INDUSTRIAL MARKETING

Text and Cases

Francis Cherunilam
M.A., M.B.A., D.D.P., Ph.D.

Dean, School of Management Studies,

Viswajyothi College of Engineering & Technology,
Muvattupurha, Kerala.
(Formerly Professor and Chairman, Marketing Area, IIMK;
Director, School of Management Studies,
Cochin University of Science & Technology;
Director, Albertian Institute of Management, Cochin;
Director, Kochi Business School;
Director, Mangalam Management Studies, Kottayam.)
E-mail: cherunilam@gmail.com

Fourth Revised Edition : 2015

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© Author
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 PREFACE TO FOURTH EDITION

Industrial Marketing, also known by such other names as Business Marketing,

Business to Business Marketing, Organisational Marketing etc., is growing in
importance because of the fast growth of the industrial (business) market.
Although the size of the business market is enormous — much larger than that
of the consumer market — and it is often more complex than consumer goods
marketing, the subject has not yet received the importance it deserves. There
is a dearth of research and literature on this subject. The main objective of this
book, which is a modified version of my earlier work Business Marketing, is
to present a fairly comprehensive and succinct textbook in a simple and easy
to understand style.
This edition is chatacterised by updating of information and modification of
some topics.
Words fail to express the gratitude to Mr. Anuj Pandey, Niraj Pandey, K.N.
Pandey and the Himalaya Publishing House Pvt. Ltd. for the constant
encouragement and inspiration.

Cochin, Dr. Francis Cherunilam

June 21, 2015.
 CONTENTS
1. An Overview of Industrial Marketing 1 - 25
Meaning and scope of Industrial Marketing; Classification of industrial goods; industrial
customers; components of industrial market; summary.
2. Comparison Between Industrial and Consumer Markets/Marketing
(Characteristics of Industrial Markets/Marketing) 26 - 37
Why and what; product and demand characteristics; customer characteristics; product/
service mix; market characteristics; marketing mix characteristics; summary.
3. Demand for Industrial Goods 38 - 45
Derived demand; joint demand; price insensitivity; price sensitivity; reverse elasticity;
cross elasticity; summary.
4. Industrial Buying and Buyer Behaviour 46 - 76
Factors affecting industrial buying decision; environmental factors; organisational
environment; buying centre factors; roles in buying process; structural dimensions; individual
factors; buying objectives/criteria; non-economic objectives; Webster-Wind model; Sheth
model; the buygrid model; buy classes; buy phases; appropriate marketing strategies over
various buying situations and phases; business buying process complexity; summary.
5. Partnering/Relationship Marketing and CRM 77 - 89
Characteristics of adversarial and partnership models; lifecycle models of buyer-supplier
relationship; stages of buyer seller relationship models; selection of firms for collaboration;
production linkages and industrial marketing; CRM; summary.
6. Industrial Market Segmentation, Targeting and Positioning 90 - 122
Market segmentation; requirements for effective segmentation; macro and micro
segmentations; intermediate segmentation; nested approach to segmentation; other bases
of segmentation; benefits of market segmentation; criteria for segmentation variables;
market targeting; differentiation; positioning; summary.
7. Industrial Product Decisions 123 - 140
Product; product lifecycle; new product development; classification of new product;
product revitalisation/elimination; summary.
8. Industrial Pricing 141 - 169
Characteristics of industrial prices; factors affecting pricing; pricing objectives; costs in
industrial pricing; pricing methods/approaches; new product pricing; pricing over the
PLC; pricing policies; geographic pricing; transfer pricing; leasing; summary.
9. Industrial Marketing Communication 170 - 179
Communication mix; salient features of business marketing communication; major
decisions in industrial marketing communication; trade fairs and exhibitions.
10. Personal Selling 180 - 190
Types of industrial salesmen; management of sales force; knowledge/training for sales force;
organising sales force; personal selling process; summary.
11. Industrial Business Marketing Logistics 191 - 210
Components of logistics: importance of logistics; business-to-business logistical services;
supply chain management; types of distribution; channel systems; multi-channel marketing
system; channel conflicts; factors influencing channel design; summary.
12. Industrial Marketing Information System 211 - 226
Marketing information system and marketing research; information requirements; utility/
importance and objectives of industrial marketing research; consumer research vs. industrial
research; types of research; phases of a research project; methods of data collection;
sampling; research agency; summary.
13. Services Marketing 227 - 237
Characteristics of services; service marketing mix; service marketing strategy; differentiation
and positioning.
14. E-Business 238 - 246
Tele marketing to e-business; growth and significance of e-commerce; barriers to
e-business; summary.
15. Strategic Marketing Planning and Control 247 - 297
Classes of decisions; strategic management; levels of strategy; strategic management process;
approaches to strategy making; competitive structure of industries; strategic groups; structural
analysis and competitive strategy; generic competitive strategies; four routes to strategic
advantage; strategic business marketing management; evaluation and control of industrial
marketing; summary.
16. International Industrial Marketing 298 - 328
International market for industrial goods; trends in major exports; trends in major imports;
direction of trade; market segmentation; international trade in services; market entry
strategies: exporting; licensing and franchising; contract manufacturing; management
contracting; turn-key contracts; wholly owned manufacturing facilities; assembly operations;
joint ventures; third country location; mergers and acquisitions; strategic alliance; countertrade;
global sourcing.
17. Cases 329 - 378
1. Distribution Barrier
2. In and Out
3. Business Ethics
4. The Equations
5. Decision Muddle
6. Tetrapack
7. Partnership Pangs
8. Intel Inside
9. Behavioural Diversity of University Departments
10. Knocking at a Closed Door
11. Lakshmi Machine Works Ltd.
12. V-Guard Industries Ltd.
13. The Documentation Market
14. The Indica Saga
 01
CHAPTER
CHAPTER

AN OVERVIEW OF
INDUSTRIAL MARKETING
Chapter Objective

The objective of this chapter is to help

understand:

 The meaning and scope of

industrial marketing

 Broad categories of industrial

goods and their marketing
implications

 Important types of industrial buyers

 Components of industrial market

 2 INDUSTRIAL MARKETING

Several specialised disciplines within the broad discipline of Marketing have emerged
over time, like International Marketing, Industrial Marketing, Services Marketing and Social
Marketing.
Industrial goods account for a substantial share of the total sales in a modern economy.
However, Industrial Marketing, also known by such names as Business Marketing, Business
to Business Marketing, Commercial Marketing, Institutional Marketing and Organisational
Marketing, is a subject that has not yet received the importance it deserves, even in a country
like U.S.A., although, the size of this market is enormous — much larger than that of the
consumer market — and it is often much more complex than consumer goods marketing.
“Traditionally, business marketing has been a distant cousin of the mainstream of the marketing
thought. However, the employment opportunities, along with the growing importance of
high-technology business products and the success of foreign competition have highlighted
the need for increased business marketing study.”1

MEANING AND SCOPE OF INDUSTRIAL MARKETING

Industrial goods/services are those goods/services which are used (mostly commercially)
in the production/rendering of goods/services. They include such goods as capital goods,
raw materials, intermediates and MRO supplies.
According to the Industrial Marketing Committee Review Broad, “industrial marketing
consists of all activities involved in the marketing of product and services to organisations
(i.e., commercial enterprises, profit and non-profit institutions, government agencies, and
resellers) that use products and services in the production of consumer or industrial goods
and services, and to facilitate the operation of their enterprises.”2
Haas defines Industrial Marketing as “the process of discovering and translating industrial
customer wants, needs, expectations and requirements into product and service specifications
and then, in turn, through effective promotion, channeling, pricing and after sale servicing,
convincing more and more of these customers to use and continue to use these goods and
services. Thus, in a general sense, industrial marketing describes all marketing activities not
directed at the household or the ultimate consumer. Used in this manner, the term industrial
marketing applies to the marketing … of all goods and services to businesses and other
organisations for their use, either directly or indirectly, in the goods and services that they,
in turn, produce.”3
Bingham Jr. defines Business Marketing as “those activities that facilitate exchanges
involving products and consumers in business markets. A business marketing transaction
takes place whenever, a good or service is sold for any use other than personal consumption.”4
Gross et al. define Business Marketing as “the marketing of products and services to
organisations rather than to households or ultimate consumers. The purchase is made not
for self gratification, but rather to achieve organisational objectives.”5
The term Industrial Marketing was popular in the past. However, in many circles today,
the term Business Marketing has supplanted the term Industrial Marketing. Robert W. Haas,
one of the popular authors on this subject, has changed the title of his book from Industrial
 AN OVERVIEW OF INDUSTRIAL MARKETING 3

Marketing Management to Business Marketing Management for the recent edition. Business
Marketing/Business to Business Marketing is broader than Industrial Marketing. It encompasses
industrial goods marketing and a considerable part of the consumer goods marketing. In
fact, a large chunk of the consumer goods pass through certain business marketing processes
before they finally reach the consumers. The marketing of consumer goods to marketing
middlemen, like wholesalers and retailers, is business marketing. Business Marketing also
includes marketing of consumer goods to organisations (like hospitals, educational institutions,
hostels, orphanages, etc.), for in-house consumption, to charitable/voluntary social
organisations (like Red Cross) for free distribution to the target beneficiaries, to firms and
other organisations to give away as gifts and compliments (this is, in fact, a sizable business
— such gift items include diaries, pens, wrist watches, clocks, fancy items, etc.)
Thus, industrial marketing includes the following:
1. Marketing of industrial goods
2. Marketing of consumer goods to:
 Marketing middlemen
 Organisations for in-house consumption
 Organisations for giving away as gifts/compliments
 Organisations for charitable distribution
In sum, business markets are “markets for products and services, local to international,
bought by businesses, government bodies, and institutions (such as hospitals) for incorporation
(e.g., ingredient materials or components), for consumption (e.g., process materials, office
supplies, consulting services), for use (e.g., installations or equipment), or for resale.... The
only markets not of direct interest are those dealing with products or services which are
principally directed at personal use or consumption, such as packaged grocery products,
home appliances, or consumer banking.”6
Figure 1.2, given in the Summary at the end of the chapter, outlines the scope of
Industrial Marketing.

CLASSIFICATION OF INDUSTRIAL GOODS

On the basis of how people buy, consumer goods are classified as convenience goods,
shopping goods, speciality goods and unsought goods. Such classification does not, however,
suit the business goods as there is no such conspicuous variability in the buying behaviour
of business goods. An appropriate classification of the business goods would be on the basis
of how the goods are used. Based on such criterion, business goods may be classified as
follows:
Capital Equipment and Investments
These include capital goods, land, building and other companies. They are also known
as foundation goods.
 4 INDUSTRIAL MARKETING

There are mainly two categories of capital equipment, namely, single purpose equipment
and multipurpose equipment. Multipurpose machines, also known as general purpose
machines, are versatile machines which can be used for different operations and, therefore,
they have a horizontal market, i.e., a market extending across many industries. Examples
include lathes, milling machines, shapers, boilers, compressors, etc.
Single purpose machines (SPMs) are made specifically for performing exclusive
operations in only one company or industry. SPMs are often meant for mass production.
Piston turning lathe, camshaft grinder and gear generator are examples of SPMs.
Capital equipment also includes accessories which are light equipment used to facilitate
production, administrative or marketing activities such as hand-held drills, personal computers,
typewriters, calculators, fire extinguishers, furniture, etc.
Investments include land, building, and companies acquired.
Marketing Implications:
The top executives very actively involve in the decision-making in respect of major
capital investments and the decision-making process involves very careful evaluation of
alternatives from the commercial and several other points of view. This is not only because
of the large size of the capital outlay but also because the type of technology/equipment,
the size of productive capacity, etc., impact on the quality and cost of the output and
competitiveness of the firm. Similarly, the choice of location and site will have to be evaluated
not only from the commercial point of view but also from other perspectives like ecological,
political, demographic and sociological.
The marketing people should, therefore, be able to convince the decision-makers with
facts, figures and logic the superiority of their offer. In case of items of large capital outlay
or of highly technical nature, the role of direct marketing is very great.
Whether a capital equipment is multipurpose or single purpose has also got certain
implications. Because of the limited scope of use, the demand for SPM tends to be more
volatile than that of the MPM. As the SPM is custom built, or has only limited applications,
it is often difficult to find alternate buyers if a buyer backs out. It is, therefore, quite common
that the machine manufacturers take some advance payment with the order for SPM. There
could still be risks. For example, in June 1998, the Coimbatore based Lakshmi Machine
Works Ltd. (LMWL) decided to curtail its production by about 50 per cent despite the fact
that its order book was so full that it needed 18 months to complete the execution of all
the orders at hand. Though spinning mills had placed orders on LMWL by paying advance,
the units were not willing to confirm their plans of taking delivery because of the grim
textile situation. It was reported that even some units which had confirmed the delivery
dates had backed out on their earlier commitments. As most of these textile machinery were
tailor made for each customer, alternative avenues of marketing was hardly present.
The SPM is more prone to become obsolete than the MPM. Even if the products and,
therefore, the nature of the machinery used to produce it, of one firm or industry changes,
the total demand for MPM may not be very drastically affected. MPM, therefore, tend to
have a longer life cycle than the SPM. Because of their versatility, many MPMs have a
second hand market whereas, there may not be, or may have only a very narrow, market
for used SPMs.
 AN OVERVIEW OF INDUSTRIAL MARKETING 5

A very close relationship is required between the manufacturer and buyer of SPM.
In large organisations, the purchase of standard accessories is normally routinised without
the need for the active involvement of top executives. Indirect channels are common in the
marketing of such goods. Easy availability is a very important factor in their marketing.
Demand for major capital equipment depends on a number of factors like government
policy, prospects of user industries, investment climate, credit availability, etc.
Leasing of capital equipment has become popular.
Manufactured Materials and Component Parts
Manufactured materials are raw materials that have undergone some processing before
entering into the manufacturing process of a product. For example, rubber sheets or crumb
rubber, made out of natural latex, used by rubber product manufacturers, aluminium
extrusions, copper formed into wire, etc. Component parts are manufactured items,
subassemblies or completely assembled units that are incorporated into the buyer’s final
product. Examples: automobile tyres, dash board instruments, motors, batteries, etc.
Many companies do not process or manufacture all the items required in their
production. In fact, the trend for some time now has been toward de-integration and
outsourcing. Many materials and component parts are outsourced by manufacturers of final
product. For example, nearly 80 per cent of the total number of parts and components of
Telco’s Indica are outsourced (see the case on Indica for details).
Marketing Implications
Whether the material or component part is a standardised one or custom made may
have implications for marketing strategy.
In the case of a custom made item, very close interaction between the engineering/
production departments of both the manufacturer and the buyer would be beneficial.
Standardised items are normally bought through the purchasing department of the buying
firm on the basis of the product specifications developed by the engineering and production
people.
Quality, price and reliability of supply are very important considerations in the selection
of suppliers. Several firms prefer to have more than one supplier of items which are important
and bought in large quantities. Partnering with one or more supplier is not uncommon.
In this age of trends like just in time inventory (JIT), the ability of a supplier to effectively
meet the challenging demands of the buyer is a critical factor.
Many component parts have two market segments — the original equipment
manufacturer (OEM) segment and the replacement market or the after market. For example,
MRF markets its car radial tyres to OEMs like Maruti and to the replacement market.
While the marketing of components to the OEM segment is normally direct, the sale
to the replacement market is often through indirect channels.
For products like truck tyres and spares, there are large business buyers in the
replacement market, like State Road Transport Corporations, where a marketing approach
different from that for other customers may be required.
 6 INDUSTRIAL MARKETING

The purchase policy of the OEM, may some times be influenced by the competitive
situation for their products. For example, under the controlled economic regime in India
when the supply of certain two-wheelers was shorter than the demand, some companies
supplied their two wheelers with low quality, low priced tyres.
But today, when the market is very competitive, companies pay due attention to the
quality of the component parts and even the type and brand of the tyre used may be
highlighted in the promotional campaigns.
Business with the OEM segment may be very important for gaining business in the
after market. For example, MRF highly advertises that its car radials are used as original
product by Maruti and several foreign brands of cars in India. It may help the company in
at least two ways. That the company is a leading supplier to the OEMs in a highly competitive
market may give some credibility to its products. Secondly, many customers prefer the same
brand as used originally at the time of replacement. The fact that Sundaram Fastners is a
leading supplier of certain component parts to world leaders like General Motors has a
profound impact on the image of the company.
Manufactured material, components and raw materials are also known as entering
goods.
MRO Supplies
Maintenance, repair and operating supplies get used up in facilitating the operation
of the enterprise but do not become part of the finished product. Examples of maintenance
supplies include cleaning compounds, paint, brooms and light bulbs. Bearing, gears and
filters are examples of repair supplies. Operating supplies include office supplies such as
pen, ink, paper, pencil, envelope, etc., lubricants and coolants for factory machinery, fuel
and lubricants for company vehicles, etc.
Marketing Implications
As MRO supplies are bought by a wide variety of customers, a variety of intermediaries
may be required to reach this broad and large multiplicity of customers. However, very
large customers may be directly marketed to.
Purchase of MRO suppliers are normally routinised. Organisations prefer to purchase
them from suppliers who are reliable, capable of supplying all the items in a category and
are good to deal with. It is, therefore, necessary to ensure that such suppliers deal with the
company’s products. Agents play an important role in the distribution of many of these
items. Personal selling is important when certain types of new products are introduced.
Company/brand reputation is important in respect of many MRO supplies. This gives some
indications of the type of promotional strategy required.
Process Materials
Process materials used in the manufacture of a product may be distinguishable in the
final product, like sheet metals, electric and electronic circuit wiring, etc., or indistinguishables
like additives used in lubricants, certain ingredients used in pharmaceutical and food products,
etc. Process material also include catalysts.
 AN OVERVIEW OF INDUSTRIAL MARKETING 7

Marketing Implications
Process materials are also normally bought routinely by the purchasing department of
a firm. Most process materials are demanded across a wide spectrum of industries by a very
large number of customers and hence, a wide variety of channels is common.
A buyer may lay down specifications, either developed by the buyer or agencies like
the Indian Bureau of Standards. Hence, it is inevitable in such cases that the seller satisfies
such standards or specifications.
Process materials lose, by and large, their identity in the final product and for very
few of them there is a replacement market. Therefore, advertising them to the buyers of the
final product may not be meaningful.
Business Services
Business services cover a broad spectrum like technical service of maintaining equipment,
non-technical services of maintaining the premises like janitorial services and commercial
services like banking, insurance, research, consultancy, etc.
MRO supplies and business services are also known as facilitating goods.
Raw Materials
Raw materials are one of the most important items of operating expenses. In many
cases, the quality of raw materials affects the quality and cost of the output. Raw materials
may be primary products or manufactured products. Many primary products also undergo
some processing before they are supplied as raw materials to the industry. For example,
coconut is converted into copra before supplied to the oil mill. Many food processing units
use wheat flour, and not raw wheat, as the raw material.
Marketing Implications
For many raw materials, the customers are very diverse and very large in number and
hence, a variety of channels may have to be used. Large customers, however, may have to
be marketed directly, even when the sale is by indirect channels.
As raw materials account for a large chunk of the cost of production and as the price,
and quality of the raw material and the reliability of supply are very important, multiple
buying influences are involved at least in the initial stages of the procurement cycle, in the
case of large organisations.
When a new raw material which substitutes the existing one is to be introduced, direct
promotion may be necessary.
Use Based Classification
Government of India uses a use based classification of goods. On the basis of the
nature of the output and its use, industries are classified into basic industries, capital goods
industries, intermediate goods industries and consumer goods industries. Basic goods, capital
goods and intermediate goods are essentially industrial goods. As sated earlier, most consumer
goods also pass through the process of business marketing.
 8 INDUSTRIAL MARKETING

Table 1.1
Use Based Classification of Goods
Sl. No. Classification Weight in the index of industrial production

1 Basic goods 45.68

2 Capital goods 8.83
3 Intermediate goods 15.69
4 Consumer goods 2.40

Source: Economic Survey 2014-15.

Basic industries are those industries which provide essential inputs for the development
of other industries and the economy. In other words, these are industries which provide
bases for development of other industries. For example, the iron and steel industry forms a
basis for the development of the engineering industry. Fertiliser is regarded as a basic input
for the agriculture. Coal, oil and electricity are also regarded as basic industries because
growth of modern industry depends on the supply of these vital inputs.
Capital Goods Industries are those industries which produce machinery, equipment or
tools. A capital good is one which is instrumental in producing other goods or services. The
capital goods do not directly serve any consumption requirement. They are used to produce
consumer goods (and other goods) and services. The capital goods industries are capital
intensive in nature, i.e., they require heavy capital investment.
Intermediate Goods are goods which have already undergone manufacturing process
but which form inputs for other industries as material for further processing, part or component.
The Consumer Goods Industries are those industries the output of which serve the final
consumption requirements. The consumer goods may be broadly classified into Consumer
Durables and Consumer Non-durables.
Consumer non-durables are those goods which are used up at once or within a relatively
short period, like foodstuffs, cigarettes, soaps, electric bulbs, etc.
Consumer durables, on the other hand, serve the consumers over a relatively long
period, like car, bicycle, electric fan, television, refrigerator, etc. A distinguishing characteristic
of the consumer durables is that their life or service may be extended by repairs.
The following table shows some important industries that come under the different
categories:
1. Basic Industries:
Mining and quarrying
Fertilizers
Heavy inorganic chemicals
Cement
Iron and Steel basic industries
Non-ferrous basic metals
Electricity
 AN OVERVIEW OF INDUSTRIAL MARKETING 9

2. Capital Goods Industries:

Hand tools and small tools
Specialised equipment
Machine tools
Agricultural machinery (tractors)
Heavy electrical equipment
Electric motors
Electric cables and wires
Rail road equipment
Heavy vehicles
3. Intermediate Goods Industries:
Cotton Spinning
Jute Textiles
Tyres and Tubes
Synthetic Resins and Plastics
Man-made Fibres
Dye-stuffs
Products of Petroleum and Coal (petroleum refinery products)
Bolts, Nuts, Nails, Screws, Springs, Chains, etc.
Manufacture of Metal
Dry Cells
4. Consumer Goods Industries:
A. Consumer Durable Goods
Electric Fans
Telecommunication Equipment
Motor Cycles and Bicycles
B. Consumer Non-durable Goods
Food Manufacturing
Tobacco Manufacturing
Cotton Weaving
Paper and Paper Products
Rubber Foot-wear
Drugs and Pharmaceuticals
Soaps and Glycerine
Electric Lamps
 10 INDUSTRIAL MARKETING

Overlap of Categories
There are a large number of products which fall into the category of consumer goods
and business goods.
A personal computer used in a house for personal purposes is a consumer good but
the same brand of PC used in an office is a business good. A car tyre bought by an OEM
is an industrial good but it is a consumer good when it is bought by an individual. A top
executive of a company who decides which brand of car be bought for his official use is
making a business buying decision but when the same person decides about the car for his
personal (private) use, he is making a consumer buying decision. Several of the variables,
or their relative importance, influencing his buying decisions in these two situations would
be different.
Many goods which are generally regarded as consumer goods have a sizeable business
market.
There are several products which were originally intended to be business goods but
which later found good demand in the consumer market. For some of them, in due course,
the consumer market overtook the business market in size. Van, originally intended to for
commercial deliveries, had become a popular family vehicle.
Marketing Implications
The emergence of new demand patterns have marketing implications. “When consumers
become attracted to business products, responsive marketers may adapt those products to
suit the new found market’s need more closely. A good example of this is the huge consumer
market that now exists for video cameras, which in past years were the domain of commercial
television broadcasters.”7
Similarly, there are cases of products originally targeted at the consumer market gaining
demand in the business market. For example, the business market for television has grown.
TV has penetrated into hotels, lodges, hospitals, waiting rooms of consultants (including
medical practitioners) and other organisations, educational institutions, hostels, shops,
airports, railway stations, bus stands, buses and so on.
The overlap of categories implies that different marketing approaches are required for
different categories. When an industrial product becomes a consumer product, different
segments may develop within the consumer market and vice versa. Many situations would
need product mix modifications. There are, of course, many products which do not require
any modification. In a number of cases, although the product does not need any modification,
other variables of marketing mix may have to be modified.
Figure 1.3 in the chapter end Summary depicts the classification of industrial goods.
The Standard Industrial Classification System
The Standard Industrial Classification (SIC) refers to the scheme by which industries
and products were systematically classified in the United States so as to easily identify products
by industry, group and subgroup within the industry and other relevant product particulars.
 AN OVERVIEW OF INDUSTRIAL MARKETING 11

The SIC system enables the identification of groups of business firms that produced the
same type of product.
The SIC coding system worked in the following way: First, the nation’s economy was
divided into a number of basic industries (such as agriculture, mining, construction, manu-
facturing, etc.) and each of this industry was given a two-digit classification code. Next,
major groups were identified within each basic industry and was given a specific two-digit
code. (For example, mining industry was divided into major groups such as metal mining,
coal mining, oil and gas extraction, etc.). Major groups are then further subdivided into
three-digit industry groups and it proceeded into further details as depicted in figure 1.1.

Basic Major Industry Specific Product Product

industry group group industry class (7-digit)
(2-digit) (2-digit) (3-digit) (4-digit) (5-digit)

Fig. 1.1: The SIC System

The U.S. Standard Industrial Classification (SIC) system has been replaced by the North
American Industry Classification System (NAICS). NAICS was developed jointly by the U.S.,
Canada, and Mexico to provide new comparability in statistics about business activity across
North America.
The Industry Classification data are very useful for marketing planning. It is often an
excellent basis on which to segment markets. If the manager understands the needs and
requirements of a few firms within an SIC/NAICS category, requirements can be projected
for all firms within that category because their requirements will be similar, and potential
suppliers can evaluate the total market through a detailed analysis of a few companies. The
Industry Classification data is also useful for identifying new customers. The marketing manager
can study and evaluate whether the firms in it could use the marketer’s product or service.8
SIC India Codes
Information on Standard Industrial Classification (SIC) Codes for export import trade,
industrial product classifications, and exim classification list are available from SIC India.com.
This classification is related to the International Trade Centre’s ITC HS (Harmonized
System) Classification.
There are millions of trade transactions occurring each year. These transactions are
classified under approximately 8,000 different products. Every item that is exported is assigned
a unique 10-digit identification code. The Harmonization Code System (HS-Code) is a system
of progressively more specific identifiers for a commodity.
At the broadest level the SIC code provides a 10 category division structure:
A. Division A: Agriculture, Forestry, and Fishing
B. Division B: Mining
C. Division C: Construction
 12 INDUSTRIAL MARKETING

D. Division D: Manufacturing
E. Division E: Transportation, Communications, Electric, Gas, and Sanitary Services
F. Division F: Wholesale Trade
G. Division G: Retail Trade
H. Division H: Finance, Insurance, and Real Estate
I. Division I: Services
J. Division J: Public Administration
Each division is divided into Major Groups and each Major Group is given a two digit
code. For example, for Division A: Agriculture, Forestry, and Fishing it starts with 01; for
Division B: Mining with 10; for Division C: Construction with 15; for Division D: Manufacturing
with 20 and so on. Each Major Group is divided into a number of Industry Groups which
are identified by a three digit code. Each industry Group is divided into a number of Product
Groups identified by four digit codes. See Annexure 1.1 for more information.

INDUSTRIAL CUSTOMERS

There are a number of categories of business buyers. The purpose of buying and their
buying behaviour may differ widely.
It is important to understand the characteristics of these different types of business
buyers because these characteristics have marketing implications. The buying process, quantity
of purchase, purchase timing, buying channels, responses to different marketing stimuli, etc.,
may vary between the different categories of buyers. They would also represent different
market segments calling for different marketing strategies.
At a very broad level, there are two types of business buyers, viz., commercial
enterprises and non-commercial organisations.
Commercial Enterprises
There is a vast variety of commercial buyers ranging from one-man enterprises to giant
corporations. Profit is an essential motive of their buying.
Ownership Types
On the basis of the type of ownership of the enterprises, business buyers may be
classified as public sector, private sector, joint sector and cooperative sector units. The
ownership pattern has important bearing on the buying behaviour. For example, in the
public sector enterprises, decision-making, generally, is more bureaucratic. The classification
of enterprises on the basis of the nature of the ownership does not, however, mean that
purchase behaviour of different enterprises within a category are similar. The decision-making
environment, however, may vary widely between the public enterprises. The navaratnas, for
example, have more autonomy among the public enterprises. Within the private sector, the
decision-making style may very widely, depending on size of the enterprise, ownership pattern,
extent of professionalisation of management, etc.
 AN OVERVIEW OF INDUSTRIAL MARKETING 13

Purpose
On the basis of the purpose of the purchase, buyers may be classified into manufacturers,
resellers and consumers.
Industrial units which add value by processing the goods they buy are a very important
segment of the business market. The manufacturing sector in India, for example, accounts
for nearly one-fifth of the GDP.
The growing trend of outsourcing by original equipment manufacturers (OEMs) has
significantly contributed to the growth of the industrial market. Nearly 1200 of the total of
about 1500 items which make up the Indica car are outsourced, in contrast to the traditional
strategy of Telco of manufacturing most of the components in-house. Relationship marketing,
explained elsewhere in this book, assumes great significance here.
Another very important component of the business market is the reseller segment
consisting of distributors, wholesalers and retailers. This broad segment of the business market
also includes the marketing intermediaries of consumer goods. In other words, this category
includes resellers of industrial goods and consumer goods.
Service providers is a very important segment of the business market. Examples include
firms providing DTP service, photocopying service, telecommunication services, medical
service, banking, insurance, etc. The fastest growing sector in many economies is the services.
The developed economies are predominantly service economies in the sense that the service
sector generates the bulk of the employment and income in these economies.
There are many business enterprises which buy goods for in-house consumption, though,
they are not used in manufacturing or providing commercial service. Such items include
office stationery, office equipment and furniture, furnishings, etc. As pointed out earlier,
although, these items may fall under consumer goods in some other situation, marketing of
these goods to business units is business marketing.
Non-Commercial Organisations
The business market also consists of a variety of non-commercial organisations, i.e.,
organisations whose activities are not commercial in nature. They may be grouped into two
broad types, viz., governmental and non-governmental. These include Central and State
government organisations (including departments) and corporations, municipalities and
panchayats and non-commercial organisations under them.
Figure 1.4 in the chapter end Summary provides a summary view of the important
categories of business buyers.
There is a wide spectrum of non-government organisation (NGOs) engaged in a variety
of activities, like the Red Cross, charitable societies, trusts, etc. Many of them make sizeable
purchases for in-house consumption, free distribution, or for supply at subsidised or reasonable
prices.
 14 INDUSTRIAL MARKETING

COMPONENTS OF INDUSTRIAL MARKET

A very brief account of the major sectors of the economy constituting the business
market is given below.
Industrial Sector
The fact that the term Industrial Marketing has been traditionally used to refer to Business
Marketing indicates the preponderance of the industrial sector in the business market.
The industrial sector, obviously, is one of the most important constituents of the business
market. Industrial marketing encompasses all the input supplies (including capital goods,
technology, consultancy and finance) to the numerous units of an enormous variety of this sector.
The industrial sector generates about one-fourth of the GDP of India. The industrial
sector consists of the following three important sub-sectors according to Government
classification:
1. Manufacturing
2. Mining and quarrying
3. Electricity, gas and water supply
Manufacturing is the largest sector, accounting for over 80 per cent of the income
generation in the industrial sector. Electricity, gas and water supply contribute about 10 per
cent of the industrial sector’s share of the GDP.
Industrial goods marketed to the industrial units range from very high value machinery
and equipment to items of relatively insignificant value like certain supplies and consumables,
technologically highly sophisticated to very common items, and very specialised items to
general items.
In short, the industrial sector is a market for all types of the goods described under
the section Classification of Business Goods — capital equipment and investments,
manufactured materials and component parts, MRO supplies, process materials, business
services, and raw materials.
Agricultural Sector
Agricultural inputs and bulk of the traded agricultural produce fall within the ambit
of business market.
Business marketing encompass agricultural produce sold to processing units (including
hotels and restaurants). Unprocessed agricultural produce sold to ultimate consumers also
involve business marketing when marketing middlemen are involved in the process.
The agricultural sector is a very diverse one consisting of fishery, animal husbandry,
poultry, etc., besides plants and vegetation.
The share of the agricultural sector has been steadily declining in India — a common
phenomenon associated with economic development although, the aggregate value of the
output of this sector has been rising. The agricultural sector still generates over one-fifth of
the GDP of India and is the livelihood of a majority of the population.
 AN OVERVIEW OF INDUSTRIAL MARKETING 15

The business market in the agricultural sector has been expanding due to, inter alia,
technological and related developments.
Purchased inputs, like seeds, nutrients/feeds, etc., have grown in importance in the
agricultural sector. The popularity of the high yielding varieties of seeds has also helped
increase the demand for nutrients like fertilizers and plant protective items like pesticides
and insecticides. Demand for agricultural equipment, like tractors, trillers, pump sets, etc.,
and implements has been on the increase.
The development of infrastructure in the agricultural sector, like irrigation systems,
storage and transportation facilities, naturally creates considerable demand for several industrial
products like construction materials and equipment. The development of irrigation facilities
would increase demand for high yielding varieties of seeds, plant nutrients and protectants,
and farm equipment and implements. This would, in turn, help the growth of the service
sector related to the agricultural sector like repair shops, shops selling spare parts and supplies,
etc. The business of the financial sector to the agriculture would also grow.
The development of fisheries, poultry, animal husbandry and floriculture are more business
oriented, in respect of both the inputs and outputs, than the traditional agricultural sector.
Service Sector
The service sector is the largest sector in most of the economies. It is also the fastest
growing sector in many economies.
The service sector is an enormously wide spectrum. Following are some of the important
classes within this sector:
Service Booths
These are shops equipped to sell certain types of services like telecommunication (like
STD/ISD/local calls, fax, internet, etc.), DTP, photocopying, etc. There has been a very fast
growth of this segment in India. This is an important market segment for a number of
equipment and accessories. The scale of operation of most of them is small.
Repair and Maintenance Service
As the industrial market expands, this segment also grows. Repairs and maintenance
service rendered to business units are business products. The capital goods and other goods
needed to run the repair and maintenance business are industrial goods.
Rental Service
There has also been a growth of rental services. More and more products are entering
this segment. Products commonly found in this segment include, furniture, computers, T.V.,
VCR, printers, several other equipment and implements, cassettes, publications, etc.
Hotels and Restaurants
The hotel and restaurant business is growing fast. An increasing trend of eating out is
often associated with economic development. While small hotels and restaurants, generally,
depend almost entirely on the consumer market, large, particularly star hotels may have
significant sales to business and organisations. All purchases by all types of hotels and
restaurants are part of the business market.
 16 INDUSTRIAL MARKETING

Transport
Commercial transport is a very important segment of the industrial market. There is
an enormous potential for further development of this sector in India. The new policy of
Government of India, which even allows foreign investment in this sector, the expressways
and other transport infrastructure development programmes should accelerate the development
of this sector.
As pointed out elsewhere, the outsourcing trend in the automobile industry increases
the scope of industrial marketing. Relationship marketing has an important place here.
The development of the transport sector will spur the growth of several ancillary services.
The present transport system of the country comprises several modes of transport
including rail, road, coastal shipping, inland water transport, air transport, etc. Transport has
recorded a substantial growth over the years both in areas of network and in output of the
system.
The railways and a significant part of the passenger road transport are in the public
sector.
Firms marketing to the transport sector have to select their segments and devise
appropriate strategies for the different segments.
Trade
Almost the entire trade sector is a business market. As pointed out earlier, even marketing
of consumer goods to the marketing intermediaries is business marketing. The place of the
trade sector in the business market is obvious from the fact that most of the goods, consumer
and industrial, pass through intermediaries.
Finance and Insurance
This sector is also an important market for several business goods. More importantly,
a considerable part of the business of this sector is to the business market. There are specialised
institutions to cater to the various needs of the business sector.
Health Service
Health service is a sector with enormous growth potential. This is also a market with
very diverse buyer characteristics. There are different systems of medicines with their own
unique characteristics. Organisational types vary from one man clinics/consulting to very
large and full fledged hospitals, general types to high speciality ones, health resorts,
organisations run on charity to corporate firms and so on. The marketing environment in
respect of each type would be different.
Non-Business Organisations
The non-business organisations sector forms a significant segment of the business market.
It buys both industrial and consumer goods. This sector encompasses government departments
and organisations and non-government organisations (NGOs). A variety of organisations exist
in this sector like hospitals, schools, orphanages, organisations like Red Cross and other
social service organisations.
 AN OVERVIEW OF INDUSTRIAL MARKETING 17

International Market
Although, the international market for business goods falls within above-mentioned
sectors of the national economies, it deserves a special mention because the growing
importance of this large market.
Business products (both industrial products and consumer products undergoing business
marketing) dominate the global trade. Even industrial goods taken alone make up a major
part of the world trade.
Fig.1.5 at the end of the chapter presents a summary view of the components of the
Industrial Market.

SUMMARY

Industrial goods/services are those goods/services which are used (mostly commercially) in the
production /rendering of goods/services, such as capital goods, raw materials, intermediates and MRO supplies.
Industrial Marketing, also known by such names as Business Marketing, Business to Business Marketing,
Commercial Marketing, Institutional Marketing and Organisational Marketing, “consists of all activities involved
in the marketing of product and services to organisations (i.e., commercial enterprises, profit and non-profit
institutions, government agencies, and resellers) that use products and services in the production of consumer
or industrial goods and services, and to facilitate the operation of their enterprises.”
Figure 1.2 outlines the scope of business marketing.

Industrial Market

Marketing of Industrial Goods Marketing of Consumer Goods to:

Business Enterprises Non-Business Organisations

Organisations Organisations
buying for in-house buying for in-house
Resellers Business Consumers consumption or consumption or
business promotion charitable distribution

Fig. 1.2: Dimensions of Industrial Marketing

On the basis of how the goods are used, business goods may be classified as shown in Figure 1.3.
 18 INDUSTRIAL MARKETING

Industrial Goods

Capital Manufactured MRO Process Business Raw Overlap

Equipment Materials and supplies materials services materials categories
and Investments Component Parts

Fig. 1.3: Classification of Industrial Goods

There are a number of categories of business buyers. The purpose of buying and their buying behaviour
may differ widely. Figure 1.4 provides a summary view of the important categories of business buyers.

Industrial Customers

Commercial Organisations Non-Commercial Organisations

Public Private Cooperative Joint Voluntary

Government
sector sector enterprises ventures Cooperatives organisations
organisations
enterprises enterprises

large, medium, small and tiny units

Processing enterprises, Industrial/consumer goods resellers, Service enterprises

Fig. 1.4: Types of Business Buyers

The industrial market consists of several major sectors of the economy, such as (1) the industrial
sector consisting of three important sub-sectors according to Government classification: manufacturing;
mining and quarrying; electricity, gas and water supply; (2) the agricultural sector which is a very
diverse one consisting of fishery, animal husbandry, poultry, etc., besides plants and vegetation; ( 3)
the service sector which is an enormously wide spectrum; (4) the non-business organisations sector,
encompassing government departments and organisations and non-government organisations (NGOs),
which buys both industrial and consumer goods. A variety of organisations exist in this sector, like
hospitals, schools, orphanages, organisations like Red Cross and other social service organisations.
It is depicted in Figure 1.5.
 AN OVERVIEW OF INDUSTRIAL MARKETING 19

Industrial Market

Industrial Agricultural Services International Non-business

sector sector sector market market

Fig. 1.5: Components of Business Market

REFERENCES

1. Frank G. Bingham Jr., Business Marketing Management (Lincolnwood, Illinois: NIC Business Books,
1998), p. 5.
2. Cited by Robert R. Reeder et al., Industrial Marketing (New Delhi: Prentice Hall of India, 1997),
pp. 6-7.
3. Robert W. Haas, Industrial Marketing Management (New York: Petrocelli/Charter, 1976), p. 2.
4. Frank G. Bingham Jr., op. cit., p. 4.
5. Andrew C. Gross et al., Business Marketing (Delhi: A.I.T.B.S. Publishers & Distributors, 1998), p. 6.
6. Eugene J. Kelley and Lisa R. Hearne, “Management Education and the Broadening Role of Business-
to-Business Marketing,” Report-6-1986, Institute for the Study of Business Markets, College of Business
Administration, Pennsylvania State University. [Cited by Michael D. Hutt and Thomas W. Speh, Business
Marketing Management (Chicago: The Dryden Press, 1989, p. 4)]
7. Andrew C. Gross et al., op. cit., p. 7.
8. Michael D. Hutt and Thomas W. Speh, Ibid., p. 149.

REVIEW QUESTIONS

1. Explain the meaning of industrial marketing and examine the relevance of specialised study of Industrial
Marketing.
2. Give an account of the classification of business goods. Examine the marketing implications of each
category.
3. Describe the different categories of industrial buyers.
4. Describe the important components of the industrial market.
5. Write short notes on the following:
(1) Overlap categories of goods
(2) Non-business segment of the business market
(3) Difference between Industrial Marketing and Business Marketing
(4) Standard Industrial Classification.
6. Write very short answers (1 to 3 sentences) to the following questions:
(1) Define industrial marketing.
(2) What are business goods?
(3) What is Standard Industrial Classification (SIC)?
(4) What is meant by basic industry?
(5) What are intermediate goods?
(6) What are MRO supplies?
20 INDUSTRIAL MARKETING

ANNEXURE 1.1

ITC (HS) CLASSIFICATION AND SIC CODES

SIC Division Structure

Division A: Agriculture, Forestry, and Fishing

 Major Group 01 : Agricultural Production Crops
 Major Group 02 : Agricultural Production Livestock and Animal Specialties
 Major Group 07 : Agricultural Services
 Major Group 08 : Forestry
 Major Group 09 : Fishing, Hunting, and Trapping

Division B: Mining
 Major Group 10 : Metal Mining
 Major Group 12 : Coal Mining
 Major Group 13 : Oil and Gas Extraction
 Major Group 14 : Mining and Quarrying of Nonmetallic Minerals, Except Fuels

Division C: Construction

 Major Group 15 : Building Construction General Contractors and Operative Builders

 Major Group 16 : Heavy Construction Other Than Building Construction Contractors
 Major Group 17 : Construction Special Trade Contractors

Division D: Manufacturing
 Major Group 20 : Food and Kindred Products
 Major Group 21 : Tobacco Products
 Major Group 22 : Textile Mill Products
 Major Group 23 : Appare and Other Finished Products Made From Fabris and
Similar Materials
 Major Group 24 : Lumber and Wood Products, Except Furniture
 Major Group 25 : Furniture and Fixtures
 Major Group 26 : Paper and Allied Products
 Major Group 27 : Printing, Publishing, and Allied Industries
 Major Group 28 : Chemicals and Allied Products
 Major Group 29 : Petroleum Refining and Related Industries
 Major Group 30 : Rubber and Miscellaneous Plastics Products
 Major Group 31 : Leather and Leather Products
 AN OVERVIEW OF INDUSTRIAL MARKETING 21

 Major Group 32 : Stone, Clay, Glass, And Concrete Products

 Major Group 33 : Primary Metal Industries
 Major Group 34 : Fabricated Metal Products, Except Machinery And
Transportation Equipment
 Major Group 35 : Industrial and Commercial Machinery And Computer
Equipment
 Major Group 36 : Electronic And Other Electrical Equipment And Components,
Except Computer Equipment
 Major Group 37 : Transportation Equipment
 Major Group 38 : Measuring, Analyzing, And Controlling Instruments;
Photographic, Medical And Optical Goods; Watches And Clocks
 Major Group 39 : Miscellaneous Manufacturing Industries

Division E: Transportation, Communications, Electric, Gas, And Sanitary Services

 Major Group 40 : Railroad Transportation
 Major Group 41 : Local And Suburban Transit And Interurban Highway Passenger
Transportation
 Major Group 42 : Motor Freight Transportation And Warehousing
 Major Group 43 : United States Postal Service
 Major Group 44 : Water Transportation
 Major Group 45 : Transportation By Air
 Major Group 46 : Pipelines, Except Natural Gas
 Major Group 47 : Transportation Services
 Major Group 48 : Communications
 Major Group 49 : Electric, Gas, And Sanitary Services

Division F: Wholesale Trade

 Major Group 50 : Wholesale Trade — durable Goods
 Major Group 51 : Wholesale Trade — non-durable Goods

Division G: Retail Trade

 Major Group 52 : Building Materials, Hardware, Garden Supply, And Mobile
Home Dealers
 Major Group 53 : General Merchandise Stores
 Major Group 54 : Food Stores
 Major Group 55 : Automotive Dealers And Gasoline Service Stations
 Major Group 56 : Apparel And Accessory Stores
 Major Group 57 : Home Furniture, Furnishings, And Equipment Stores
 Major Group 58 : Eating And Drinking Places
 Major Group 59 : Miscellaneous Retail
22 INDUSTRIAL MARKETING

Division H: Finance, Insurance, And Real Estate

 Major Group 60 : Depository Institutions
 Major Group 61 : Non-depository Credit Institutions
 Major Group 62 : Security And Commodity Brokers, Dealers, Exchanges, And
Services
 Major Group 63 : Insurance Carriers
 Major Group 64 : Insurance Agents, Brokers, And Service
 Major Group 65 : Real Estate
 Major Group 67 : Holding And Other Investment Offices

Division I: Services
 Major Group 70 : Hotels, Rooming Houses, Camps, And Other Lodging Places
 Major Group 72 : Personal Services
 Major Group 73 : Business Services
 Major Group 75 : Automotive Repair, Services, And Parking
 Major Group 76 : Miscellaneous Repair Services
 Major Group 78 : Motion Pictures
 Major Group 79 : Amusement And Recreation Services
 Major Group 80 : Health Services
 Major Group 81 :
Legal Services
 Major Group 82 :
Educational Services
 Major Group 83 :
Social Services
 Major Group 84 :
Museums, Art Galleries, and Botanical and Zoological
Gardens
 Major Group 86 : Membership Organizations
 Major Group 87 : Engineering, Accounting, Research, Management, And
Related Services
 Major Group 88 : Private Households

Division J: Public Administration

 Major Group 91 : Executive, Legislative, And General Government, Except
Finance
 Major Group 92 : Justice, Public Order, And Safety
 Major Group 93 : Public Finance, Taxation, And Monetary Policy
 Major Group 94 : Administration Of Human Resource Programs
 Major Group 95 : Administration Of Environmental Quality And Housing
Programs
 Major Group 96 : Administration Of Economic Programs
 Major Group 97 : National Security And International Affairs
 Major Group 99 : Non-classifiable Establishments
 AN OVERVIEW OF INDUSTRIAL MARKETING 23

Example
Division D: Manufacturing
The manufacturing division includes establishments engaged in the mechanical or
chemical transformation of materials or substances into new products. These establishments
are usually described as plants, factories, or mills and characteristically use power driven
machines and materials handling equipment. Establishments engaged in assembling
component parts of manufactured products are also considered manufacturing if the new
product is neither a structure nor other fixed improvement. Also included is the blending
of materials, such as lubricating oils, plastics, resins, or liquors. The materials processed by
manufacturing establish-ments include products of agriculture, forestry, fishing, mining, and
quarrying as well as products of other manufacturing establishments. The new product of
a manufacturing establishment may be finished in the sense that it is ready for utilisation or
consumption, or it may be semi finished to become a raw material for an establishment
engaged in further manufacturing. For example, the product of the copper smelter is the raw
material used in electrolytic refineries; refined copper is the raw material used by copper
wire mills; and copper wire is the raw material used by certain electrical equipment
manufacturers.
The materials used by manufacturing establishments may be purchased directly from
producers, obtained through customary trade channels, or secured without recourse to the
market by transferring the product from one establishment to another which is under the
same ownership. Manufacturing production is usually carried on for the wholesale market,
for interplant transfer, or to order for industrial users, rather than for direct sale to the domestic
consumer.
There are numerous borderline cases between manufacturing and other divisions of
the classification system. Specific instances will be found in the descriptions of the individual
industries. The following activities, although not always considered as manufacturing, are so
classified: Milk bottling and pasteurizing; Fresh fish packaging (oyster shucking, fish filleting);
Apparel jobbing (assigning of materials to contract factories or shops for fabrication or other
contract operations) as well as contracting on materials owned by others; Publishing; Ready
mixed concrete production; Leather converting; Logging; Wood preserving; Various service
industries to the manufacturing trade, such as type setting, engraving, plate printing, and
preparing electro typing and stereotype plates, but not blueprinting or photocopying services;
Electroplating, plating, metal heat treating, and polishing for the trade; Lapidary work for
the trade; Fabricating of signs and advertising displays.
There are also some manufacturing-type activities performed by establishments which
are primarily engaged in activities covered by other divisions, and are, thus, not classified
as manufacturing. A few of the more important examples are: Agriculture, Forestry, and
Fishing. Processing on farms is not considered manufacturing if the raw materials are grown
on the farm and if the manufacturing activities are on a small scale without the extensive
use of paid labour. Other exclusions are threshing and cotton ginning, mining. The dressing
and beneficiating of ores; the breaking, washing, and grading of coal; the crushing and
breaking of stone; and the crushing, grinding, or otherwise preparing of sand, gravel, and
non-metallic chemical and fertilizer minerals other than barite are classified in Mining.
 24 INDUSTRIAL MARKETING

Construction. Fabricating operations performed at the site of construction by contractors are

not considered manufacturing, but the prefabrication of sheet metal, concrete, and terrazzo
products and similar construction materials is included in the Manufacturing Division.
Wholesale and Retail Trade. Establishments engaged in the following types of operations are
included in Wholesale or Retail Trade: cutting and selling purchased carcasses; preparing
feed at grain elevators and farm supply stores; stemming leaf tobacco at wholesale
establishments; and production of wiping rags. The breaking of bulk and redistribution in
smaller lots, including packaging, repackaging, or bottling products, such as liquors or
chemicals, is also classified as Wholesale or Retail Trade. Also included in Retail Trade are
establishments primarily engaged in selling, to the general public, products produced on the
same premises from which they are sold, such as bakeries, candy stores, ice cream parlours,
and custom tailors. Services. Tyre retreading and rebuilding, sign painting and lettering shops,
computer software production, and the production of motion picture films (including video
tapes) are classified in Services. Most repair activities are classified as Services. However,
some repair activity such as shipbuilding and boatbuilding and repair, the rebuilding of
machinery and equipment on a factory basis, and machine shop repair are classified as
manufacturing.
Examples

Major Group 20: Food And Kindred Products

Industry Group 201: Meat Products
 2011 Meat Packing Plants
 2013 Sausages And Other Prepared Meat Products
 2015 Poultry Slaughtering And Processing
2011 Meat Packing Plants
Establishments primarily engaged in the slaughtering, for their own account or on a
contract basis for the trade, of cattle, hogs, sheep, lambs, and calves for meat to be sold or
to be used on the same premises in canning, cooking, curing, and freezing, and in making
sausage, lard, and other products. Also included in this industry are establishments primarily
engaged in slaughtering horses for human consumption. Establishments primarily engaged
in slaughtering, dressing, and packing poultry, rabbits, and other small game are classified
in Industry 2015; and those primarily engaged in slaughtering and processing animals not
for human consumption are classified in Industry 2048. Establishments primarily engaged in
manufacturing sausages and meat specialties from purchased meats are classified in Industry
2013; and establishments primarily engaged in canning meat for baby food are classified in
Industry 2032.
 Bacon, slab and sliced-mitse
 Beef-mitse
 Blood meal
 Boxed beef-mitse
 Canned meats, except baby foods and animal feeds-mitse
 AN OVERVIEW OF INDUSTRIAL MARKETING 25

 Corned beef-mitse
 Cured meats-mitse
 Dried meats-mitse
 Frankfurters, except poultry-mitse
 Hams, except poultry-mitse
 Hides and skins, cured or uncured
 Horsemeat for human consumption-mitse
 Lamb-mitse
 Lard-mitse
 Luncheon meat, except poultry-mitse
 Meat extracts-mitse
 Meat packing plants
 Meat-mitse
 Mutton-mitse
 Pork-mitse
 Sausages-mitse
 Slaughtering plants: except animals not for human consumption
 Variety meats edible organs-mitse
 Veal-mitse