MODULE 1

What Is Industrial Marketing?

Industrial marketing or business marketing is to market the products and services to business
organizations. Their buyers can be manufacturing companies, government undertakings, private sector
organizations, educational institutions, hospitals, distributors, and dealers. The business organizations,
buy products and services to meet their aims like maximizing profits, minimizing costs, use of latest
technology, and so on. Industrial marketing is the marketing of goods and services by one business to
another. The term, industrial marketing has largely been replaced by the term B2B marketing.

The word Industrial Marketing is also used for Business-to- Business Marketing, or Business Marketing,
or Organizational Marketing.
Industrial marketing consists of all process involved in the marketing of products and services to
organizations that use products and services in the production of consumer or industrial goods and
services. The organizations selling goods like steel, machine tools, computers, courier services, and other
goods and services to buying organizations.
For example, a company manufacturing and marketing tyre tubes to motorbike company, a manufacturer
is doing industrial marketing. Industrial marketer of the tyre tubes company must understand the needs of
motorbike manufacturers such as Hero Motocorp and Honda, Bajaj, Yamaha in terms of their quality
standards, applications of tubes, availability or delivery on daily or weekly basis, and so on.

Nature Of Industrial Marketing

The nature of industrial marketing is relatively easy to understand, but the process is complex. Selling to
customers directly is easy. The business serves a limited number of products to its customers. In B2B
marketing, the business sells its products to other sellers who will then sell to end customers.In B2C
marketing, the business needs to know the taste and preferences of a smaller group of people, and with
good salesmanship, it can quickly seal the deal. However, if the business engages in B2B marketing, it
needs to know a large group of diverse people across various locations.
Let’s consider a simple example to understand the nature of industrial marketing. Consider the differences
between a small ice cream parlor that serves a limited number of ice cream flavors to their local
customers(business to customer model) and an ice-cream manufacturer that produces hundreds of flavors
on a large volume to customers from across the country and the world. The manufacturer doesn’t directly
sell its products to the customers. Instead, it sells them to different ice cream parlors(business to business
model), who, in turn, sell it to the customers. Selling ice-creams to individual customers is relatively easy
if you have good salesmanship and knowledge about customer preferences. However, selling ice-creams
to multiple stores is much more challenging. It requires the ice cream manufacturer to market its flavors
in a manner that is appealing to a large number of ice cream stores across the world, each requiring
unique marketing strategies based on location, demographics, and operating costs. Thus we can see that
industrial marketing is very different from B2C marketing in terms of decision making, marketing
strategies, and customer relationships.

OBJECTIVES OF INDUSTRIAL MARKETING

1.Generate sales
Sales are not going to happen overnight. But all of the above will help. Establishing an advertising
strategy, both in social networks and in search engines, that should have an impact on sales. The clear
objective of industrial marketing is to sell. And for this you have to reach customers. How?
Establishing content that is attractive and encourages awareness of the brand and products; taking the
brand with collaborations to new customers (for example establishing a collaboration to appear as a brand
in distributors, or with manufacturers); etc.

2. Know who your target audience is

In industrial marketing the target audience is not a person, or an individual, but a company. But you need
to know what kind of company. That is, you can focus on distributors, shops, manufacturers, importers, or
even industrial end consumers.

3.Have multiple supports

In industrial marketing, it is not enough just to have a website and that's it. Position it on the Internet as
high as possible in the search engines, so that, if a company or individual searches for a certain product
that they sell, they leave the first results to have more possibilities of sale.

4.Build trust.
Not only that, you also get more people to see you, have a leadership in the sector and establish a
"minimum quality" of both your products and your services.

Difference between Industrial and Consumer Marketing:

Industrial marketing or B2B marketing refers to the marketing of industrial goods/services in the
industrial market. Industrial marketing relies on the tools of competitive tendering and effective
communication channels between industrial companies and professional buyers of their highly specialized
products.

Consumer Marketing
Consumer or B2C marketing refers to the marketing of finished products/services to the potential end-
customers in a consumer market. It relies on gaining extensive knowledge about the tastes and
preferences of the end-customers.
Criteria Industrial Marketing Consumer Marketing

Products are complex and Products are simple and easy-to-

Type of Products highly specialized that use that can be straightforwardly
require expert knowledge. mass-marketed.

Professional and trained

business owners who use the End-users who purchase the
product of your industrial product or avail the services for
Target Audience
company as a factor of final consumption and
production, i.e. as an input in gratification.
their production process.

To create awareness of the

To influence institutional
availability of a product or
buyers throughout their
Motives of Sellers service by a particular brand and
complete industrial buying
generate demand by
process.
highlighting the salient features

Strategic Focus Developing and nurturing Dynamic advertising that

partnerships that focus on induces the impulsive buying

building long-term relations
with business partners by
gaining their trust.
behavior of the customers and
makes them loyal to the brand.
Customers may or may not be
the long-term users of the
products/services.

Digital Content marketing

Marketing Strategies
(posting blogs, white papers, Various online and offline
case studies on informational advertising and marketing tools
websites), personalized including print, television, and
presentations to clients, several online or social media
distributing product samples, platforms.
etc.

Encompasses all the

Marketing Elements
Encompasses only highlighting
operational competencies and
the benefits/utilities that
processes employed by the
customers will derive by using
company in delivering value
the product/service.
to their customers.

Narrow and constricted as

industrial marketers deal with Wide and extensive as consumer
the limited magnitude of marketers market the
Market Reach
businesses requiring products/services to potential
products/services of their mass customers.
clients.

TRENDS AND CHANGES IN BUSINESS MARKETING

1. More Emphasis on Quality, Value, and Customer Satisfaction:

Today’s customers place a greater weight to direct motivations (convenience, status, style, features,
services and qualities) to buy product. Today’s marketers give more emphasis on the notion, “offer more
for less.”

2. More Emphasis on Relationship Building and Customer Retention:

Today’s marketers are focusing on lifelong customers. They are shifting from transaction thinking to
relationship building. Large companies create, maintain and update large customer database containing
demographic, life-style, past experience, buying habits, degree of responsiveness to different stimuli, etc.,
and design their offerings to create, please, or delight customers who remain loyal to them. Similarly
more emphasis is given to retain them throughout life. Marketers strongly believe: “Customer retention is
easier than customer creation.”

3. More Emphasis on Managing Business Processes and Integrated Business Functions:

Today’s companies are shifting their thinking from managing a set of semi independent departments, each
with its own logic, to managing a set of fundamental business processes, each of which impact customer
service and satisfaction. Companies are assigning cross-disciplinary personnel to manage each process.

4. More Emphasis on Ethical Marketing Behaviour:

The market place is highly susceptible to abuse by those who lack scruples and are willing to prosper at
the expense of others. Marketers must practice their craft with high standards. Even, governments have
imposed a number of restrictions to refrain them from malpractices. Marketers are trying to sell their
products by obeying and observing moral standards or business ethics.

5.More Emphasis on High-tech Industries:

Due to rapid economic growth, high-tech firms emerged, which differ from traditional firms. High-tech
firms face higher risk, slower product acceptance, shorter product life cycles, and faster technological
obsolescence. High-tech firms must master the art of marketing their venture to the financial community
and convincing enough customers to adopt their new products.

6. More Emphasis on Direct and Online Marketing:

Information technology and communication revolution promise to change the nature of buying and
selling. Companies follow direct channel in term hiring salesmen, setting own distribution network,
designing network marketing, applying online marketing, and contracting with giant shopping/retailing
malls.People anywhere in the world can access the Internet and companies’ home pages to scan offers and
order goods. Via online service, they can give and get advice on products and services by chatting with
other users, determine the best values, place orders, and get next-day delivery.

CLASSIFICATION OF INDUSTRIAL PRODUCTS

Industrial products are defined as the products, which are used for processing or for carrying out a
business. Thus, the peculiarity between a consumer product and an industrial product is depending on the
purpose for which the product is bought.
For example, we can say a customer buys a mixer or juicer or grinder for domestic use it is a consumer
product, whereas when the same mixer/juicer/grinder is sold to a fruit juice vendor it is termed as an
industrial product. Industrial marketing can also be carried out in Business Services.
Industrial Products can be classified in three broad categories:
 Materials & Parts
 Capital Items and
 Supplies and Services

Material & Parts

These consists raw material, finished material & parts. Raw materials are generally farm products namely
cotton, wheat, vegetables etc. Some natural products like namely meat, petroleum product, iron etc.
whereas finished material and parts are items like iron rods, linen yarns, wires and cables etc. and
component and parts can be household appliance motors, components of PC’s, component parts of motor
vehicles etc.

Capital Items
The industrial products which assist the buyer’s production and operations are termed as capital items.
These include accessory equipments, installations or may be buildings, complex computer systems. Some
other items which can be added to this are the accessory equipment which can aid the production Process.
For example, forklift trucks for material handling, equipments & furniture etc. These products like
forklift trucks for material handling, equipments & furniture etc., have a shorter life span than buildings,
complex computer systems as mentioned at the beginning.

Supplies & Services

This is also another type of industrial products and services in industrial marketing. This includes the
items that have a constant use in the plant or in office. Cleaning equipments, paints, pencils, printer inks,
photocopy papers, etc. are the convenience products and are purchased with no difficulty.
Maintenance and repair services are the items like window and furniture cleaning material computer
repair etc. There are also the business consultative services like legal, management consulting,
promotional etc. The needs and objectives of industrial buyers are satisfied through the following
exchange processes. There can be four different types of exchanges in industrial marketing

CLASSIFICATION OF INDUSTRIAL CUSTOMERS

Industrial customers are normally classified into four groups:

Commercial Enterprises
Commercial enterprises are private sector, profit-seeking organisations such as IBM, General Motors,
Computer Land, and Raven Company, purchase industrial goods and/or services for purposes other than
selling directly to ultimate consumers.
However, since they purchase products for different uses, it is more useful from a marketing point of view
to define them in such a way as to understand their purchasing needs at the time of examination of the
varieties of products they purchase and how marketing strategy can be developed to meet their needs.
Thus, it is more logical to look at commercial enterprises:
 Industrial distributors or dealers
 original equipment manufacturers (OEMs)
 users
As and when, these categories tend to overlap; are useful to the industrial marketer because they point out
the ways of uses of products and services in buying firms.

Industrial Distributors and Dealers

Industrial distributors and dealers take title to goods; thus, they are the industrial marketer‘s
intermediaries; acting in a similar capacity to wholesalers or even retailers. the intermediaries not only
serve the consumer market but also they serve other business enterprises, government agencies, or private
and public institutions. They purchase industrial goods and resell them in the same form to other
industrial customers.
Original Equipment Manufacturers (OEMs)
These industrial customers purchase industrial goods to incorporate OEMs into the products they
produce. For instance, a tyre manufacturer (say, MRF), who sells tyres to a truck manufacturer (say,
TELCO) in this case it would consider the truck manufacturer as an OEM. Thus, the product of the
industrial marketer (MRF) becomes a part of the customer‘s (TELCO‘S) product.

Users
An industrial customer, who purchases industrial products or services, to support its manufacturing
process or to facilitate the businessoperations is referred as a user.
For example, drilling machines, press, winding machines, and so on are the products which support the
manufacturing process, whereas the products which facilitate the operations of business like computers,
fax machines, telephones, and others.

Government Customers
In India, the largest purchasers of industrial products are Central and State Government departments,
undertakings, and agencies, such as railways, department of telecommunication, defense, Director
General of Supplies and Disposal (DGS&D), state transport undertakings, state electricity boards, and so
on. These Government units purchase almost all kind of industrial products and services and they
represent a huge market.

Institutions
Public and private institutions such as hospitals, schools, colleges, and universities are termed as
institutional customers. Some of these institutions have rigid purchasing rules and others have more
flexible rules. An industrial marketing person needs to understand the purchasing practice of each
institute so as to be effective in marketing the products or services.

Cooperative Societies
An association of persons forms a cooperative society. It can be manufacturing units (e.g. Cooperative
Sugar Mills) or non-manufacturing organisations (e.g. Cooperative Banks, Cooperative Housing
Societies). They are also industrial customers.

INDUSTRIAL MARKETING ENVIRONMENT

The industrial marketing environment could be divided into three levels namely the interface level, the
public’s  level and the macro environment level.

The Interface Level

This involves those key participants who immediately interface with an industrial firm (buyer or seller) in
facilitating production, distribution and purchase of firm’s goods and services.

Participants in the interface level include:

Input supplier– Input goods such as the raw materials, labor  and capital are supplied by organizations to
industrial firms for use in producing output goods and services. The survival and success of a firm depend
on the knowledge and relationship with its input suppliers. Interruptions in the flow of inputs cause
repercussions in the entire industry affecting not only production and marketing plans but also the
production and marketing plans of the suppliers.
Distributors– Most organizational buyers buy from five or more industrial distributors. Industrial
distributors, contact potential buyers, negotiate orders, provide buffer inventories, credit and technical
advice to potential buyers. They are particularly important when joint demand is present because they
bring together the heterogeneous inputs needed for the production of end products .
Facilitators– Advertising agencies and public relations firms provide the necessary communication flow
between the sellers and buyers through the formulation of meaningful information and media strategies.
The use of advertising in reaching potential buyers and the multitude of buying influencers is vital in the
overall communication strategy. Transportation and warehouse companies facilitate the free flow of
goods that must be delivered in usable condition to industrial customers and distributors when and where
they are required. When goods are not delivered on time and in usable solutions, buyers can be forced to
shut down production lines. Resources as they move from the supply inputs to end users must be financed
and insured.

Competitors– Competitors actions whether domestic or foreign, ultimately influence the company’s
choice of target markets, distributors, product mix, and in fact its entire marketing strategy.

The Publics Level

Publics are distinct groups that have actual or potential interest or impact in each firm’s ability to achieve
its respective goals. Publics have the ability to help or hinder a firms effort to serve is markets.

Financial publics– Financial institutions such as investments firms and stock brokerage firms and
individual stakeholders invest in an organization on its ability to return profits. When they become
unhappy with the management or dissatisfied with a company’s social polices, they sell their shares.

Independent press – Industrial organizations must be accurately sensitive to the role that the mass media
play and how they can affect the achievement of the marketing objectives. The independent press is
capable of publishing news that can boost or destroy the reputation of a firm as well as the sales potential
of a product.

Public interest groups– Industrial marketing decisions are increasingly affected by public interest
groups. Clearly, these various public interest groups limit the freedom of the suppliers and buyers in the
industrial market. While some organizations respond by fighting, others accept these groups as another
variable to be considered in developing strategic planning, working through public affairs departments to
determine their interests and to express favorably the company’s goals and activities in the press. The
impact of these groups however is felt by all participants in the interface level.

General public– Although the general public does not react in an organized way towards a firm or an
industry, as interest groups do, when sizeable portion of a population shifts attitude towards   a firm or
industry, there is definite impact.
Internal public– The board of directors and managers as well as blue and white colour workers are
important emissaries between an organization and other participants in the interface and public levels.
Corporate policy must give consideration to employees and others who are held responsible for the
overall operation of the firm. Employee morale is an important factor in all business decisions. And when
morale is low, organizational efforts suffer. A firms employees spend more than two thirds of their time
off the job, interacting with their families and the community, so employees attitudes do influence the
public.

Macro Environment
This level of the organization is made up of components that have less specific and less immediate
implications for managing the organization effectively.
1. Economic component
Economic conditions greatly influence an organizations ability and willingness to buy and sell. Thus
emerging changes in the economic environment both at home and abroad, must be closely monitored.  It
includes the following factors;
 GNP, Inflation rates, Balance of payment position, Debts and spending, Taxation rates, Interest rates,
Consumer’s income, Corporate profits

2. Social component
This describes the characteristics of the society where an organization exists.  It includes factors such as;
Literacy levels, Values of people, Educational levels, Geographical distribution, Customs and believes

3. Legal component
This consists of  legislation’s  that have been passed.  It describes the rules or the laws that all the
company members must follow.  They include all laws affecting the organization e.g. Consumer health
policy, Energy policies and conservation Acts, Employment Acts, etc.

4. Political component
Comprise those elements related to the government affairs. This includes;
Type of government, Government attributes towards certain issues, Lobbying efforts from interest groups,
Progress towards passing of laws affecting certain industries, etc.

5.  Technological component
Given the rate of technological change in industries such as telecommunications, computers, and semi
conductors, large buying firms are developing forecasting techniques to enable them to estimate time
periods in which major technology developments might occur. Marketers must also monitor technological
change if they hope to adapt marketing strategy with sufficient speed and accuracy to make the more
scientific breakthroughs.  This includes;
New procedures, Approaches to new plan of goods and services, Addresses the issues of new equipments
and new ways of improving production through the use of computers /robots.

6.  Demographic component
Industrial firms cannot ignore the demographic environments because of the derived nature of industrial
demand. World population explosion and changing population structure of the world has a major impact
on industrial demand.

MODULE 2

CHARACTERISTICS PECULIAR TO DEMAND OF INDUSTRIAL PRODUCTS

 A limited number of Buyers

When compared to customer and farming goods, the number of buyers of industrial goods is limited.
Such buyers are also found in certain regions. For example, sugarcane is purchased by a few producers of
sugar, but sugar, which is a consumer product, is purchased by a huge amount of people.

 A shorter channel of distribution

Because of a part number of buyers, the sale of industrial products is usually made with facilitate of
shorter channels of distribution, mean, direct selling or one point channel. Industrial goods always emerge
to be complex in view of their technological nature. It is not achievable for a layman to review the value
of such goods. One has to have industrial information to be capable to evaluate them.
 Geographic awareness

Because of the position of industries at convinced points or regions, industrial markets are greatly
determined, geographically.

 Derived Demand for Industrial goods

The demand for industrial products is derived from the demand for consumer products. For example, the
demand for leather will be derived from the demand for shoes and other leather products in the
market. The demand for industrial goods is a derived demand. i.e., it is influenced by the demand for the
goods they assist to manufacture. Another example, the demand for a soft drink making plant will be
indomitable by the demand for the soft drink.

 Reciprocal Buying

Some big companies from basic industries like oil, steel, rubber, and medicines resort to the practice of
reciprocal buying. Purchase of consumer or agricultural goods can be undertaken by an individual. But in
the case of industrial goods, a group or a team is commonly concerned in the buy. The team might consist
of engineers, financial experts, and others.

 Inelastic demand

The demand for industrial goods is relatively inelastic, i.e., it is not affected by changes in price. As
industrial goods are very extremely priced, each purchase involves a very high amount. 

 Heavy investment in Industrial goods

The production of manufacturing goods calls for profound capital investment. Most of the companies
involved in the production of industrial goods raise capital by issuing shares and debentures and also by
resorting to borrowing from financial institutions.

DERIVED DEMAND OR DIRECT DEMAND

The demand for Industrial goods is ultimately derived from the demand of consumer goods. Thus animal
hides are purchased because consumers want to buy shoes, purses and other leather goods. If the
demand for the consumer goods slackens so will the demand for all Industrial goods entering to their
production. For this reason the industries must closely monitor the buying pattern of ultimate
consumers.
For example, the demand for steel and cement does not exists in itself. It is demand for the constructed
houses which are purchased in turn by customers. The boom in apartments and flats in the mid 90’s led
to the surge in demand for those products. Thus a forecast of the real estate scenario in general and
construction industry in particular has to be monitored, to understand the demand for steel and
cement.
In case of capital goods such as equipment and machinery that are used to produce other goods the
purchases are made not only for the cement requirements but also in anticipation of profits from the
future usage. Thus if the businessman foresee or feel that there may be a recession in near future, their
purchases will be drastically curtailed.
During the process of recession or reduced consumer demand, industrial firms reduce their inventories
or reduce production or both. On the other hand during the period of prosperity there is an increased
production and sales of consumer goods, which results in an increased demand for industrial goods. This
may be the right time for price increases or building stock as ready availability and shorter delivery
period becomes very important.
An industrial marketing firm must be in close touch with customers, purchase, finance, quality standards
etc. so as to get information on changes in customers demand.

Joint Demand:

Joint demand occurs when one product requires the existence of others to be careful while exceptions
may be found. Most products require several components, parts or ingredients. Example; A bakery
require flour, salt, preservatives, yeast in the production of bread. If one of the ingredients cannot be
obtained other purchases will be curtailed or discontinued. Joint demand situations can also be affected
by changes in product specifications. Industrial customers often prefer to buy from one supplier rather
than purchase individual products from different suppliers. The individual products required do not have
individual demand, but are demanded only if the “other” products are available in the supplier line.

Cross elasticity of demand:

Cross elasticity of demand is the responsiveness of the sales of one product to a price change in another.
It can have a dramatic impact on the marketing strategy of an Industrial firm.
Cross elasticity for substitutes is always positive i.e., the price of one good and the quantity demanded
of the other always more in the same direction. The more positive is this ratio the larger the cross
elasticity and more definite it is that the products compete in the same market. Cross elasticity for
complements is negative-price and quantity move in opposite directions. The more negative this
relationship the more closely the demand for the products is related.
The concept of cross elasticity of demand can be very useful to Industrial marketers. For example the
quantity of granite required for construction is related to the price of its close substitute bricks or
marble and vice-versa. It is important that a firm know how the demand for its products is likely to be
affected by changes in the prices of other goods and also the interrelationship among industries.

THE BULLWHIP EFFECT

The bullwhip effect can be explained as an occurrence detected by the supply chain where orders sent
to the manufacturer and supplier create larger variance then the sales to the end customer. These
irregular orders in the lower part of the supply chain develop to be more distinct higher up in the supply
chain. This variance can interrupt the smoothness of the supply chain process as each link in the supply
chain will over or underestimate the product demand resulting in exaggerated fluctuations.

What contributes to the bullwhip effect?

There are many factors said to cause or contribute to the bullwhip effect in supply chains; the following
list names a few:

 Disorganization between each supply chain link; with ordering larger or smaller amounts of a product
than is needed due to an over or under reaction to the supply chain beforehand.
 Lack of communication between each link in the supply chain makes it difficult for processes to run
smoothly. Managers can perceive a product demand quite differently within different links of the
supply chain and therefore order different quantities.
 Free return policies; customers may intentionally overstate demands due to shortages and then cancel
when the supply becomes adequate again, without return forfeit retailers will continue to exaggerate
their needs and cancel orders; resulting in excess material.
 Order batching; companies may not immediately place an order with their supplier; often
accumulating the demand first. Companies may order weekly or even monthly. This creates
variability in the demand as there may for instance be a surge in demand at some stage followed by
no demand after.
 Price variations – special discounts and other cost changes can upset regular buying patterns; buyers
want to take advantage on discounts offered during a short time period, this can cause uneven
production and distorted demand information.
 Demand information – relying on past demand information to estimate current demand information of
a product does not take into account any fluctuations that may occur in demand over a period of time.

Example of the bullwhip effect

Let’s look at an example; the actual demand for a product and its materials start at the customer, however
often the actual demand for a product gets distorted going down the supply chain. Let’s say that an actual
demand from a customer is 8 units, the retailer may then order 10 units from the distributor; an extra 2
units are to ensure they don’t run out of floor stock.

The supplier then orders 20 units from the manufacturer; allowing them to buy in bulk so they have
enough stock to guarantee timely shipment of goods to the retailer. The manufacturer then receives the
order and then orders from their supplier in bulk; ordering 40 units to ensure economy of scale in
production to meet demand. Now 40 units have been produced for a demand of only 8 units; meaning the
retailer will have to increase demand by dropping prices or finding more customers by marketing and
advertising.

Although the bullwhip effect is a common problem for supply chain management understanding the
causes of the bullwhip effect can help managers find strategies to alleviate the effect. Hopefully this blog
post has given you a simple understanding of the term.

industrial marketing research

Industrial marketing research (De: marktforschung, Fr: recherche en marketing) is defined as a

systematic and objective process of acquiring, evaluating, and analyzing data or information for decision-
making in industrial marketing. Industrial Marketing Research is conducting to recognize the industrial
customer’s opinion; it can be done pre-production, post-production or re-launch of the manufactured
goods. Marketing research varies from scale to large level depends upon the business willingness to
gather in-depth information. The term industrial marketing research is used extensively in modern
marketing management. It acts as a tool for accurate decision making as regards marketing of goods and
services.

SCOPE OF INDUSTRIAL MARKETING RESEARCH

Industrial Product Research:

Product means the goods and services which are sold to the consumers. It includes consumer products and
industrial products. Product research studies the individual product. It studies the making and marketing
of the product.
2. Consumer Research:
Consumer is the person who purchases the goods and services. The consumer is the king in the market.
Consumer research studies consumer behaviour. It studies the consumer’s needs, wants, likes, dislikes,
attitude, age, sex, income, location, buying motives etc. This data is used to take decisions about the
product, its price, place and promotion.
3. Packaging Research:
Packaging research is a part of product research. It studies the package of the product. It improves the
quality of the package. It makes the package more attractive. It makes the package more convenient for
the consumers. It reduces the cost of packaging. It selects a suitable method for packaging. It also selects
suitable packaging material.
4. Pricing Research:
Pricing Research studies the pricing of the product. It selects a suitable method of pricing. It fixes the
price for the product. It compares the company’s price with the competitor’s price. It also fixes the
discount and commission which are given to middlemen. It studies the market price trends. It also studies
the future price trends.
5. Advertising Research:
Advertising research studies the advertising of the product. It fixes the advertising objectives. It also fixes
the advertising budget. It decides about the advertising message, layout, copy, slogan, headline etc. It
selects a suitable media for advertising. It also evaluates the effectiveness of advertising and other sales
promotion techniques.
6. Sales Research:
Sales research studies the selling activities of the company. It studies the sales outlets, sales territories,
sales forecasting, sales trends, sales methods, effectiveness of the sales force etc.

PROCESS OF INDUSTRIAL MARKETING RESEARCH

1. Defining the Problem and Research Objectives:

This forms the first activity of any research process. This sounds very simple but many research
problems go wrong because people do not clearly decide what information they need from the research
they commission. Before any external research starts one should make sure that the information does
not already exist.
For example, many organisations collect extensive data in different areas of the company and other
parts of the company may not be aware of. Often research agencies and the Government publish useful
information. Trade or other business associations may also have information.
2. Developing a Research Plan:

Specific information needs must be determined according to the stated research objectives. Information
collected can be either secondary or primary data. Secondary data is data that already exists e.g.,
journals, magazines and reports. Primary data is data collected for your specific purpose e.g., by
distributing questionnaires.
Researchers would normally exhaust secondary data sources before commencing with primary data
collection. In certain situations, secondary data may be sufficient to meet the researcher’s information
needs.
There are several issues to be considered in primary data collection: research approaches, contact
methods, sampling plan and research instruments. All these decisions together constitute a research
plan.
3. Implementing the Research Plan:

If an external agency is asked to conduct the research, it needs to be ensured that the agency is
provided with a proper brief, showing in detail the information required. The organisation must also
make sure that the research agency is aware of all the information that it already has so that there is no
wastage of money finding things that are already known.
4. Analysing, Interpretation and Reporting of Findings:

Interpretation should be conducted not only by the researcher but also the marketing manager. Today,
computer software made quantitative analysis very easy and faster as they are capable of storing and
analysing large amounts of data. For example, multidimensional data are easily captured and analysed
using cross tabulations and provided to the manager in a readable format.
Information has no value unless it assists managers in better decision-making. Traditionally companies
have relied on centralised MIS (Marketing Information System) to provide managers with routine
information. They also have direct and quick access to data and information and are able to tailor it to
meet their own needs.

MODULE 3

CONCEPT OF BUYING CENTRE

A buying center is a group of people within a company such as employees and other members of an
organization responsible for channelizing buying process and finalizing major purchase decisions for
a product or service. A buying center is defined as a group of people or organization members who are
supposed to play a crucial role in making decision-related to the purchase of certain things. Buying
centers are common in small corporations. They can be permanent or temporary. Buying centers are
essential in all kinds of business that might be a small business. It is because every person has their own
choice. A company must be good enough to take all such people’s ideas and use them. Buying center
contains not just one person. It includes more than one person responsible for the decision of certain
things.

Buying Center Members

Buying center is composed of various people. All these members are considered as important people in
the group. They are responsible for all kinds of activities.

1. Initiators

They are those who come first to test the products personally. For example, a salesperson waits to get a
lead from the website visitors so that when someone visits the site, they can create the need for the same.
They review the products.

2. Users

After initiators, They are the group of people who come next to the initiators and use the product. They
are the ones who personally use it to speak about its reviews. They will have certain specifications in their
mind, and they work according to them.

3. Buyers

They are the purchasing agent who comprises the formal authority for selecting the supplier and arranging
the purchase terms. They are crucial for selecting vendors and negotiating, plus they also play a key role
in shaping the product specifications.

4. Influencers

They are those people who may know about the product, and they might have used the product. They will
know everything that is needed.

5. Gatekeepers

They are those people whom one should meet before approaching a big company, for example. They are
such people who decide and check whether a product is liable or it can be sold out in the company or not.
To get the work done, one should have knowledge and expertise. Gatekeepers will do their job of
thoroughly checking whether the product is good or not.

6. Deciders

They are the final faculty who take the final decision about whether a product is to be purchased or not. It
is not a single-handed transaction; it is a group that determines whether a product is necessary.
7. Approvers

They are the individuals who authorize the proposed actions of deciders or buyers. They can be the
people from the top management or finance department or the users.

The Webster and Wind Model

The Webster and Wind Model of organizational buying behaviour is quite a comprehensive model
(Figure 3.1). It considers four sets of variables: environmental, organizational, buying center, and
individual, which, affect the buying-decision making process in a firm.
The environmental variables include physical, technological, economic, political, legal, labour unions,
cultural, customer demands, competition and supplier information. For example, in a recessionary
economic condition, industrial firms minimize the quantity of items purchased. The environmental factors
influence the buying decisions of individual organisations. The organizational variables include
objectives, goals, organisation structure, purchasing policies and procedures, degree of centralization in
purchasing, and evaluation and reward system. These variables particularly influence the composition and
functioning of the buying center, and also, the degree of centralization or decentralisation in the
purchasing function in the buying organisation.

The functioning of buying center is influenced by the organisational variables the environmental
variables, and the individual variables. The output of the group decision-making process of the buying
center includes solutions to the buying problems of the organisation and also the satisfaction of personal
goals of individual members of the buying centre. The strengths of the model, developed in 1972, are that
it is comprehensive, generally applicable, analytical, and that it identifies many key variables, which
could be considered while developing marketing strategies by industrial marketers. However, the model is
weak in explaining the specific influence of the key variables.

Buying Situations in the Industrial Marketing

There are three common types of buying situations in industrial market, which are  discussed as
follows:

1. New Purchase

The industrial buyers buy the item for the first time in this situation. The need  for a new purchase may be
due to internal or external factors. For example,  when a firm decides to diversify into new purchase
situations the buyers have  limited knowledge and lack of previous experience. Therefore, they have to
obtain a variety of information about the product, the suppliers, the prices and so  on. The risks are more,
decisions may take longer time, and more people are  involved in decision making in the new purchase
decisions.

2. Change in Supplier

This situation occurs when the organisation is not satisfied with the performance  of the existing
suppliers, or the need arises for cost reduction or quality  improvement. The change in supplier may also
be necessary if technical people  in the buying organization ask for changes in the product specification,
or  marketing department asks for redesigning the product to gain some competitive  advantage. As a
result, search for information about alternative sources of  supply becomes necessary. Even though,
certain attributes or factors can be  used to evaluate the suppliers. There may be uncertainty regarding the
supplier  who can best meet the needs of the buying firm. Therefore, the modified  re-buy  situation
occurs mostly when the buying firms are not satisfied with the  performance of the existing suppliers.

3. Repeat Purchase

If the buying organization requires certain products or services continuously and  products/services had
been purchased in the past then the situation of repeat  purchase occurs. In such a situation, the buying
organisation reorders/places  repeat orders with the suppliers who are currently supplying such items.
This  means that the product, the price, the delivery period, and the payment terms  remain the same in the
reorder, as per the original purchase order. This is a  routine decision with low risk and less information
needs, taken by a junior  executive in the purchase department. Generally, the buying firms do not
change the existing suppliers if their performance is satisfactory.

Industrial Buying Process

1. Recognition of Need of Industrial Buyer

A smart marketer recognizes the need/problem of industrial buyer originated within the firm. If the
material supplied by the existing supplier is not satisfactory in terms of quality, or the material is not
available as per requirement, or the machine supplied by him breaks down too often, the buying
organisation recognizes the problem. If an industrial marketer identifies a problem in the buying
organisation and suggests how the problem could be solved, there will be a better possibility of it being
selected as a supplier.

2. Determination of the Characteristics and Quantity of Needed Product

If the problem is recognized within or outside the buying organisation, then the buying firm will try to
answer questions such as: What type of products or services to be considered? What quantity of the
product needed? and so on. For technical products, the technical departments (R&D, industrial
engineering, production, or quality control) will suggest general solutions of the needed product. For
non-technical goods or services, either the user department or purchase department may suggest products
or services, based on experience and also the quantity required to solve the problem. Nevertheless, if the
required information is not available internally within the buying organization, the same can be obtained
from the outside sources.

3. Development of Specification of Needed Product

Stage 2 and 3 are closely related. After the general solution to the problem is determined in the second
phase, the buying organisation, in the third stage, develops a precise statement of the specifications or
characteristics of the product or service needed. During this stage the purchase department takes the help
of their technical personnel, or if required, outside sources such as suppliers or consultants. Industrial
marketers have a great opportunity to get involved at this stage by helping the buyer organisation to
develop product specifications and characteristics. It would give a definite advantage by ensuring that the
needed product includes his or her company’s product characteristics and specifications.

4. Search the Qualified Potential Suppliers

In this stage, the buying organisation searches for acceptable suppliers or vendors. Firstly, they have to
obtain information about all available suppliers and secondly, they have to decide the qualifying
suppliers. The search for potential suppliers is based on the various sources of information like trade
journals, sales calls, work-of-mouth, catalogues, trade-shows, industrial directories. The qualifications of
acceptable supplies may depend on the type of buying organization such as government undertaking,
private sector commercial organisation, or institutions, and the buying situation, and the decision-making
members. Furthermore, the factors like quality of product or service, reliability in delivery, and service
are considered in qualifications of suppliers.

5. Obtaining and Analyzing Supplier Proposals

If the qualified suppliers are decided then the buying organisation obtains the proposals by sending
enquiries to the qualified suppliers. A supplier’s proposal can be in the form of a formal offer, quotation,
or a formal bid, submitted by the supplier to the buying organisation. It must include the product
specification, price, delivery period, payment terms, taxes and duties applicable, transportation cost (or
freight), cost of transit insurance, and any other relevant cost or free service provided. For purchases of
routine products or services, the stages 4 and 5 may occur simultaneously, as the buyer may contact the
qualified suppliers to get the latest information on prices and delivery periods. For technically complex
products and services, a lot of time is spent in analyzing proposals in terms of comparisons on products,
services, deliveries, and the landed costs: includes the price after discount plus excise duty, sales tax,
freight, and insurance.

6. Evaluation of Proposals and Selection of Suppliers

The industrial buyers evaluate the proposals of competing suppliers and selects one or more suppliers.
Further negotiations may continue with selected suppliers on prices, payment terms, deliveries, and so
on. The decision makers in the buying organization may evaluate each supplier on a set of agreed-upon
attributes or factors. Each supplier is evaluated on each attribute by giving a weightage to each attribute
proportionately or on rating scale basis. The supplier(s) who get the highest total score receives the
business or the order from the buying organisation. If a buying firm faces a make-or-buy decision, the
supplier’s proposals are compared with the cost of producing the needed item within the buying
organization. If it is decided to make the item within the buying organization, the buying process is
stopped at this stage.

7. Routine Order Selection

In this stage the procedure of exchange of goods and services between a buyer and a seller is worked out.
The activities include placement of orders (i.e. purchase orders) with the selected suppliers, the quantity
to be purchased from each supplier, frequency of order placement by buyers and delivery schedules to
be adhered to by the supplier, schedule, and the payment terms to be adhered to by the buyer. The user
department would not be satisfied until the supplier delivers the required item as per delivery schedule,
and with acceptable quality.

8. Performance Feedback and Post-Purchase Evaluation

In this final phase a formal or informal review regarding the performance of each supplier (or vendor)
takes place. The user department gives a feedback on whether the purchased item solved the problem or
not. If not, the members of the decision-making unit review their earlier decision and decide to give a
chance to the previously rejected supplier. The industrial vendor should recognize that marketing effort is
no over after the order is received. He or she must check the feedback and evaluation process in the
customer (buyer) organisation. In particular, the industrial marketer must monitor the user satisfaction
levels or complaints so that immediate corrective action can be taken before a major damage. In fact, a
quick response to customers’ complaints can result in good buyer-seller relationship. The type of
products, the phase of the buying-decision making process of customer firms, and the purchasing
situations also influence the marketing strategy of industrial seller.

BUY-GRID MODEL

Robinson, Faris and Wind, introduced the buygrid framework as a generic conceptual model for buying
processes of organisations. They saw industrial buying not as single events, but as organisational
decision-making processes where multiple individuals decide on a purchase. Their framework consists of
a matrix of buyclasses and buyphases.
 The BUYCLASSES are:

1. New Tasks
The first-time buyer seeks a wide variety of information to explore alternative purchasing solutions to his
organisational problem. The greater the cost or perceived risks related to the purchase, the greater the
need for information and the larger the number of participants in the buying centre.

2. Modified Rebuy
The buyer wants to replace a product the organisation uses. The decision making may involve plans to
modify the product specifications, prices, terms or suppliers as when managers of the company believe
that such a change will enhance quality or reduce cost. In such circumstances, the buying centre proved to
require fewer participants and allow for a quicker decision process than in a new task buyclass.

3. Straight Rebuy
The buyer routinely reorders a product with no modifications. The buyer retains the supplier as long as
the level of satisfaction with the delivery, quality and price is maintained. New suppliers are considered
only when these conditions change. The challenge for the new supplier is to offer better conditions or
draw the buyer's attention to greater benefits than in the current offering.

Based on field research, Robinson, Faris and Wind divided the buyer purchase process into eight
sequential, distinct but interrelated BUYPHASES:
1.      recognition of the organisational problem or need;
2.      determination of the characteristics of the item and the quantity needed;
3.      description of the characteristics of the item and the quantity needed;
4.      search for and qualification of potential sources;
5.      acquisition and analysis of proposals;
6.      evaluation of the proposals and selection of suppliers;
7.      selection of an order routine;
8.      Performance feedback and evaluation.

The most complex buying situations occur in the upper left quadrant of the buygrid matrix where the
largest number of decision makers and buying influences are involved. A new task that occurs in the
problem recognition phase (1) is generally the most difficult for management.

The buying process can vary from highly formalised to an approximation depending on the nature of the
buying organisation, the size of the deal and the buying situation.

The relationship between the buyer and seller is initiated in phases 1 and 2. Assessing the buyer's needs
and determining gaps between the current and desired situation is important. Buyers need assistance in
forming realistic perceptions of both the current and the desired situation. Need gaps create the motive
behind any purchase.

The relationship needs to be developed during phases 3 to 7. A sales person must be aware that a buyer
not only has functional needs, but psychological, social, knowledge and situational needs as well. These
components should be addressed in meetings in order to obtain commitment. The purchase can be a one-
time transaction of a repetitive nature. When there are multiple deliveries, the supplier and buyer must
agree on an order routine.

As buyphases are completed, the process of 'creeping commitment' occurs and reduces the likelihood of
new suppliers gaining access to the buying situation.

During the performance feedback and evaluation phase, the relationship between the seller and buyer can
develop into a longer term engagement. Buyer loyalty and customer satisfaction are primarily determined
by the sales activities during this last phase.

The Jagdish N. Sheth Model of industrial buyer behaviour

In 1973, Professor Jagdish N Sheth developed the Sheth model. This model highlights the decision-
making by two or more individuals jointly, and the psychological aspects of the decision-making
individuals in the industrial buying behaviour (Figure 3.2). It includes three components and situational
factors, which determine the choice of a supplier or a brand in the buying decision making process in an
organization.
The differences among the individual buyers expectations (Component 1) are caused by the factors:
background of individuals; information sources; active search; perceptual distortion; and satisfaction with
past purchases. The background of individuals depends upon their education, role in the organization, and
life style. The factor perceptual distortion means the extent to which each individual participant modifies
information to make it consistent with his existing beliefs and previous experiences. It is difficult to
measure perceptual distortion, although techniques such as factor analysis and perceptual mapping are
available for this purpose. In Component (2), there are six variables, which determine whether the buying
decisions are autonomous or joint. According to the Sheth Model, larger the size of the organization and
higher the degree of decentralization, more will be possibilities of joint-decision making.
The methods used for conflict resolution in joint-decision making process are indicated by the
Component (3) in the model. Problem-solving and persuasion methods are used when there is an
agreement about the organizational objectives. If there is no such agreement, bargaining takes place.
Conflict about the style of decision-making is resolved by politicking. Situation factors can be varied like
economic conditions, labour disputes, mergers and acquisitions. The model does not explain their
influence on the buying process.

MODULE 4

Macro Variables That Industrial Marketers Can Use

Table 6.1: Macro Industrial Market Segmentation Variable:

Variable Examples

Demographic Agriculture, mining, construction, manufacturing, wholes

Industry services, transportation.

Company size Size of customer’s parent company.

Location Urban/rural location, distance from the plant.

Plant Characteristic Size, age of customer’s plant, degree of automation.

Buying policies Centralised vs decentralised number of levels of purchasing a

Operating variable Which customer’s technologies are of greater interest to us.

Technology
Banks, state departments, commercial establishments.
 End-user markets consumer durables, aeroplane manufacturers.

Situational Variable Degree of competition, Ease of entry/exit from the customer’

Product application

Competitive Forces

As a first step towards segmentation, we could use the secondary sources of information like trade

+journal, magazine and government publications to identify that particular the macro that be applied for

that particular market.

Demographics:
1. Industry:
Consider the example offers a product Cummins power which offer Gensets that is used by companies
when there is a power cut. This product is targeted at various industries like hospitals, banking
hospitality, entertainment, SSI, Telcom, and IT. They have decided to target their generators to different
and dissimilar industries.
On the other hand, significant differences may be present in the industry due to which it may not be
possible to target a large chunk of the industries and hence choose one or a part of that industry.
2. Company Size:
Larger organisations have different purchasing requirements and will respond differently to marketing
programmes compared to small firms which purchase in smaller quantities. Thus, when companies are
segmented on the basis of size, larger producers may want to avoid small firms because their low
volume needs cannot be served profitably. On the other hand, smaller producers may want to avoid
large companies because their volume requirements exceed production capacities
3. Location:
Customer location can also be an important segmentation variable. In the industrial market, for
example, on-time delivery is an important factor in servicing customers. Thus due to effects on
inventory, transportation and warehousing, marketers may want to avoid those customer’s markets that
are located too far away or are too dispersed. Location also affects sales I force organisation and
deployments.
4. Plant Characteristics:
Quality improvement programmes of the organisations have led to new policies and processes to be
adapted. Just-in-time, and Robotics, are two such which are adapted to satisfy certain standards. JIT
determines the inventory of the organisation and revotics, the degree of automation.
These also form a basis of segmentation. Does the organisation have the capability to supply the
registered amount of materials at the appropriate time? Based on this, the customers are chosen. Size
and age of the plant determine the capacity and utilisation and in turn the output of the organisation.
5. Buying Policies:
Decentralised versus centralised procurement is another important macro segmentation variable due to
the influence it can have on the purchasing decision. When purchasing is centralised, the purchasing
manager’s power and specialisation, and the composition of the buying centre are strongly affected.
Thus buying policies provide a good base for isolating specific needs and marketing requirements of
individuals and organisations within industries and enable marketers to organise the sales I force to
serve chosen customers better within markets.
Operating Variables:
1. Technology:
In industrial marketing there can be many areas of technology to which the product can be applied. The
customers’ technology can be a determining factor for choosing the market segment: High precision and
high end products for high technology companies versus low end and lower technology products for
others.
2. End-user Markets:

Market segmentation by the end-use of products variable is also used by many firms which market

products or services to several end- use markets. For example, an aluminum company had different

market segments based on the end-users.

The major market segments was for aluminum doors, windows and partitions used for factories etc. The

other end user market segments were for electrical control panels, electronic sinks, bus-body builders etc.

Situational Variables:
1. Product Applications:

Many products can be used in several ways, or have different “product applications”. The pricing and

customer needs for these segments are different. For example, Nortel Networks has a product called

Voice over IP which can be used for varied applications, one such being online customer management

system.

2. Competitive Forces:

There exist markets, especially in India, where entry was difficult some years back before deregulation

and the beginning of liberalisation. Some industries like telecommunication and insurance were under the

control of the government and difficult or impossible to enter.

Today, the markets have been opened but due to heavy competition it is difficult to enter and sustain

growth. As an industrial marketer, he must be aware of the company’s strengths and weakness so as to

choose the segment where they can sustain and grow.

Micro Variables Used for Segmentation of Industrial Market

Micro segments are homogenous group of customers within the macro segments. If necessary, after

macro segmentation industrial marketers sub-divide them even further using some micro variables.

Some of the micro-variables used for segmentation are enumerated in the table 6.2.

Table 6.2: Micro Industrial Market Segmentation Variables:

Variables Example

Individual variable Demographics, e.g. age and experience,

Loyalty
Personality and conflict resolution strategies used.

Attitude to risk and

Product life cycle stages as it relates to customer adop

Power position and structure Financial, technical and operational capabilities.

Organisational variables Key influences on decision makers etc.

Customer experience stage

Bids, tenders, supplier’s reputation.

Organisational capabilities
New task, straight rebuy, modified rebuy.

Purchasing variables

Structure of buying centre

 Purchasing policies/criteria Purchasing

situation/phase

1. Individual Variables:

Purchasing decisions are ultimately made by individuals within the organisation. Hence it is possible to

segment the industrial market by the characteristics of individuals involved in the purchasing situation.

For example, it was found that experience was significantly related to the buyer’s price sensitivity. Also,

some buyers were more willing to take risks, whereas others avoid them. Willingness to take risks, is

directly related to personality variables such as intolerance of ambiguity or self-confidence.

Individuals within organisations tend to hold reward, legitimate or expert power. The use of power will

also differ across organisations as well as individual functional areas and buying situations.

2. Organisational Variables:

The experience, interaction needs and capabilities can also form the basis for segmentation. When, an

organisation lacks the experience or is unfamiliar with the product, the customers tend to be attracted by a

vendor with a proven technology and many benefits. The decision making process tends to be time

consuming and composition of the decision making unit differs and hence marketing strategies differ for

each segment.

On the other hand, financial capabilities also provide means for designing different strategies. Where

financial capabilities are weak, supplier discounts may be more important than supplier delivery factors,

or companies that operate with tight inventories may be more attracted by supplier delivery capabilities.

3. Purchasing Variables:

The public sector and government-run enterprises have standard purchasing policies and procedures

which have to be strictly adhered to. They usually follow the tenders bidding and offer the contract to the

lowest bidder.
 The choice of Reliance and Tata Indicom for providing basic telecom services using WLL technology

was done through bids. On the other hand, the purchasing criteria for the private sector (small and large)

could be different, like payment terms, performance, inventory carrying cost etc.

Buying situations or buy phases are used to segment the customer groups further. The duration and

involvement, and hence the marketing strategy, of buyer-seller discussions will depend on whether

buying is a new task, straight rebuy or modified rebuy.

MODULE 5

New Product Development

New Product Development process is the process by which the product ideas are generated, assessed,
directed and converted into products. There are seven stages in the process of new product development,
they are

1. Idea Generation:  The Industrial marketer should be consciously search for  new product idea and to
their sources both inside and outside the company.  Internally the new product ideas may come from sales
staff that is close to  customers, R&D experts, from top management. An external source of ideas
includes channel members such as distributors or customers. An industrial  marketer can get good ideas
by using techniques like brainstorming and attribute  listing. In attribute listing technique, important
attributes of existing products  are listed. Ideas are invited from a group of employees to search for an
improved product by modifying each attribute. An industrial firm should  encourage the employees to
present innovative and creative ideas by offering  recognition or rewards to the employees submitting the
best ideas.

2. Idea Screening:  In order to select the product ideas which are likely to  succeed, screening of new
product ideas will be undertaken. Specified criterion  and procedure should be set for screening new
product ideas. Major  considerations in the screening of a new product idea includes expected profit
potential, the competitive situation, the general  adoptability  of the company to  the new product and the
volume of investment that would be necessary for the  implementation of the new product idea.
Marketing consideration includes the  size of the market, marketing methods etc. It is also necessary to
judge the  technical viability of the product idea. Production considerations such as  facilities required,
cost of production, and availability of materials are also to be  considered apart from several legal
considerations.

3. Concept Development & Testing:  After the screening of the new product  idea it should be developed
into a product concept. A product concept is a  detailed version of the product idea that is expressed in a
 meaningful terms. It is  the usual practice to develop different versions of product concept and each
product concept is assessed by getting response from the customers. The  product concept that has the
strongest reaction from the customers is selected.

4. Business Analysis:  In the business analysis, an estimated projection of the  sales, costs and profitability
of the proposed new product will be developed. It  is an elaborate analysis which is expressed in terms of
investment required for  the installation of the plant and equipment, investment in working capital, market
potential, sales forecast, customer and competitive analysis, cost of product  development, cost of
manufacturing and marketing the product; likely price levels,  profitability and return on investment etc.
People who have proposed the new  product idea should not be assigned with the task of business analysis
because of  excessive optimism or vested interest by such persons. People with reasonably  fair
experience and skills in strategic planning, marketing, finance, and  engineering could be given the task of
business analysis. The new product  concept will more on to the next stage, i.e. product development,
only if the  projected sales and profits fulfill the company’s long term objectives or goals.

5. Product Development:  Product development is a process of creating desired  product by the technicians.
The R&D department develops one or more  prototypes of the product concepts. The ability to produce
the product with in  the estimated cost will be confirmed or negated by the development of the  prototype.

6. Market Testing:Market testing is done by using different methods.  The method to be adopted for testing
depends on the cost and size of the  product, the degree of confidentiality to be maintained during market
testing and  the preparedness to introduce the product with in a short period. Commonly used market
testing methods are: Alpha and Beta Testing, Trade Shows, Dealer Show Rooms, Test Marketing

Commercialization: An industrial product is launched when it is introduced  to a target market. The
commercialization process involves execution of the  various activities developed in an action plan as
a part of the marketing plan.  The activities such as customer service, maintaining adequate stocks at
the  company warehouses and or with dealers/distributors, introductory  advertisement, price lists,
product catalogues, training of sales force etc. would  be taken up at this stage. Sophisticated network
techniques such as PERT and  CPM can be used by industrial marketers to ensure proper coordination
and  timely completion of all the activities concerning the launching of new industrial  product.