

multiple suppliers
the basis of past purchase the basis of fresh negotiations the basis of Tenders
Marketing Application & Practices 13

INDUSTRIAL MARKETING

THE BUYING PROCESS
4. Tenders :
          Open (Advertised / Public Openings) Closed (Advertised / No public opening) Limited (By invitation only) Integrity Meeting / Exceeding Specs Quality Delivery Time Pre / After Sales Service Company Reputation Commercial Terms
Marketing Application & Practices 14

5. Selection among Supplier

INDUSTRIAL MARKETING

THE BUYING PROCESS
6. Information Sources :
 Own company record  Other company reference / Published literature  Catalogues / Exhibitions / Seminars / Presentations

7. Placement of Order 8. Order Follow up 9. Receipt & Inspection of Products & Documents 10. Payment
Marketing Application & Practices 15

INDUSTRIAL MARKETING

Buyer – Seller Relationship
◦ More of partnership ◦ Mutual trust ◦ Long term outlook

Closely tied firms often work at lower total costs simply by reducing the risks & uncertainties
Marketing Application & Practices 16

INDUSTRIAL MARKETING

Lower prices are possible with :
◦ ◦ ◦ Back to back understanding Annual rate contract Large volumes

5 key dimensions that help buyer & seller relationships :
1. 2. 3. 4. 5. Co – operation Information sharing Operational linkages Legal bonds Relationship specific adaptations
Marketing Application & Practices 17

INDUSTRIAL MARKETING
     

Co – Operation efforts treats problem as joint responsibility Information sharing could be risky Operational linkages may help in reducing the total inventory cost Powerful customers may control relationship Buyers may look for other sources to reduce risks Reciprocity may influence relationship in big way e.g. Japan
Marketing Application & Practices

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INDUSTRIAL MARKETING

TYPES OF PROMOTION
1. 2. 3. 4. 5. 6. 7. 8. 9. Telephone Directory / Yellow Pages Trade Directories / Publications Journals Press Advertising Direct Marketing Tele – Marketing Catalogue / Company Literature Seminars / Exhibitions Give – Away
Marketing Application & Practices 19

INDUSTRIAL MARKETING

NEW PRODUCT INTRODUCTION PROCESS
1. Finding New Product Ideas 2. Preliminary appraisal of new product ideas and selection process 3. Research on Products & Markets 4. Research on Manufacturing process 5. Semiworks operation in Production and Marketing 6. Transition to full – scale production and marketing
Marketing Application & Practices 20

INDUSTRIAL MARKETING

FACTORS INDICATING PRODUCT DELETION
1. 2. 3. 4. A declining volume of sales A falling rate of profit A declining share of the market The appearance of a substitute that represents an improvement 5. An increase in cost of production 6. A declining market 7. The need for constant executive attention to prevent loss
Marketing Application & Practices 21

INDUSTRIAL MARKETING

Vendor approval / classification
1. 2. 3. 4. 5. Data gathering Data analysis Visit to vendor works Vendor approval / registration Vendor classification

This helps in limiting the competition for each type of product category Unless vendor is approved the process of sale cannot start
Marketing Application & Practices 22

ORGANISATION BUYING PROCESS
CHARACTERISTICS TIME REQUIRED MULTIPLE INFLUENCE REVIEW OF SUPPLIER TYPE OF PROCESS NEW - TASK MODIFIED STRAIGHT BUYING RE-BUY RE-BUY HIGH HIGH HIGH MEDIUM SOME SOME LITTLE LITTLE NONE LITTLE
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INDUSTRIAL INFORMATION REQUIRED

MARKETING HIGH MEDIUM

Marketing Application & Practices

INDUSTRIAL MARKETING

STRATEGY
“ACTIONS AIMED DIRECTLY AT ALTERING THE STRENGTH OF THE ORGANISATION RELATIVE TO THAT OF IT’S COMPETITORS” ◦ Not included are all actions aimed at improving operational effectiveness ◦ WITHOUT COMPETITION THERE WOULD BE NO STRATEGY ◦ Analysis is the critical starting point of Strategic Thinking
Marketing Application & Practices 24

INDUSTRIAL MARKETING

STRATEGY – MAJOR CONSTRAINTS
1. Reality :
    Company Competence Customer Competition Time has to be ripe. More strategies fail because they are overripe than premature Limitations of Internal resources Skills , Experience
Marketing Application & Practices 25

2. Ripeness : 3. Resources :
 

CORPORATE STRATEGY
Market Attractiveness

A – Prevent or Minimise Loss

C
B

B – Select Opportunities &
Consolidate resources

C – Defend & Increase Mkt Share

A
Corporate Strength
Marketing Application & Practices 26

INDUSTRIAL MARKETING

INDUSTRIAL MARKETING

COMPETITIVE STRATEGY :
It involves positioning of business to maximise the value of the capabilities that distinguish it from its competitors


◦ ◦ ◦

COMPETITIVE STRATEGIES :
Cost Leadership Differentiation Focus
Marketing Application & Practices 27

PORTER'S MODEL
COMP. ADVANTAGE FULL COST LEADERSHIP PRODUCT DIFFERENTIATION

FOCUS NARROW INDUSTRIAL MARKETING LOW HIGH

Marketing Application & Practices

MARKET
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INDUSTRIAL MARKETING

COST LEADERSHIP - FEATURE
1. Follow a strategy of overall cost leadership 2. Focus on lowering the prices to the customers by lowering the COST OF PRODUCTION 3. Competitive advantage lies in their ability to produce goods economically and effectively 4. Avoid marginal accounts 5. Avoid heavy spending on R & D and Advertisement

Marketing Application & Practices

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INDUSTRIAL MARKETING

COST LEADERSHIP STRATEGY
Stresses only costs 2. Lower margins & higher share 3. Lower cost & higher margins
1.

COST LEADERSHIP - PITFALLS
1. Finding market with few low-cost sellers 2. Likely to be an “all or nothing”
Marketing Application & Practices 30

INDUSTRIAL MARKETING

PRODUCT DIFFERENTIATION
Many products sell on image as well as physical attributes. 2. Strategy of differentiation is making tangible and intangible aspects of product different from those offered by other sellers
1.

FEATURES

 

Strives to earn higher profit margins by charging higher prices Strategy largely successful as customers are willing to pay extra for special or superior products
Marketing Application & Practices

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INDUSTRIAL MARKETING DISTRIBUTION

WHY REQUIRED ?

1. 2. 3. 4. 5. 6. 7.

Cost of Contacting Customers Channel reach – selling support Channel’s influence Faster response Faster Order Execution Easy Payment Better Pre-sales/After sales service
Marketing Application & Practices 32

INDUSTRIAL MARKETING DISTRIBUTION

TYPES OF CHANNELS

1. 2. 3. 4. 5.

Sales Agent Wholesaler Retailer Authorised Service Center C & F / Storage

Marketing Application & Practices

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INDUSTRIAL MARKETING

KEY PERFORMANCE INDICATORS OF SALES ACTIVITIES

1. 2. 3. 4. 5. 6. 7. 8.

Sales / Target (%) Orders / Quotations (%) Margins / Sales (%) Cost of Sales / Sales (%) Sales Value / Number of Order (%) Orders / Calls (%) Key Account Contact New Customer Orders / Orders
Marketing Application & Practices 34

INDUSTRIAL MARKETING

KEY PERFORMANCE INDICATORS OF SALES ACTIVITIES (cont.)

1. 2. 3. 4.

Calls per day / Face to face time New Prospects called Credit Orders / Total Orders (%) Calls to build Customer Relationship 5. Discounts / Sales (%) 6. Timely Submission of reports 7. Timely submission of Itineraries
Marketing Application & Practices 35

INDUSTRIAL MARKETING NEGOTIATION

1. Is the issue negotiable 2. Are the negotiators interested in compromise – trading value for value ? 3. Do they trust each other, at least to some extent 4. Do they have the authority to come to an agreement ? Marketing Application & Practices

Defn : “Negotiation is the process of determining what the other side really desires and reaching an agreement so that they get what they want while you get what you want” Pre – Requisites :

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INDUSTRIAL MARKETING NEGOTIATION

◦ ◦ ◦ ◦

Styles of Negotiation :

◦ ◦ ◦ ◦ ◦

5 P’s of Negotiation :

Lose – Lose (No desire for agreement) Win – Lose (Competitive) Lose – Win (Lose now for future) Win – Win (Co – operative, problem solving) Modified Win – Win (Both feel they have won) Positive attitude – The will to succeed Preparation before negotiation Problem solving approach Probing during negotiation Marketing Application & Practices Promote yourself, company & product

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INDUSTRIAL MARKETING NEGOTIATION

Crucial Factors :

◦ ◦ ◦ ◦ ◦ ◦

Information / preparation required Evaluating bargaining power Opening the Negotiation Rules of Conduct Handling difficult personality types Understanding devious negotiation tactics Follow - up
Marketing Application & Practices 38

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