INDUSTRIAL MARKETING

1
2
OBJECTIVE
The aim of this educational package is to present you the basic marketing principles so as for
you to apply them on industrial goods. Under this perspective, what is to be examined are
the basic marketing principles, and the way in which we frame a marketing plan; then, there
follows a detailed analysis of the parameters applied to the industrial market and the
industrial marketing.

EXPECTED RESULTS
After the end of this educational package, you will be able to:

Define marketing and recognize its function and usefulness

Analyze the marketing mix of every product or service

Analyze the macro- and micro- environment of every business

Enumerate the basic components of a marketing plan

Implement whatever planned in the marketing plan

Recognize the industrial markets and the industrial marketing characteristics

Analyze the buying behavior of the industrial customers

Apply suppliers selection criteria

Frame the strategic planning of the industrial marketing

Organize the product positioning

Manage to accomplish the pricing process

Organize the publicity campaign of the industrial product

KEY CONCEPTS
Marketing

Marketing Mix (price, product, promotion, place)

Macro-Environment

Micro-Environment

Marketing Plan

Industrial (or B2B) Marketing

Buying Behavior

Strategic Planning

3
 Segmentation

Product Positioning

Marketing Planning

Communication and Publicity/Promotion of the product

INTRODUCTION NOTE
The educational package examines the basic marketing concepts and then goes on with the
industrial marketing. It has 2 Units. The first unit is an introduction to the marketing concept
and function in the business, whereas the second unit focuses on the industrial marketing,
its basic components, the strategic planning and the marketing planning for an industrial
product.

4
UNIT 1: MARKETING: KEY COMPONENTS................................................................................ 7

PURPOSE..................................................................................................................................7
EXPECTED RESULTS.....................................................................................................................7
KEY CONCEPTS............................................................................................................................7
INTRODUCTION NOTE................................................................................................................7
1.1 INTRODUCTION TO THE MARKETING CONCEPT.................................................................8
1.1.1 MARKETING DEFINITION.......................................................................................................8
1.1.2 MARKETING MIX COMPONENTS...............................................................................................8
1.1.3 MARKETING FUNCTIONS........................................................................................................10
1.1.4 MARKETING DUTIES.............................................................................................................11
1.1.5 MARKETING CATEGORIES.......................................................................................................11
1.1.6 MARKETING ENVIRONMENT..................................................................................................12
1.1.7 THE BUSINESS MICRO-ENVIRONMENT......................................................................................15
1.1.8 THE MARKETING DECALOGUE................................................................................................21
1.2 THE MARKETING PLAN.....................................................................................................22
1.2.1 ROLE OF THE MKTG PLAN..................................................................................................22
1.2.2 THE STAGES OF THE MKTG PLAN..........................................................................................23
1.2.3 OUTLINE OF A TYPICAL MKTG PLAN CONTENTS......................................................................24
1.2.4 INFORMATION SOURCES FOR THE ANALYSIS OF THE PRESENT SITUATION......................................30
1.2.5 IMPLEMENTATION/REALIZATION PROCESS OF THE MARKETING PLAN...........................................30

UNIT 1 SUMMARY.................................................................................................................. 32

UNIT 1 ACTIVITIES.................................................................................................................. 34

UNIT 2: INDUSTRIAL MARKETING.......................................................................................... 36

PURPOSE................................................................................................................................36
EXPECTED RESULTS...................................................................................................................36
KEY CONCEPTS..........................................................................................................................36
INTRODUCTION NOTE..............................................................................................................36
2. 1 INDUSTRIAL MARKETING..................................................................................................38
2.1.1 DEFINITION AND MEANING OF THE INDUSTRIAL MARKETING....................................38
2.1.2 INDUSTRIAL CUSTOMERS................................................................................................39
2.1.3 INDUSTRIAL GOODS........................................................................................................40
2.1.4 INDUSTRIAL MARKETS BASIC CHARACTERISTICS...........................................................41
2.1.5 INDUSTRIAL CUSTOMERS BUYING BEHAVIOR ANALYSIS...............................................42
2.1.6 INDUSTRIAL GOODS BUYING PROCESS AND CENTER OF BUYING DECISIONS..............43
2.1.7 CRITERIA OF SUPPLIERS SELECTION AND INFORMATION SOURCES.............................44
2.2 INDUSTRIAL MARKETING PLANNING...............................................................................46
2.2.1 INDUSTRIAL MARKETING STRATEGIC PLANNING..........................................................46
2.2.2 SEGMENTATION OF THE INDUSTRIAL MARKET AND PRODUCT POSITIONING.............48
2.2.3 IMPLEMENTATION AND COST OF SEGMENTATION........................................................50
2.2.4 PRODUCT POSITIONING................................................................................................51
2.2.5 MARKETING PLANNING..................................................................................................53

5
2.2.6 DEVELOPMENT OF INNOVATIONS AND NEW PRODUCTS INTO THE INDUSTRIAL
MARKETING............................................................................................................................54
2.2.7 BUSINESS COMMUNICATION AND PROMOTION/PUBLICITY IN THE INDUSTRIAL
MARKETING..............................................................................................................................56

UNIT 2 SUMMARY.................................................................................................................. 59

UNIT 2 ACTIVITIES.
61

6
UNIT 1: MARKETING: KEY COMPONENTS

PURPOSE
The purpose of this unit is to introduce the reader to the marketing concept and its main
principles.

EXPECTED RESULTS
After the end of this unit, you will be able to:

Define marketing and recognize its function and usefulness

Analyze the marketing mix of every product or service

Analyze the macro- and micro- environment of every business

Enumerate the basic components of a marketing plan

Implement whatever planned in the marketing plan

KEY CONCEPTS

Marketing

Marketing Mix (price, product, promotion, place)

Macro-Environment

Micro-Environment

Marketing Plan

INTRODUCTION NOTE

This Unit is an introduction to the marketing concept and function in the businesses. The
basic marketing principles, along with their implementation in a marketing plan are
presented to you. There are 2 Units. Unit 1 includes the marketing concept, the marketing
mix components, and its function and duties. Unit 2 includes the marketing plan, its
meaning, its components, and, finally, its implementation in the business environment. At
the end of each Lesson and Unit there are some self-evaluation activities and tasks that each
one of you is supposed to accomplish, based on the material you have studied. At the end of
the educational material lie both some suggested sources of information you can consult to
find additional information, along with the bibliography used.

1.1 INTRODUCTION TO THE MARKETING CONCEPT

1.1.1 Marketing Definition

7
The Chartered Institute of Marketing uses the definition below: Marketing is the
management process through which the customer needs are identified, predicted and
satisfied with some profit for the business.

Another simple marketing definition is the one that defines marketing as the process that
combines the business means with the customer needs. In other words, marketing is about
the satisfaction of the customer needs, while at the same time it aims to achieve the
business goals, it directs the business means and it continuously confirms the fact that the
customer is satisfied.

A marketing-directed business is the one to place the customers in the center of its whole
business activity, aiming always to have satisfied customers. According to the correct words
of Philip Kotier:
The business sales for each period come from two groups: the new customers and the old
customers. To attract new customers has a higher cost than to maintain the old ones.
Consequently, it is more important to hold the old customers, rather than to attract new
ones. The secret to hold the old customers is for them to be satisfied. The satisfied customer:
1. Buys again.
2. Says good things to other people for the product.
2. Pays less attention to the competitive brands and the advertisement.
3. Buys more products from the same brand.

1.1.2 Marketing Mix Components

This term signifies the combination and coordination of the various controlled marketing
variables, which are subject to the business to be chosen and which are the ones to define
the program. The selection of a target market and the development of marketing mix are
interrelated. The Marketing manager cannot accomplish first the one and then the other
task. Both tasks have to be accomplished simultaneously, because they both define the
marketing strategy of the business.
The four marketing mix components are:
Price: the product has to be sold at a price that matches its value.
Product: the product has to satisfy the customer needs, i.e. the customers have to
take what they expect from it.

8
 Promotion: the advertisement, the public relations and the various sales techniques
have to function in a way that helps them to approach the target group in the proper
manner, sending them the proper messages.
Place: the product has to be available in the right place, in order to facilitate the
consumers to buy it.

Analytically, each one of the marketing mix components is defined by the variables below:
Price:
Price list
Price differentiation
Discounts
Payment terms

Product:
Quality
Characteristics
Variety-product line
Sign
Package

9
 Label
Guarantee
After sale service

Promotion:
Advertisement
Personal sales
Sales promotion
Publicity
Public relations

Place:
Channels
Geographic coverage
Physical distribution (storage, transfer)
Customer service level

1.1.3 Marketing Functions

The basic functions that the marketing accomplishes are presented below:
The Market function: to valuate products and services.
The Sales function: to promote a product. It includes the personal selling, the
advertisement and other methods of mass selling.
The Transfer function: transferring goods from one place to another.
The Storage function: to keep goods in order to handle demand at a specific time.
Standardization and Grading: to classify products according to size and quality.
Funding: it provides the necessary funds, the credit essential for the production,
transfer, storage, promotion, selling and buying of the products
Risk Taking: the uncertainty linked to the marketing process.
Packaging: to place the products into a specific material that helps them attract the
consumers more.
The Market Information function: to collect, analyze and distribute information
essential for the planning, implementation and control of the marketing activities.

1.1.4 Marketing Duties

10
The most basic marketing positions, along with the duties description for each one of them
lie below:
Brand Manager: the person responsible for all the decisions related to a specific
brand.
Product Manager: the person responsible for all the decisions related to a group of
similar products in a business.
Sales Manager: the one responsible to control, train and motivate the salespeople
and the salespeople support group.
Salesperson: the one responsible to identify the customer needs and try to satisfy
them.
Advertisement manager: the person responsible for the products promotion to the
consumers.
Public Relations Manager: the one responsible for the business public image; for this
reason, (s)he organizes happenings and other events.
Market Research Manager: the person responsible for identifying the customer
needs and collecting information about the competing products.

1.1.5 Marketing Categories

Marketing is classified into various categories, according to the criteria used. According to
the point of research, marketing is classified into:
General Marketing: it examines the general marketing principles that apply to all
products and branches.
Specific Marketing: it examines only one branch or product in all its functions, e.g.
industrial marketing.
According to its size, marketing is classified into:
Macro-Marketing: it examines the marketing of a whole economy.
Micro-Marketing: it examines the marketing of a business.
According to the number of mediators that intercede between the producers and the
consumers, marketing is classified into:
Direct marketing: no mediators between the producers and the consumers.

Indirect marketing: a way lot of institutions, like mediators, wholesalers, and

retailers.
According to the aim marketing has, it is classified into:
Commercial Marketing

11
 Social Marketing: it aims to non-profit goals, like the non-profit services marketing.

1.1.6 Marketing Environment

The economic organizations function today in a complex, complicated and continuously
changing business environment. The environment rate of change is usually higher than the
economic organization rate of change; consequently, this economic organization has to adapt
to the environmental changes in order to survive and develop.
The marketing administration of the business, or generally, the organization, is responsible
for the identification of the main changes that take place in the environment. These changes
lead to uncertainty, risks, but also opportunities. Despite the fact that we cannot predict the
future at a certain rate, the marketers can largely estimate what may happen. The means
they use to detect the changing future are the information and the marketing research.
Entrepreneurs or senior administration members, who cannot recognize the environmental
changes, leave their business unprepared to handle the new challenges and marketing
opportunities that emerge in the environment.
The marketers often have to confront environment conditions that would be impossible to
be handled unless they had the necessary information and the mechanisms essential for this
matter, like strategies, tactics, policies, programs, etc. the first thing that the marketers do
when they plan marketing activities is to correctly evaluate their business environment. The
business environment is classified into: macro- and micro-environment.

a) The Business Macro-Environment

The macro-environment includes powers of the general business environment, like:
demographic, economic, technologic, political and legal, and, last, social and cultural. The
marketers, with the identification of these powers, manage to develop products or services
to satisfy the market needs, which is subject to constant change.

12
 The Demographic Environment
Demography is the study of the population and demographic tendency is a change in the
population. The marketers collect information about the demographic environment, to
understand the demographic tendencies and to plan the future, since these changes directly
affect the business. The marketers pay special attention to the development tendencies of
the total population, the development tendencies of some specific age groups, the
geographic allocation of the population, as well as to the rate at which the population of an
area changes. Regarding the last variable, where the population decreases, the opportunities
for sales do also decrease. When the rest of the conditions remain stable, the opportunities
to increase sales are identified in the countries and regions where the population grows. The
marketers should also have data concerning the demographic environment, as: which is the
number of households and the number of members per household, the education level of
the population, the population combination per profession, and, last, the number of
employed women.

The Economic Environment

The economic environment of a country is affected by the economic policy that is currently
applied to it. Also, it is affected and it depends on the world economic situation, since almost
no country is a close economic system.

13
All the organizations and business, independently of being robust or not, are getting affected
by the internal and the external economic environment, too. Indicators of economic growth,
like inflation, income, et.al., and all the economic tendencies, too, largely preset the kind of
products and services that the consumers need. So, the current economic situation and the
predicted changes in the economy largely affect the success of a business marketing
strategies.
A measure relevant to the situation of the general economic environment, being accepted by
many people, is the Gross National Product (GNP). This meets the total value of all the final
products and services that are produced in a country during a year. If an economy is in a
good condition, something expressed with a high Gross National Product, there would be an
increased potential for new goods and services. If the economy, however, is in a bad
condition, there will not be large opportunities for new goods and services.
The marketers have to know how and in what products and services the consumers spend
their income. The way the latter ones spend their money depends on the increase of their
income.
The Technologic Environment
The marketers have to act fast in the technologic environments changes. Everyday new
goods and services appear in the market, which we often have not thought about them. This
fact leads to many old products to be replaced by new, better ones. Thus, the risks that stem
from the continuous technologic evolution are important for a business and they have to be
predicted and expected by the marketing members. Under this pressure of the competitive
technologic environment, the marketers have to carefully observe the trends in this
environment. The new products planning and development, in collaboration with the
Research and Development department is a certain fact.
The political and legal environment
The political will in each country is expressed via laws, presidential decrees and ministerial
decisions. The political and legal environment, though, changes all the time and the
marketers have to be always informed of these changes. In Greece, the legislation changes in
short time periods. Thus, in order for a business to function properly, it should make use of a
legal counselors services. The laws concerning the businesses operation increase every
year.
The Social and Cultural Environment
Some social and cultural values, like religion, family, democracy, are vital for the Greek
society. Other values, like the way someone communicates with their environment (e.g.

14
clothes style), are secondary values. The basic norms do not easily change. The marketers
know all these, so they try to affect the secondary norms. Each country has its own special
social and cultural environment and, as a business activity becomes international, the
marketers have to respect this environments particularities. The social and cultural values
affect the way in which the consumer acts.

1.1.7 The Business Micro-Environment

The micro-environments powers are directly related to the business; that is why it can
largely control them. These powers directly affect the efforts of the marketing
administration. The business micro-environment includes these powers: a) the ones having
to do with the direct business environment, like the personnel, the physical, technological
and financial powers of the business, b) the intermediate marketing operations, like the
mediators, the physical distribution businesses and the service centers, c) the suppliers, d)
the customers, and finally, e) the business competitors.

The Direct Business Environment Powers

These powers are intra-business and there are available to be used in achieving the business
goals. These are:

15
 1. The Business Personnel. A business personnel are its main force, since without
them the business does not exist as an organization. This personnel, however, has to
be correctly selected, trained and activated to attain the business goals.
2. The Physical Powers. The physical powers of a business include the facilities,
machinery, raw materials stock and the distribution mechanism. The administration
has to maintain these powers in excellent condition and ready for use, to perfectly
accomplish their task.
3. The Technological Powers. These have to do with the technological level that the
business holds. The business administration has to choose the technological level
that fits the company, according to the goals and the level of the business staff skills.
4. The Financial Powers. The funding of a business programs may come from the funds
of the organizations of the business, from the profits or the loan capitals. These
capitals are essential to achieve its goals.

The Intermediate Marketing Businesses

The businesses very often employ specialists or intermediate marketing businesses, which
help them accomplish the various marketing tasks. Such businesses are: the mediators, the
physical distribution businesses, as well as the service centers. The producers consider these
businesses to be an expansion of their own marketing administrations. This happens
because, if these businesses did not exist, the businesses marketing administrations would
have to accomplish all these tasks that the intermediate businesses undertake.

1. Mediators
Mediators are the ones to mediate so as for a product or service to go from the producer to
the final consumer. Some of the mediators buy the products or services, they become their
proprietors and then they resell them. Others just mediate to create commercial acts, i.e.
they do not resell the products, and they are the so-called representatives. In the first
mediators category belong the wholesalers and the retailers, who buy and resell the
products they purchase.

2. Physical Distribution Businesses

There are specialized businesses which deal with products storage and transfer, from the
place of production, to the place of consumption. The means of transport employed vary and

16
depend on the kind of product, on how fast the product or order should get to its
destination, and on the size, weight and transfer safety of the product, etc.
The products production units and the physical distribution businesses may have
warehouses available. These places are called private warehouses. Apart from these places,
however, there are also public warehouses, which both the production units and the physical
distribution businesses can use. The goal of a business which undertakes the creation of a
physical distribution system is to satisfy both the time and place needs of the customers and
to minimize the transfer and storage cost of the products. Each production unit should
decide how much storage space it will have and how much space it will use from the
warehouses the physical distribution businesses have. Also, the production unit should
decide if it will employ its own means of transport or if it is going to use the physical
distribution businesses transportation.

3. Service Centers
The marketing service centers are the marketing research companies, the advertising
companies, as well as the marketing counselors. The smaller a business is, the more it
employs marketing service centers.
The businesses assign surveys to the marketing research companies, in order to collect data
that the business itself cannot collect in any other possible way. Besides, the advertising
companies help the business to develop product or services promotion strategies, and the
implementation of these strategies for the business. Usually, the tasks that the advertising
companies are assigned expand to the undertaking of the special product promotion
programs to their points of sale, too. The task that the counsellor companies undertake may
expand from the solution of a specialized marketing problem to the assignment of a large
part of the total marketing strategy of the business.

The Suppliers
Each production unit, apart from the raw materials, it is supplied with some parts essential
for the manufacturing of its final product from other production units. As you can see, a
close collaboration between buyer and supplier is necessary. This collaboration should be
based on a long-term and honest, friendly relationship, which is going to serve their mutual
interests.
In some businesses, there is a special department functioning to serve the supplying needs,
called Purchasing Department, or this task is assigned to one person, called purchaser. The

17
level to which this task is developed will depend on the kind and the nature of the business.
The businesspeople that belong to the last two categories should have a department called
Marketing and Purchasing Department available.
When a production unit is planned, there should be a decision taken, about which
accessories it will manufacture itself and which are going to be purchased by other
production units. The Marketing and Purchasing department members should set quality
and reliability standards for the raw materials and the accessories they are going to provide
for their business.
The Marketing and Purchasing Department members in a retailing business, in order to
provide the goods for sale, usually follow the stages below:
1. Define the needs of the segments of the market they address to.
2. Choose the suppliers of goods.
3. Negotiate the goods purchase terms.

The Customers
The business customers are another important factor of the business micro-environment.
Without customers there would be no business. Each business tries to satisfy one or more
market groups or target-markets with a specific number of products or services. All customer
types can be divided into the following categories:
1. Final Consumers: They buy products and services for personal or family use.
2. Wholesalers and Retailers: They buy products and services to resell them to others
for some profit.
3. Industrial Customers: They are organizations that buy products to utilize them in the
manufacturing of other products.
4. International Customers: They can be consumers, manufacturers and resellers of a
foreign country.

The Business Competitors

The competitors are one of the most basic powers of a business micro-environment. The aim
of every marketer, though, should be to offer the market products and services without
substitutes, in such a way that makes the consumer to insist on buying these specific
products or services. The economists distinguish four categories of competition, which are:
1) perfect competition, 2) oligopoly, 3) monopoly competition and 4) monopoly.

18
 1. Perfect Competition: It forms a private market condition with a large number of
salespeople and purchasers. Each salesperson or purchaser sells or buys an
extremely small quantity, compared to the total quantity, and so they cannot affect
the final price of the market. The products offered and sold in the market are
homogeneous.
2. Oligopoly: In this market condition, a small number of companies control the whole
market for the specific products or services they offer. These businesses usually
agree on the definition of a single price and they make it hard for similar companies
to enter the market.
3. Monopoly Competition: In this market form, there are several companies, which
rarely compete with each other in price level. Each one of them tries to differentiate
the products or services offered, and the competition takes place mainly on
trademarks level.
4. Monopoly: In this case, there is only one business that offers a specific product to
the market and it has the chance to set whatever price it wishes, since it is the only
one that offers this specific product or service.

The marketers have to monitor and control the competition and to define the changes
happening in the business competitive environment.
However, to be able to move on to an analysis of the competing market, they should obtain
the necessary information, like:
Who are our competitors?
Who else can be a competitor of our business?
How many product series they offer to the market, what is the performance of their
products, which is the quality of their products and how good is the thing they offer?
How skilled is the competitors marketing and which is its philosophy?
How many salespeople they have and how are they organized?
Which is their pricing policy, what are their terms and what discounts do they make?
Which is their technological level?
Which is their financial position?
What are their goals?

19
 What are the shares our competitors hold in the target market?
1.1.8 The Marketing Decalogue
The practical advice the business specialists give are as follows:
1. Concentrate on the market and the customer.
2. Segment your market field.
3. Carefully choose your market.
4. Differentiate from your competitors.
5. Carefully evaluate your products briefcase.
6. Do not pay attention only on the pricing policy.
7. Pay particular attention on the customer quality of service.
8. Promote your competitive advantages.
9. Develop long-term relationships with the customers.
10. Base your strategies on a complete marketing strategy.

Task 1
Analyze the marketing mix a) of an airlines company, b) of a paper production company.
What similarities and differences can you spot?

Task 2
Analyze you own business macro- and micro-environment.

20
1.2 THE MARKETING PLAN
1.2.1 Role of the MKTG Plan
The MKTG Plan is a written text that actually responds to some basic questions of the
marketing strategy, i.e.:
(1) How did we get here?
(2) Where are we now?
(3) Where do we wish to be in the future?
(4) How will we get there?
Consequently, it is a mechanism to guide the ones responsible for the success of a particular
product, that is, the marketing members. The plan describes in detail all the necessary
information that the managers have to accomplish in order for the product or the products
to have a successful career in the market. The success of each product, of course, lies to the
members themselves. Therefore, we can develop marketing plans for a specific product or
product series or for all the important products of a business, or even for a department of
the business. The MKTG plan is, in this way, a mechanism of effective communication. The
various marketing plans from the various departments and for various products, that end up
for approval at the highest administration levels, provide the businesss senior administration
with an important way to control the compatibility between the planning units and the inter-
department collaboration results. Each plan guides the senior administration members of all
levels to pose the questions suitable for each implementation. The MKTG plan also helps to
accurately evaluate the business deeds and to provide diagnostic information, that lead to
the better understanding of the specific market mechanisms and to the development of the
proper strategies necessary to attain the marketing goals.
Despite all the advantages that the adoption of the strategic planning (and the marketing
planning specifically) offers to the business, the large businesses that have not fully accepted
its role are not a few.
The usual reasons why some businesses do not officially prepare MKTG plans are because:
They have unofficial programs/plans.

They use more general business plans.

They have been discouraged by bad planning experiences in the past.
They find it too easy to make predictions,

They do not have the necessary information and facts for the planning process,

They do not have time available for planning,

21
 They find it too difficult to coordinate the various business functions to achieve the
general business goals.
The senior administration members are not committed to the planning process.

1.2.2 The Stages of the MKTG Plan

The first stage is the analysis of the present situation. It is a descriptive presentation of the
present condition of the business, mainly based on real facts, and not on regulatory acts
(what the business should do, or how the situation should be in the near future). It includes
analyses of the internal (business resources and capabilities) and the external (competitors,
consumers, marketing environment) factors of the business. The analysis of the external
factors should aim towards the understanding of the simultaneous present situation and the
tendencies that allow for the prediction of the business future position and the course of the
specific product. On the other hand, the analysis of the internal factors is easier, since the
necessary facts are directly available from the business records. However, it is hard to
objectively assess these factors; this is why many businesses assign the task of the internal
factors assessment to special counselor companies.
The second stage includes the identification of problems and opportunities, based on the
analysis of the present condition that preceded this stage. Here, the managers opinion to
detect the problems and the opportunities is needed, mainly regarding their classification.
Thus, the managers end up with the main problem that they directly have to solve, and to
the basic opportunity, or opportunities, that will have to exploit, based on the business
advantages, the resources available and the given market conditions.
The set of marketing goals is the third stage of a marketing plan framing. This means that it is
about the answer to the fundamental question where do we want to get. From the answer
to this question, both the strategies and the implementation programs of the marketing
strategies are derived.
The fourth stage of the whole process is about how to get where we want to get. Here there
are strategies and specific programs (tactics) developed, with the implementation of which
we wish to achieve the marketing objectives that were set in the previous stage. According to
the characteristics of the specific industry/market, we set the time span of the plans
implementation. The time span usually expands from one to five years. Here we should
highlight the fact that the specific (and highly detailed) programs allow for the estimation of
the resources necessary to achieve the marketing objectives that have been set.

22
The last stage completes the marketing plan with the prediction of the expected profits and
other economic results of the whole effort. Specifically, it mentions the basic resources
which are going to be used, the various expenses that are going to be required and the
results/performance (income, profits, etc.), that are going to be attained by the programs
implementation. The valuation of the results, so the level to which the business achieved its
goals, too, takes place with criteria similar to the ones that have been employed in the set of
the objectives (e.g. sales size, sales value, market share per segment, profit margins, market
entrance, cost of products produced). In the same stage, there should be a prediction on
how to handle situations that are relatively unlikely/unpredictable; there should be, in that
sense, alternative plans to handle situations that reverse the assumptions used for the
planning process (predictions for the market, the competitors, etc.).

1.2.3 Outline of a Typical MKTG Plan Contents

A marketing plan includes the departments below in the order they appear. Of course, some
businesses modify or adapt this generally accepted outline according to their needs,
administration habits or competition conditions that they face. The Conference Board
presents 38 examples of different marketing plans ways of development from businesses of
consumer and industrial goods and services. The deviations that appear are not usually
important. The basic parts of the plan that are introduced here are in one way or another,
included to most modern marketing plans.

1. BASIC EXECUTIVE SUMMARY

A brief presentation of the present situation, the problems and opportunities that the
business and the product faces, as well as a presentation of the objectives, the alternative
marketing strategies and the marketing strategy that was finally employed. Moreover, what
is also included is a brief reference to the action plans and the benefits that the business
obtained by their implementation.
1.2 CONTENTS
2. ANALYSIS OF THE PRESENT SITUATION
2.1 SALES ANALYSIS
Diachronic presentation of the product sales, according to the type, geographic region,
consumer type, distributors, industry, final users and season. Analysis to identify tendencies
and possible problems, too.

23
2.2 INDUSTRY ANALYSIS/ ANALYSIS OF THE BUSINESS BRANCH ATTRACTIVENESS
a. Market factors:
(1) Market size
(2) Development rate of the market sales
(3) Cyclicality
(4) Season
(5) Stage in the Product Life Cycle (PLC)
(6) Profits
b. Industrial factors:
(1) Branch skills of production
(2) Obstacles in new competitors entrance
(3) Competition Level of competition
(4) Suppliers negotiation powers
(5) Buyers negotiation powers
(6) Threat by the substitute products
(7) Raw materials
c. Environmental factors:
(1) Social
(2) Political Economical
(3) Demographic
(4) Technological
(5) Legislating
(6) Natural Environment factors

2.3 COMPETITOR ANALYSIS

For each basic competitor, the following things are analyzed:
(1) Which are the main objectives?
(2) Which is the present marketing strategy?
(3) Which are its strengths and weaknesses, and how can they change (Also: what do the
competitors consider to be their main competitive advantage)?
(4) Which is going to be the expected marketing strategy in the future?
(5) i) Ability to conceive and plan new products
ii) Ability to produce or manufacture products
iii) Ability to promote and present products in the market

24
 iv) Funding abilities
v) Management skills

2.4 CUSTOMER/ CONSUMER ANALYSIS

() Who?
(1) Who are the customers of a business/ product?
(2) How can they be classified (Market Segmentation)?
(3) What classification is more important for the business and its competitors today, but also
in the future?
(b) Why?
(1) Why the customers buy on this specific moment, this quantity and in the way they want
to?
(2) How complicated and prolonged is the markets decision?
(3) How many people (consumers) participate and in what stage?
(4) What are the objectives of each person that participates?
(5) Which objectives are the most important?
(c) Modern trends in the products consumption.
(d) Consumer attitudes and recent changes in their behavior.

2.5 RESOURCE ANALYSIS

Evaluation of strengths and weaknesses, based on:
(1) The comparison between the business brand and the competitors brands.
(2) The comparison between the business and its competitors, and
(3) The evaluation of the business skills in problem-solving and in the exploiting of
opportunities, which appear from the analyses of the industry and the competitors.

3. PLANNING HYPOTHESES
Presentation of hypotheses related to external factors (e.g. raw materials, employees offer,
consumer preferences, etc.), that are important for the realization of the marketing
objectives and the success of the marketing strategies that are going to be suggested in the
plan. At the same time, predictions on the market abilities and business sales forecasting are
introduced.

25
The planning hypotheses are the key-factors that shape the present situation into which the
business and the product function. These factors are mainly mentioned in the business
internal environment and, consequently, the business cannot control them. If the hypotheses
cannot be realized, the business is obliged to go on with a new marketing strategy for the
product, since the facts and the terms by which the game of the marketing strategic planning
is played.
The changes in some of the planning hypotheses also bring similar results, because, for
instance, new data have been emerged. This means that the answer to the question will we
need a marketing strategy modification if a planning hypothesis does not apply anymore? is
a kind of control to the planning hypotheses.
4. PROBLEMS AND OPPORTUNITIES
Problems identification and presentation generally for the market and specifically for the
business and opportunities identification and presentation (new markets, new or modified
products, necessary changes to the marketing mix).

5. MARKETING OBJECTIVES
These objectives can be expressed as sales, profit, market share, target market objectives,
etc., but they should be attainable, specific, countable, quantitative and they should also
refer to a specific time period.
The objectives are distinguished into clearly strategic and operational. A strategic objective
describes what do we wish to achieve, while an operational objective describes how will
we know when we will achieve the things we want. Thus, for example, the strategic
objective can be Increase of the Market Share, and the operational from 14% to
18%.... Also, there are primary and secondary objectives. If we go on with the same
example, we may set the secondary objective (strategic and operational at the same time) to
be by maintaining the profits at 12%.

6. MARKETING STRATEGIES/ MARKETING MIX)

Presentation of the alternative marketing strategies (with the pros and cons of each one).
Selection of a strategy from the alternative ones (or selection of combination from the
alternative ones) and justification of this choice.

26
The strategies are also mentioned through the respective positioning in target-customers
or/and target-competitors. Therefore, the positioning that a marketing strategy suggests
gives out the basic reasons for which the target -customers will buy our brand instead of the
target-competitors brand.

7. MARKETING PROGRAMS/ MARKETING STRATEGY IMPLEMENTATION

Description of the way the selected marketing strategy is implemented (specific marketing
programs with implementation time schedules and ways of monitoring and control of the
marketing plan progress). The programs do actually refer to the default implementation
measures of the selected marketing strategy. Through these tactics, the value in the
positioning suggestion is created. Specialized possible marketing plans may refer to the
product, the pricing, the marketing communication (promotion), the distribution, the
customer service etc. of course, the marketing plan should internally comply, not only with
one another, but also with the selected marketing objectives and strategies. They should also
include the element of the proper reward of the people who participate in this task.

8. ECONOMIC DOCUMENTS
(1) Budgets of the marketing programs that are going to take place.
(2) PRO FORMA calculations (costs, revenues, profits).

9. METHODS OF MONITORING AND CONTROL

Detailed reference to the methods under which the monitoring and control of the progress
of the implementation of the programs and the realization of the objectives goes on. In fact,
there is a clear presentation of the necessary information that come from research and the
way in which it is going to be used.

10. EMERGENCY PLANS AND ALTERNATIVE STRATEGIES

It includes a presentation of the way in which the marketing strategies and programs are
going to be modified in case of a differentiation in one of the planning facts, or if something
unpredictable or highly anticipated happens, that reverses the hypotheses on which the
marketing plan was based on.

11. APPENDIX FACT BOOK

27
This Appendix contains all the important facts that were employed mainly in the analysis that
preceded the marketing plan, and all the material that is not directly connected to the plan,
too (tables, diagrams, advertisements, relevant articles, publications, leaflets, annual
business reports, statistical data, previous studies, etc.).
At the beginning of the program, there is a table of contents, with all the facts that have
been introduced, numbered in the same order.
The Fact Book is a permanent record of the product and the market characteristics, and the
market conditions and marketing activities in it.
It is employed as a report, allowing the marketing plan to be relatively brief, concise and
functional. It is also used as an introduction for the familiarization and the information of the
business new employees.

1.2.4 Information Sources for the Analysis of the Present Situation

There follows a list of the information sources that are mainly used, and that are essential for
the sub-analyses of the marketing plan present situation analysis.
(1) Previous marketing plans.
(2) Empirical knowledge and observation of marketing managers.
(3) Salespeople and business marketing records.
(4) Professional analysts that record the branchs tendencies.
(5) Committee responsible for marketing.
(6) Financial reports.
(7) Newspapers and magazines.
(8) General publications having to do with the economy, the market and the businesses.
(9) Publications of this field professional organizations.
(10) Governmental reports and publications.
(11) Financial analysts.
(12) Advertising companies (especially the research departments).
(13) Competitors employees.
(14) Suppliers and distributors.
(15) Consumers/customers.

1.2.5 Implementation/Realization Process of the Marketing Plan

The structure of the marketing plan implementation process presupposes some certain
answers to questions like: Who is the one responsible for the completion of the planning and

28
the implementation of the marketing plans and who is responsible for each part of the plan?
How often does the planning process take place, does it take place regularly or when the
market conditions ask for it? Who is the one responsible for the evaluation and approval of
the marketing plans, and with what mechanisms does the implementation control of the
plan that proceeded happen? Some observations relating to those questions are useful in
this point.
The responsibility for the preparation and the structure of the marketing plan usually is
undertaken by the marketing manager, the marketing vice-president and the product/brand
manager, members of the Sales, Advertising or Research Department and, lastly, the
personnel of the Planning Department. Given the time restrictions for the organizational
structure of the business, it is useful for the marketing plan to include the people that will be
responsible for its implementation. Even if this is something that sounds logical, it is not
something that most businesses, at least, prefer. In this way, the marketing plans end up to
be, for the ones that wish to apply them, directives of their obligatory actions. At the same
time, for the success of the marketing plan, it is a desire and also a determinant to mix even
senior administration members in the marketing plan development/ planning. Thus, the
administration members are not restricted to play the role of those who say yes or no to
the indifferent plans, but, by the understanding of the planning process by being a vital part
of it, the commit more to the plans and they are in a better position to estimate the
objectives, the strategies and the plans suggested by their subordinates. As far as the
planning time schedules, we could support that these are mainly depending on the nature of
the industry/market and on the specific product.

Task 3
Make the marketing plan diagram of the business you work at.

29
UNIT 1 SUMMARY

Marketing is the management process with which the customer needs are identified,
predicted and satisfied with some profit for the business. The four components of the
marketing mix are the price, the product, the promotion and the place.
The marketing environment is the macro- and micro-environment of the business. The
macro-environment contains powers of the general business environment, like the
demographic, economic, technological, political and legal and, last, social and cultural. The
business micro-environment contains these powers: a) the ones having to do with the direct
business environment, like the personnel, the natural, technological and financial powers of
the business, b) the intermediate marketing businesses, like the mediators, the physical
distribution companies and the service centers, c) the suppliers, d) the customers, and,
finally, e) the business competitors. The analysis of the business macro- and micro-
environment helps us to spot the strengths and weaknesses of the business and to predict
the threats and opportunities that may emerge.
The marketing plan is a mechanism to guide the ones responsible for the success of a specific
product, i.e. the marketers. The plan describes in detail all the necessary actions the
marketers have to accomplish in order for the product or the products to have a successful
career in the market. The marketing plan also helps to evaluate in an exact manner the deeds
of the business and to provide diagnostic information that lead to the better understanding
of the specific market mechanisms and to the development of strategies suitable to achieve
the marketing objectives.
The first stage is the analysis of the present situation. The second stage includes the
identification of the problems and opportunities, according to the analysis of the present
situation that took place before. To define the marketing objectives is the third stage of the
development process of a marketing plan. To define strategies is the main point of the fourth
stage of the whole process. The last stage completes the marketing plan with the estimation
of the expected profits and other economic results of the whole effort.
The responsibility for the preparation and the structure of the marketing plan is usually up
to: the Marketing manager, the Marketing vice-president, the Product/Brand manager,

30
members of the Sales, Advertising or Research departments, and, finally, the staff of the
Planning department.

31
Unit 1 Activities

1. Marketings main objective is :

a) The satisfaction of the customer needs
b) The attainment of the business objectives
c) Both

2. The general marketing examines a product in all its functions:

TRUE FALSE

3. The macro-marketing examines the marketing of the whole economy:

TRUE FALSE

4. In the direct marketing, what is between the producers and the consumers is:
a) mediators
b) wholesalers
c) retailers
d) all the above
e) none

5. The sales are about the need of the salesperson to transform the product into money,
while marketing is about the satisfaction of the customer needs.
TRUE FALSE

6. When the rest of the conditions remain stable, the chance to increase sales is
identified in those countries and regions where the population grows.
TRUE FALSE

7. The business micro-environment includes these powers;

a) The ones having to do with the direct business environment

32
b) The intermediate marketing businesses
c) The suppliers
d) The customers
e) The business competitors
f) All the above

33
UNIT 2: INDUSTRIAL MARKETING
PURPOSE
This Units aim is to introduce you to the industrial marketing concept and to the way you
can utilize it as a tool for the businesss benefit.

EXPECTED RESULTS
After the end of this unit, you will be able to:

Recognize the industrial markets and the industrial marketing characteristics

Analyze the buying behavior of the industrial customers

Apply suppliers selection criteria

Frame the strategic planning of the industrial marketing

Organize the product positioning

Manage to accomplish the pricing process

Organize the publicity campaign of the industrial product

KEY CONCEPTS

Industrial Marketing

Buying Behavior

Strategic Planning

Segmentation

Product Positioning

Marketing Planning

Communication and Promotion/Publication

INTRODUCTION NOTE

This Unit is an introduction to the industrial marketing concept and function in the
businesses. It has 2 Lessons. In Lesson 1, the basic characteristics of all the marketing
elements are presented (customers, products, markets, suppliers). In Lesson 2, the industrial
marketing strategic planning is introduced, together with the way in which the various
decisions are taken, concerning the product positioning, the pricing, its promotion and all
the elements that have to be included in the marketing plan. At the end of each Lesson and

34
Unit there are some self-evaluation activities and tasks that each one of you is supposed to
accomplish, based on the material you have studied. At the end of the educational material
lie both some suggested sources of information you can consult to find additional
information, along with the bibliography used.

35
2. 1 INDUSTRIAL MARKETING

2.1.1 DEFINITION AND MEANING OF THE INDUSTRIAL MARKETING

The industrial marketing deals with the exchange of industrial, and not consumer, goods. The
transactions in the industrial market highly exceed the ones in the consumer market. All the
business types (public, private, profit, non-profit) participate in the exchange of industrial
products.

Thus, the industrial marketing deals with the satisfaction of organizations needs and is
defined as the process of:
Business buying behavior analysis and study in a wide sense.
Identification of these needs.
Planning of suitable products, prices, distribution channels and means of
communication that satisfy their needs.

Therefore, a final consumer for the industrial marketing is the business. The market structure
for the industrial marketing is geographically more restricted with a relatively smaller
number of buyers and, usually, with oligopoly competition. The industrial marketing products
are technologically more complicated and more specialized (i.e. adapted to individual
customers demands). An important fact is the service/ delivery/availability of the product.
From the final consumers viewpoint, that, as was mentioned in the case of industrial
marketing, in a wide sense, this is the businesses, the businesses present a knowledge of the
technological matters, they are motivated by the rational motives of the market, create
mutual inter-business relationships and they wish for a personal contact before the market
decision making (restricted mediators, emphasis on personal sales). Even the pricing policy is
different, since in the businesses the competitive tendering with sealed offers and the
negotiations are what rules them.

The subject of the industrial marketing in general covers an important part of the economic
life of a country and also affects its social life and evolution. This happens because the
socioeconomic status of a country highly depends on its productive sector and on the ability

36
of its businesses (private and state ones) to economically and effectively produce useful
goods and services.

Another important point is that the industrial production allows countries with developed
technology and production units to be able to significantly control or affect the economies of
lees developed countries, where they export their industrial products.

One countrys industrial marketing circle and the respective transactions compose the basic
points of the economy and they deserve special research and study.

2.1.2 INDUSTRIAL CUSTOMERS

The industrial customers can be classified into three categories according to their nature:
1. Every kind of business (industrial, trade, commercial, transports, services, etc.).
2. Public enterprises and state organizations (governmental services, regional
authorities, public companies, organizations of public utility, etc.).
3. Institutions (colleges, universities, galleries, public utility organizations, prisons, etc.).

2.1.3 INDUSTRIAL GOODS

The various businesses that, in a wide sense, compose the industrial market, buy a large
variety of goods and services, which, according to the way they enter the process of
production and the cost structure, they are classified into the following categories:
1. Materials and Parts (raw materials and manufactured parts that are incorporated
into the final product).
2. Capital Items (fixed assets that are gradually depreciated during the process of
production).

37
 3. Supplies and Business Services (provisions and services the business offers)

According to Kotler, Stanton, Marrian and McCrathy, the industrial goods may be classified
according to their type into six categories:
Facilities and Machinery
Assistant tools
Raw materials
Accessories, component parts
Supplies
Services

Note: The differentiation between goods and services in the industrial marketing is not easy
and in some cases it is not even desirable, because of the tendency to offer complete
industrial packages to the industrial customers. The advantages that come from the
proprietorship or the use of a product are often so closely connected with the products
support services that is highly important for the suppliers to link the products and service
businesses in order to better satisfy the customer. Unfortunately, though, many businesses
service departments are getting dispatched recently are and considered to be a whole
different part of the business total effort. The industrial equipment leasing is an example of
separation risk of a business service department activities.

2.1.4 INDUSTRIAL MARKETS BASIC CHARACTERISTICS

The industrial market presents some special characteristics that have to do with the size of
the market, the nature of the products and the economic sizes invested or spent. The
industrial market generally presents high interrelation between the functions of the business
itself; this happens because possible marketing decisions that in the consumer market will
affect just the marketing department, in the industrial market they may affect many
departments, mostly those of management, research and development, the techno-
productive process, etc. Moreover, in the industrial market, possible marketing decisions
have to do with high costs and assets investment that need complex and time consuming
procedures to be approved.

38
Another industrial market characteristic has to do with the nature of the products. The
demand for industrial goods is highly connected with the demand for consumer goods, of
which the production is created or supported or contributed by the industrial goods. The
demand for industrial goods is usually characterized as non-flexible, because it is not
significantly affected by changes in their price.

Also, it is important that the number of the customers in the industrial markets is relatively
restricted. The supplier of industrial goods can aim to businesses that present a
concentration of purchasing power in each branch or even geographic concentration (cities
industrial regions). But, the customers of the suppliers of industrial goods are more hardly
approachable, since they adopt more rational criteria of product selection and they are less
affected by advertising methods and sales promotion. The relations created between
supplier and buyers are crucial. What s long-term aimed to happen is to set the buyer into an
inertia stage, i.e. to stop seeking new sources of provisions before each buying action, and
to trust the supplier that has employed in every purchase. Of course, the purchasing process
in the field of the industrial market is complicated; something that makes it difficult for the
suppliers to act, but, still, it generally remains to be a stable market.

The economys course in general is highly based on the industrial market and the industrial
marketing. All the branches of the economy take part in the exchange of industrial products
and services and all the transactions in the economy are industrial transactions except for
those in which the final consumer also takes part.

2.1.5 INDUSTRIAL CUSTOMERS BUYING BEHAVIOR ANALYSIS

Generally speaking, the knowledge of the consumers behavior, either for industrial or
consumer markets, helps each marketing manager to understand and better estimate the
customer needs and their general philosophy concerning to the way they act. Therefore , the
marketing manager will be able to plan and effectively implement the marketing strategy,
i.e.:
To produce the right goods in the proper price
To recognize the proper target-points
To plan the correct and more efficient communication policy to aim the target-
points.

39
Specifically, the marketing manager of an industrial market should recognize and study the
following points:
What are the various decision stages through which a customer gets before
(s)he goes on with the purchase of the industrial product?
The groups of people that influence the buying decision and the
characteristics of these groups.
The buying behaviour of all the people who take part in the buying process,
i.e. the product selection criteria, the information sources for their ongoing
purchases, the devotion they present to already existing customers and the
attitude/motives/viewpoints of them.

2.1.6 INDUSTRIAL GOODS BUYING PROCESS AND CENTER OF BUYING DECISIONS

The purchase of industrial goods is the result of a time consuming process that has certain
stages. These stages are listed below:

1. Identification of buying need.

2. Set of standards and required quantity of the industrial good.
3. Description of standards and required quantity of the industrial good.
4. Effort to find and evaluate possible suppliers.
5. Concentration and analysis of the offers.
6. Offers evaluation and suppliers selection.
7. Signing of supply agreement and set of the size and the frequency of the order.
8. Delivery and control of the products and continuous suppliers evaluation.

We should also take into account that the complexity of the purchase of an industrial good
depends on the meaning and the objective of this specific market and then the number of
the participants involving in the buying decision and the decision taking time may vary.

40
Also, we have to note that the most usual fact is to have three or more people involving in
the purchase of industrial goods. The recognition of these people that take or influence the
buying decisions leads to the definition of the Center of Buying Decisions, which aims mainly
to concentrate and evaluate all the information relating to the purchase of an industrial
product.
Scheme 1
The Center of Buying Decisions and its parts

Information Unit Buying Decision Control Unit

Making Unit

The roles undertaken in the frame of the Center of Buying Decisions are:
The users (the ones who are going to use the product).
The controllers of the information flow in the Center of Buying Decisions (the ones
who control the information that passes on through to the other participants).
The influencers (the ones who affect the buying decision, offering information for
the evaluation of alternative products or by setting buying standards).
The decision makers (the ones who take the decision, without typically having the
authority to do so).
The buyers (the ones who have the power and the responsibility to move on with
the purchase).

2.1.7 CRITERIA OF SUPPLIERS SELECTION AND INFORMATION SOURCES

The industrial marketers deal with and search the criteria under which the members of each
Center of buying Decisions select the suppliers to adapt accordingly the offers of the
business products. The knowledge of the criteria the industrial buyers apply helps the
marketing manager to make a decision concerning the kind of information they have to give
to the customers. Generally speaking, these criteria can be either rational or emotional.

Rational criteria: they are mostly of economic nature and they have to do with the price, the
quality, the service and the constant provisions.

41
Emotional criteria: They refer to wishes having to do with the status, the buyers uncertainty
concerning the result of the buying decision and the friendly emotions.

Specifically, after various studies, some categories of selection criteria have been identified,
directly concerning the industrial marketing manager. These categories are: a)
communication, b) previous experience, c) understanding of the customer needs, d)
compliance with the plan and, e) results. It is obvious that the evaluation criteria are
interconnected and during the whole purchase process the customer does not separate
them, but (s)he examines them as a whole.

There is the necessity for the Marketing manager to know how to share information, i.e.
what means of communications will the manager use. In this point, the manager has to
search the information sources that the industrial buyers use. These are classified into four
categories:
) Personal/ Commercial: from the salespeople and the trade fairs.
) Impersonal/Commercial: from catalogues, brochures, advertisement and direct mail.
) Personal/Non-Commercial: personal contacts, seminars and symposiums.
) Impersonal/Non-Commercial: scientific publications, trade and professional links,
exhibitions and documents of the Supplies department.

Task 4
Suppose that you work in a business marketing administration. Analyze the customers and
the products. What/Which are these and what are their characteristics? What are the
markets you address and which the process of attracting them? Who are your suppliers and
under what criteria do you choose them?

42
2.2 INDUSTRIAL MARKETING PLANNING

2.2.1 INDUSTRIAL MARKETING STRATEGIC PLANNING

The success of industrial marketing presupposes the existence of strategic planning for the
business to be able to respond to the demands and the needs of the changing environment
and the high competition.

Usually, the strategic planning includes:

1. Analysis of the business strengths and weaknesses
2. Identification of the business mission
3. Identification of the business competitive advantage
4. Analysis of the environment and the subject changes
5. Set of long-term goals for the business
6. Selection of the target-markets that offer the most attractive opportunities and
perspectives
7. Set of standard and countable objectives necessary for the achievement of the long-
term goals
8. Planning of strategies that lead to the objectives achievement and the exploitation of
opportunities

The successful combination depends on the marketings ability to suggest ideas for the
development of new products, the identification of new opportunities, the development of
complete marketing programs, and the evaluation of the results they are going to bring
about and the possible corrective movements into which the business is going to proceed. Of
course, the fact that for the framing of the strategic planning it is obligatory for all the
business functions to participate is of core importance.

The process of industrial marketing strategic planning is described below in a more specific
way:

43
Analysis of the present situation
It is perhaps the most basic stage, for the business cannot recognize the present market
opportunities and set objectives and marketing plans, without knowing in advance its
position in the whole marketing environment. In this way, the analysis of the present
situation facilitates the business to collect information from its internal and external
environment and to recognize: a) the strengths and weaknesses compared to its
competitors, b) the threats and opportunities that appear under economic, social, legal,
technological and competitive factors.

Set of marketing objectives

The marketing objectives represent the results (short-term, mid-term or long-term) that the
business expects in the frame of its general objectives. Among the usual objectives are the
increase of the sales amount, the profit margin, and the yield of funds and the reduction of
the sales costs. The marketing objectives should be characterized by the general acceptance
of the managers and should reflect in a satisfactory level their values and priorities. Also ,
they should be characterized by flexibility, cohesion and attainability. Moreover, they should
be easily understood and to give the managers a strong desire to achieve them.

Alternative marketing strategies analysis

The industrial businesses usually have a portfolio of products that are different between
them and that they address to different buyers. The composition of an excellent products
and markets mix that contributes to the achievement of the business goals presupposes a
well-justified analysis and evaluation of alternative marketing strategies per product and
market. There are various analysis tools to frame strategies per product and to accurately
allocate the business resources in the various products and markets, which are usually: the
products life cycle, the products portfolio, the experience curves and the research tool PIMS
(profit impact of marketing strategies).
Set of marketing strategies
The identification and evaluation of alternative marketing strategies and the selection of
specific product-market combinations are followed by the development of marketing
strategy that contains: a) the market segmentation and the selection of target-markets, and
b) the framing of the suitable marketing mix for the selected target-markets.

44
Marketing programs development
These programs include the framing of default and specific marketing activities for each
variable of the marketing mix, thus implementing the business marketing strategy.
Some of the marketing activities in this phase are: marketing trial for new products,
salespeople training, development of advertising campaign, selection of industrial
distributors, set of discounts and credit borders, etc.

Marketing planning control

Through this process the business is able to learn the extent to which the marketing
strategies and plans have been effectively implemented and the extent to which the business
objectives have been achieved.
The basic control points are the set of standards of marketing and sales performance, the
counting of the performance and its comparison with these standards, as well as the
enforcement of corrective movements in the points where a problem is found.

2.2.2 SEGMENTATION OF THE INDUSTRIAL MARKET AND PRODUCT POSITIONING

The basic thing one has to do to segment the market is to fit the business abilities with the
customers unsatisfied needs. The customers strategic choice in the frame of the marketing
strategic planning, which we have previously developed demands the segmentation of the
industrial market. Therefore, the segmentation of the market is a strategy that has to do with
the selection of customers, the customer differentiation according to their differences in the
way they respond to the marketing activities, the choice between alternative opportunities
that emerge and the adaptation of the marketing strategies to these distinguishable
opportunities.

In the industrial markets segmentation, we should always take into account that the
customers are organizations and not individual consumers, that the unit of buying decision
making is a group of people into which there are interactive powers taking place as far as
the business organizational structure is concerned; and that these people have unique
personality, experiences, and responsibilities that influence their behavior.

The process of the industrial market segmentation includes two other segmentations, the
macro- and the micro-segmentation. The macro-segmentation aims to identify the parts of

45
the market according to the traditional variables, concerning the characteristics of the
organizations, like the size, the geographic positioning, etc. the macro-parts represent the
target-markets and they can be easily recognized with the use of information by secondary
intra-business and extra-business sources. The micro-segmentation aims to the identification
into the macro-parts, according to the behavior variables that relate to the characteristics of
the Centers of Buying Decisions and their members.

The number of variables that can be used for the industrial market segmentation is large and
is always increasing.
The most important macro-segmentation variables are:
1. The size of the organization-customer that buys the product (often valued with the
employees number or the sales)
2. The geographic positioning
3. The use of the product (users or non-users of the product)
4. The structure of the supply function (centralizing supplies system/ decentralizing
supplies system)
5. Technology
6. The branch of economic activity
7. The implementation or the way of the products usage
8. The type/form of the supply (buyers for the first time or not)
The most significant micro-segmentation factors are:
1. The selection criteria of products and suppliers (speed, function, aesthetics,
compatibility, service, delivery, fixed price, price flexibility, reliability, etc.)
2. The structure of the decision making unit or the Center of Buying Decisions (who
participates in the buying process and in what stages)
3. The supplies strategies
4. The innovation of the organization
5. The personal traits of the people who take part in the buying process
6. The psychological traits

2.2.3 IMPLEMENTATION AND COST OF SEGMENTATION

After the market segmentation the business goes on with its implementation. In this phase it
decides into what parts of the market it wishes to enter. The number of parts depends on

46
the business objectives and the flexibility it holds. The next decision has to do with the way
the business has to deal with the competition in these markets. Specifically, the product has
to be placed in the market in a way that will differentiate it from the competing products.
Finally, we have the development of the marketing mix of the product, which has to do with
the planning of the product, the distribution channels, the publicity of the product and the
pricing.

The direct cost of the selection of a markets part is not high and it mainly includes
administrative actions. All the previous actions do not present particularly high costs, except
for the part of the product differentiation that is the most expensive one. The product
differentiation causes problems in the production, by imposing the production of small
series, the constant training of the staff, the restricted automation and the need to maintain
large stock quantities. These disadvantages could be reversed, for the customers respond in
a more positive way to the benefits of a differentiated product series.

As far as the cost is concerned, we can easily understand that the bigger the number of parts
a business approaches, the bigger gets the direct market segmentation cost.

2.2.4 PRODUCT POSITIONING

Product positioning refers to the position the product has in the customers mind, and,
consequently, it concerns the way in which the product has been placed in the market. Most
products are placed in the market following the viewpoints of the consumers/customers and
taking into account the respective positioning of the competitors. So, the business tries to
identify the manner in which the customers consider not only the business itself and its
products, but also the competitors and their products, something that asks for market and
marketing research to be carried out. The development of product positioning strategy in the
industrial market is more difficult than in the consumer market and differentiated in many
variables, like the one related to the promotion means. Television, the most widespread
means of consumer goods is not as effective as for industrial products, and is not suggested
for their promotion as well.

According to many scientists, a successful strategy is the one which exploits the long-term
business efforts in advertising and personal sales. In some cases, a products repositioning

47
takes place, mainly when there are ongoing changes in the business environment that may
affect the demand of the market. The product positioning in the market is done by the
viewpoint chart that depicts the way in which the consumers/customers face the product,
compared with the products of the competitors. This chart has many dimensions according
to the characteristics of the suppliers and the products, but usually, there are two
dimensions applied.

A more analytical model to define the strategic industrial product or services positioning
(MIPS-Managing Industrial Positioning Strategies) was developed by Muhlbacher, Dreher and
Ritter in 1994 and it includes the stages below:

48
 Definition of the Business Field

Set and Analysis of the Real and

the Possible Customers

Creation of Customer Sectors

Identification of Factors Affecting Pre-Analysis of the Existing and

the Business System the Possible Competitors

Pre-Selection of the Attractive

Customer Sectors

Customers and Factors Analysis Affecting

the Business System
(Goals, potentials, power)

Definition of the Main Success

Goals and their Meaning for Each
Sector

Main Competitors Analysis Internal Business Analysis

Set of Differentiation Potentials

Selection of Sector to Target Set of Different Benefits Offered in

Each Sector

Record of the Strategic Positioning

Marketing Mix (Planning and

Implementation)

49
To conclude, it is obvious that for a successful marketing strategy for a business, it is
required:
A) To recognize the markets the business is capable of satisfying according to its existing
resources
B) To select attractive target-sectors that are not currently satisfied by the existing
competitors, something that calls for market segmentation
C) To obtain a suitable strategy of product positioning

2.2.5 MARKETING PLANNING

The marketing plan is, according to Lehmann and Winer, a written text that contains
directives for the marketing programs and the allocation of the business activity center,
during the planned period. The marketing plans are created in various levels, based on the
business organization. A business which is vertically organized per product creates plans for
each product or product or services series.

The objectives of a marketing plan aim to:

define the business current status
spot the business problems and identify the opportunities that appear
set goals for the business future status
set strategies and programs that are going to be implemented, in order to achieve
the objectives set
set the time period for the objectives achievement
encourage the creative thoughts and suggestions
turn the whole effort towards the customer and also the competitor

50
2.2.6 DEVELOPMENT OF INNOVATIONS AND NEW PRODUCTS INTO THE INDUSTRIAL
MARKETING

Like in the consumer, in the industrial goods the planning and development of new products
are essential for the business survival. A new product is not just something created from
scratch and for the first time. The most new products are improvement and differentiations
of products that already existed in the market. The industrial business will possibly go on
with the planning of new products a) to adapt the production to the changes of the
consumer goods they already produce, b) because of improvements in the technology that
affect the production costs, the time and quality, and c) to achieve a link between technology
and living workforce.

There are basically five categories of new products:

New-to-the-world Products
New Category Entries
Additions to Product Lines
Product Improvements
Repositionings

From these five new product categories, the last three offer the higher security to the
business and they appear more frequently in the market. The small need for investment for
their development, the technical conveniences and the lack for further effort by the buyers
make these categories popular for the businesses.

The stages followed for a new products development are as follows:

1. Screening of new ideas
2. Assessment, commercial analysis and research
3. Product planning and natural development
4. Product trial in the market
5. Product presentation in the market

After the presentation of the new product in the market what follows is either its acceptance
by the customers/common target or its rejection. Some of the factors that lead almost the

51
97% of the new products to failure (according to research, only 3% of the new products are
successful) are:
The technological evolution and the high competition that reduce the
product life cycle. This result in the reduction of the profitable product life
cycle and the time compression required for the development of the
founding idea.
The difficulty of finding new-to-the-world products that is getting more and
more difficult nowadays.
The business insufficient planning.
The lack of the products competitive advantage, compared to the products
that already exist in the market or the over-estimation of its positive traits.
The match between the price and performance that is often unsuccessful.
The long last of the process of the ideas development and implementation.
The competitors powerful reaction by applying either price war or launching
similar and better products.
The product positioning in the market is done in the wrong time.
The technical problems appearing during the new product production.
To not meet the standards set by the sate or other institutions.
The lack of the new product trial positioning under natural conditions in the
market so as for the consumers to evaluate their performance.

2.2.7 BUSINESS COMMUNICATION AND PROMOTION/PUBLICITY IN THE INDUSTRIAL

MARKETING

A basic communication model includes the five elements below:

1. The source of information that, in our case, is the business.
2. The message created by words, imagery and sounds (codification) by the source,
aiming to the information of the target audience.

52
 3. The message transfer that takes place via the distribution channels (the selection of
the proper channel helps the message efficiency).
4. The receiver that decodes the message. There is a chance for the receivers not to
decode the message because they either did not have the opportunity to see it or
they were not able to decode it properly.
5. The act by the receivers side that the business usually prefers to be the products
market.

The process of creating the communication mix and the promotion of the products includes
eight stages. The communication designer first defines the target-audience and its
characteristics, which also include the image the audience has for the product. Then the
designer defines the communication target; (s)he decides if (s)he wants to cause knowledge,
information, liking, preference, belief or to challenge the market. Then the message is
composed so that it includes an effective content, structure, form and source. What happens
next is the selection of the distribution channels; the definition of the total promotion
budget which is going to be allocated between the basic promotion tools, the stage of the
buyers readiness and the stage of the product life cycle. The communication designer has
then to monitor the products course in the market in order to see the markets rate to which
the existence of the product is known, the product is tried and the public is satisfied by the
whole process. Finally, in all the communication procedure, management has to be enforced
and to be completed, the timing has to be the right one and it has to be cost efficiency.

During the communication mix planning, the following questions should be answered
accurately:
To who does the message aim?
What should be its content?
With what means will we transfer the message to the receivers?
What actions do we expect by the message receivers?
What should be the cost of the whole communication program?

After the previous questions have been answered, some decisions related to the message
have to be made: to who will you send the message, what you are going to say, how you are
going to say it, and when are you going to say it. The first decision is about the definition of
the target-audience, the second is about the communication policies, the third relates to the

53
creative presentation of the communication and the last decision is about the messages
coordination in the right mediums, with the right frequency and the relevant costs of the
alternative methods.

The communication mix

To attain the objectives and to apply a policy, a communication mix is to be required to be
employed. The communication mix, i.e. the sum of the various communication methods
employed for the promotion of a product cannot be pre-set. Different products, companies,
markets, competitive environments, etc. are the factors to define the communication mix.
Most of the times, in order for a product to be promoted, more than one types of
communication are to be used. The effort for the development of a successful mix is
constant.

The basic tools of the communication mix are:

Advertising (printed, radio, television, in the package, etc.)
Sales Promotion (competitions, games, free trial testing, coupons, cash return, etc.)
Public Relations (interviews, speeches, annual fairs, charities, etc.
Personal Sales (sales presentations, telemarketing, sales-targeted gatherings, trade
fairs)
Regarding the importance that the basic marketing mix tools present, now, we could say that
in the industrial markets, rather than in the consumer ones, the personal sales and the sales
promotion are thought to be more significant. Equally important is the fact that because the
purchase of an industrial good is not an individual decision, but a group decision of people
who are specialized in what they do, the salesperson has also to be specialized in the field of
the product (s)he wishes to sell/promote, so as to be able to respond to the customer needs.
This fact makes the personal sale in the industrial market a difficult and time-consuming
process.

54
Unit 2 Summary
The industrial marketing is about the exchange of industrial and not consumer goods. It is
defined as the process:
Business buying behavior analysis and study in a wide sense.
Identification of these needs.
Planning of suitable products, prices, distribution channels and means of
communication that satisfy their needs.

The industrial customers can either be: a) various businesses, b) state businesses or c)
institutions.
The industrial products may be classified according to their type into six categories:
Facilities and Machinery
Assistant tools
Raw materials
Accessories, component parts
Supplies

55
 Services

The industrial market has some special traits that have to do with the size of the market, the
nature of the products and the economic sizes that are invested or spent.
The industrial products market is the result of a time consuming procedure that includes
certain stages. Respectively, from the other hand, the industrial marketers deal with and
research the criteria under which the members of each Center for Buying Decisions select
the suppliers to relatively adapt the offers of the business products.
The success of the industrial marketing presupposes the existence of a strategic planning in
order for the business to be able to respond to the needs and demands of the changing
environment and the high competition.
The market segmentation is a strategy relating to the customers selection, the differentiation
of the customers according to their different viewpoints concerning the marketing activities,
the selection between alternative opportunities that are brought about and the adaptation
of the marketing strategies to these distinguishable opportunities.
The product positioning refers to the position the product has in the customers mind and it
is respectively about the way in which is has been positioned in the market. Most products
are positioned in the market according to the consumer/customer needs and by taking into
account the respective positioning of the products of the competitors.
The marketing plan and the organization of an advertising campaign are equally important
for the industrial products and for every other product or service.

Task 5
After you have studied the first and the second unit, what differences can you identify
between the marketing planning of a compatible product/service, compared with the
planning of an industrial product?

56
Unit 2 Activities

8. The industrial markets look like the consumer ones and they are related with the

exchange of industrial and consumer goods.

TRUE FALSE

9. The industrial market is less concentrated than the consumer one.

TRUE FALSE

10. The industrial marketing products present higher technical complexity and they are more

specialized.

TRUE FALSE

11. The public services and the state organizations are not considered to be industrial

customers.

TRUE FALSE

12. The industrial goods are considered wide consumption goods.

TRUE FALSE

13. The demand for industrial goods is usually characterized as non-flexible.

TRUE FALSE

14. The number of customers in the industrial markets is relatively restricted.

TRUE FALSE

57
15. The knowledge of the customers behavior is not useful to understand the customer

needs.

TRUE FALSE

16. The recognition of the people who participate in the buying decision composes the

Center of Buying Decisions.

TRUE FALSE

17. What the below diagram depicts is correct:

Center of Buying Decisions and its Parts

Buying Decision
Making Unit Information Unit Control Unit

TRUE FALSE

18. The criterion of suppliers for industrial goods is (Choose the right answer):

a) Communication

b) Previous experience

c) Understanding of the customer needs

d) Compliance with the planning

e) Results

f) All the above

58
19. The strategic planning is something voluntarily used in the industrial marketing and it is

not necessary.

TRUE FALSE

20. The set of long-term objectives and the selection of target-markets for the business are

core components of the strategic planning.

TRUE FALSE

21. Which of the following is correct?

So, the analysis of the present situation of the business helps it to collect information from

its internal and external environment and to identify:

a) The strengths and weaknesses compared to its competitors and b) the threats and

opportunities caused by economic, social, legal, technological and competitive factors.

c) All the above

22. The market segmentation has to do with the customer selection, the customer

differentiation according to their differences, the choice between alternative

opportunities that appear and the adaptation of marketing strategies in these

distinguishable opportunities.

TRUE FALSE

23. Choose the mistake below: The most important variables for the market macro-

segmentation are:

A) The size of the customer-organization (usually counted by the number of employees

or the number of sales)

B) The geographic placement

59
 C) The business legal form

D) The use of the product (users or non-users of the product)

E) The structure of the supply function (centralized supplies system/decentralized

supplies system)

F) Technology

24. Choose the mistake below: The most important variables for the market micro-

segmentation are :

A) The selection criteria of products/ suppliers (speed, function, aesthetics, compatibility,

service, delivery, fixed price, price flexibility, reliability, etc.)

B) The type/form of the supply (buyers for the first time or not)

C) The structure of the decision making unit or the Center of Buying Decisions (who

participates and in what stages of the buying process)

D) The supplies strategies

E) The organization innovation

F) The personal traits of the people who participate in the buying process

25. The high cost for the product differentiation is counterbalanced, for the customers

respond in a more positive way to the benefits of an improved product series.

TRUE FALSE

26. Most products are positioned in the market according to the view the business itself has

for its product.

TRUE FALSE

60
27. The development of product positioning strategy in the industrial market is more difficult

to that of the consumer market.

TRUE FALSE

28. The product positioning in the market takes places by the viewpoint chart, which depicts

how the consumers/customers view each product, compared to the products of the

competitors.

TRUE FALSE

29. Choose the mistake below. For a successful marketing strategy for an industrial business,

the requirements are:

A) High budget in an annual basis

B) The identification of the markets that the business can effectively satisfy with its existing

resources

C) Selection of attractive target-sectors that are not satisfied by the existing competitors,

something that presupposes market segmentation

D) A suitable strategy of product positioning

30. The marketing plan is a written text that contains the guidelines regarding the marketing

programs and the allocation of the business activity center, during the scheduled time

period.

TRUE FALSE

31. The industrial business can go on with the planning of new products perhaps to adapt

its production to the changes of the consumer goods it already produces.

TRUE FALSE

61
32. Choose the mistake. There are five categories of new products:

New-to-the-world Products

Consumer Goods

New Category Entries

Additions to Product Lines

Product Improvements

Repositionings

33. The trial of a new product in the market before its final launch is a process which is not

considered to be obligatory.

TRUE FALSE

34. The lack of products meaningful advantage, compared with the ones that already exist

in the market or the over-estimation of its positive traits are one of the usual reasons of

the new products failure.

TRUE FALSE

35. The basic components of a communication model are:

A) The source of the message

B) The message

C) The transfer of the message

62
 D) The receiver

E) The act

TRUE FALSE

36. The communication mix is the mass media the business is going to employ for the

promotion of its product.

TRUE FALSE

37. The sales promotion is one of the communication mix components.

TRUE FALSE

63
 BIBLIOGRAPHY

Brennan R., Business to business marketing, 2007, Mc Graw-Hill

Coe J., The fundamentals of business to business sales and marketing, 2003, Mc Graw-Hill

Jenster Per V., European casebook on managing industrial and business to business
marketing, 1994, IMD International (Institute)

Kotler P., B2B brand management, 2006, Springer

Kotler P., Principles of marketing, 2005, Harlow England, Prentice Hall/Financial Times

Avlonitis, G., Strategic Business to Business Marketing: The Products and Services Marketing
Addressing to Businesses and organizations, Volume A, 2nd ed., 2001, Stamoulis
Publications

Kirgiakos S., Misirlakis, N. Industrial Marketing Practical Guide, 1994, Barberopoulos

Publications

Mantzaris, G. Dynamic Marketing of Products and Services, 2004, Giourdas Publications

Patrinos, D. Business to Business Marketing, 1999, Hellene Publications

Tsaglaganos, A. Basic Marketing Principles, Thessaloniki 1980, Kyriakides Publications

64