1. 1.

BusinessMarketing
2. 2. Nature of Business Marketing
3. 3. What is Business Marketing? Business marketing also referred to as “Industrial
marketing” or “B2B marketing” or “Organizational marketing”. Business marketing is
the marketing of products & services to business organizations. Business organizations
include: Manufacturing companies Business organizations buy products & services to
satisfy many objectives Govt. undertakings like production of other goods & Private
sector organizations services, making profits, reducing costs, & so on. Educational
institutions Hospitals Consumer marketing is the marketing Distributors / Dealers of
products & services to individuals, families, & households. The consumers buy products
& services for their own consumption. ISB&M Business Marketing
4. 4. B2B Marketing vs. Consumer Marketing Areas Industrial Markets Consumer Markets
1. Market characteristics • Geographically concentrated • Geographically distributed •
Relatively fewer buyers • Mass markets 2. Product characteristics • Technical complexity
• Standardized • Customized 3. Service characteristics • Service, timely delivery & •
Service, timely delivery & availability is very important availability is somewhat
important 4. Buying behavior • Involvement of various • Involvement of family
functional areas in both buyer members & supplier firms • Purchase decisions are mainly
• Purchase decisions are made on rational/performance mostly made on physiological
basis / social / psychological needs •Technical expertise • Less technical expertise •
Stable interpersonal • Non-personal relationship relationship between buyers & sellers
ISB&M Business Marketing
5. 5. B2B Marketing vs. Consumer Marketing Areas Industrial Markets Consumer Markets
5. Channel characteristics • More direct • Indirect • Fewer intermediaries • Multiple
layers of intermediaries 6. Promotional • Emphasis on personal selling • Emphasis on
advertising characteristics 7. Price characteristics • Competitive bidding & • List prices or
maximum retail negotiated prices price (MRP) • List prices for standard products ISB&M
Business Marketing
6. 6. Industrial Demand Demand Derived Demand for new homes The demand for
industrial products & services does not exist by itself. It is derived from the ultimate
demand for Demand for consumer goods & services. furniture Demand Industrial
customers buy goods & services for use in for wood producing other goods & services.
Joint Demand Demand Joint demand occurs when one industrial product is useful if
Demand for ink other product also exists. for pen Cross-Elasticity Demand Demand is
„elastic‟ if the %age change in quantity demanded is more than the %age change in price.
Cross elasticity of demand is the responsiveness of the sales Price of of one product to a
price change in another product. Tea Back ISB&M Business Marketing
7. 7. Industrial Market & Environment Industrial Intermediaries / middlemen, reselling to
OEMs, Commercial enterprise distributors / dealers users, Govt. firms Business /
Industrial customers Original equipment For Exide (battery manufacturer), Telco, is an
OEM manufacturers Users For HMT, TVS-Suzuki is the ‘user’ customers Govt. Public
sector units BHEL, ONGC, IOL Govt. undertakings Indian Railways, Defence units,
State Elec. Boards Institutional customers Public institutions Govt. hospitals, prisons
Private institutions Schools, colleges Cooperative Manufacturing units societies
Maharashtra Sugar Cooperative Society Non-manufacturing Cooperative banks, housing
cooperative societies units ISB&M Business Marketing
8. 8. Industrial Market & Environment Basic products like iron ore, crude oil, fish, fruits,
Materials & Raw materials vegetables parts Manufactured Acids, fuel oil, steel,
chemicals Industrial products & services materials Semi-finished parts like bearings,
tyres, small Component parts motors, batteries Subassemblies Semi-finished goods like
exhaust pipe in motorcycle Light equipment or Hand tools, dies, computer terminals
Capital items accessories Installations or heavy Furnaces, machines, turbines equipment
Offices, plants, warehouses, parking lots, real Plant & building estate property Suppliers
& Operating & maintenance suppliers like fuels, services Supplies packaging materials,
lubricants, paints, elec. items Services Legal, auditing, advertising, courier, marketing
research agency ISB&M Business Marketing
9. 9. Marketing Implications for DifferentCustomer & Product Types Materials & Parts
products, for large OEMs or users, selling is done directly from a seller organization to a
buyer organization. For smaller volume OEMs & users, standard raw materials or
components are sold through industrial dealers or distributors as it is cost effective. If the
components are custom-made, considerable interaction takes place between technical &
commercial persons from both buyer & seller organizations. Selling is direct. Industrial
salesman remain in close touch with various departments like purchase, finance, R&D,
marketing, production & quality of buyer organizations as they influence the buying or
payment releasing decisions. Personal contacts, product leaflets/brochures help as
industrial marketer in communicating product & other information. For standard
products, the factors which influence buying decisions are: Product quality &
performance Payment terms Delivery dependability Customer service Price Customer
rapport ISB&M Business Marketing
10. 10. Marketing Strategy for Capital Items, Supplies & Services Capital Items (heavy
machinery, office buildings, construction of factories etc.) Direct selling with extensive
interactions, involving top executives from both sides. Negotiations take considerable
time on key factors such as price, ROI, credit facilities, delivery period, installation time
etc. Personal selling is the primary promotional method used. Suppliers Direct selling is
used for large-volume buying firms. Distributors or dealers are used to market to diverse
markets consisting of small & medium size companies. The purchase or materials
department generally make buying decisions based on dependable delivery, price, &
location convenience. Advt. in magazines, trade journals, local newspapers, & yellow
pages are used to create awareness of the company & its products to potential users &
distributers/dealers. Services (consulting, advising etc.) Buying firms contact the selling
firms who have their reputation by way of word-of mouth. Continuation of service
depends upon the quality, price, & timeliness of service. ISB&M Business Marketing
11. 11. Purchasing Orientations of Industrial Customers Business buyers choose one of the
three purchasing orientations Buying Orientation - Firms has narrow & short-term focus.
Lowest price They follow the practice of Lowest Price where they select the lowest price
supplier. Quality & availability are the “qualifying factors” for a supplier. Negotiation
style – “I win-you lose”. Gain power Buyer firm gain power over suppliers by applying
tactics like Commoditization – all suppliers provide similar technical services, product
quality & product features. Price is the only thing to be negotiated. Multi sourcing – the
buyer firm asks quotations from various suppliers, & after negotiations, places order with
many suppliers, who compete to get more share of buying firms purchase. ISB&M
Business Marketing
12. 12. Purchasing Orientations of Industrial Customers Risk Buyers avoid risk from buying
from new suppliers. The tactics used for avoiding risks are • Follow the standard
purchasing procedure of the company. • Depend on suppliers who have proved their
performance earlier. Procurement Orientation – Purchasing firm has a strategic (i.e. long
term) focus & is proactive. The buyers seek both quality improvement & cost reduction.
Practices adopted by the company to fulfill the above objectives are: Collaborative
relationship with major suppliers This results in quality improvements & cost reduction.
The buyer & supplier have inter-firm teams who implement JIT delivery scheduling &
quality assurance to attain zero defects level. Integrative negotiation – resources can be
expanded to benefit both buyer & supplier. Working closely with other functional areas
Buyers are involved in describing specifications of products & services ensuring quality
& timely availability. ISB&M Business Marketing
13. 13. Purchasing Orientations of Industrial Customers Supply chain management (SCM)
Orientation – Focus is on how to improve the value chain from raw-materials to end
users. Purchasing philosophy Deliver value to end users Using market research, the
supply managers would understand the requirements of end-users. Outsource non-core
activities The firm would outsource those systems or sub-systems that have become non
competitive, are non-strategic, involve mature technology, & have qualified suppliers.
Support collaborative relationships with major suppliers Partnering relationship requires
cooperation, communication, trust, & commitment between buyers & suppliers. The
objective is to lower total cost and/or increase value in order to achieve mutual benefit.
ISB&M Business Marketing
14. 14. Purchasing Orientations of Industrial Customers SCM Orientation Procurement
Orientation Buying Orientation Component Intermediaries & (dealers) Raw Material
Subassembly Final Suppliers Suppliers Assembly Consumers / Manufacturer End users
Back ISB&M Business Marketing
15. 15. Purchasing Practices of Industrial Customers Purchasing in Commercial Enterprise
Depends on nature of business, size of the enterprise, volume, variety, & technical
complexity of the products purchased. In large/medium organizations, purchase decision
involves persons from departments like production, materials, quality, finance,
engineering, & also senior management executives. Various techniques, such as material
planning, supplier rating system, EOQ etc. are used by the buyer organization. Take use
of in-house technical expertise when required. Major tasks in purchasing process are:
Identifying potential suppliers Negotiating & selecting suppliers Ensuring right quality &
quantity of material at right time A long-term business relationship with the suppliers
Many commercial organizations have separated purchasing (material or purchase
function) from manufacturing to form a distinct functional area, on the same level as
marketing, finance, R&D etc. ISB&M Business Marketing
16. 16. Purchasing Practices of Industrial Customers Purchasing in Govt. Units Get the name
of the company & the products registered with the govt. units. Registration involves the
submission of duly filled standard forms, product leaflets, & company details certified by
a chartered accountant. Some govt. units depute their inspectors to inspect the company‟s
manufacturing facilities before approving their registration. For standard products &
services, tender notices are advertised in national newspapers, based on which suppliers
procure tender fees. In closed & limited tender, tender inquiry is to only few (limited)
suppliers who are registered with govt. unit for certain category of non-standard products.
 Based on the lowest price or the lowest landed cost, the orders are released on the lowest
bidder. If the tender value is large, maximum order is placed on the lowest bidder (L1) &
the balance order is distributed to more than two bidders (L2, L3, L4, .. etc) if they match
the lowest bid. ISB&M Business Marketing
17. 17. Purchasing Practices of Industrial Customers Institutional Purchasing & Purchasing
in Cooperative Societies Institutional buyers are either the government or the private
organizations. For govt. organizations, it normally follows the govt. purchase procedure.
An industrial marketer should study the purchasing practices of each institutional buyer
so as be effective in marketing the company‟s goods or services. Purchasing in Reseller’s
Market Reseller market (replacement market) consists of industrial dealers/distributors
whose main goals are profits & sales volume. Dealers / distributors select suppliers not
only on product quality but also on the policies of the supplier‟s product. Supplier related
policies which affect competiveness of traders are Sharing local advt. cost by the supplier
Providing product leaflets or display materials Competitive prices & trade discounts
Flexible payment terms with credit facility etc. Both reseller & supplier has to work
harmoniously to beat the competition. ISB&M Business Marketing
18. 18. Environmental Analysis in Business Marketing Air & water pollution, solid waste
disposal, conserving natural resources Ecological & Physical Water, power, skilled
manpower, low-cost labor, transportation Environment Company location, R&D
facilities, production Internal facilities, HR, Financial resources, marketing effectiveness,
reputation or image of the company Strength & weaknesses analysis • Customers &
competitors Micro • Suppliers External Affect a particular firm • Economic Opportunity
& threat analysis • Technological Macro • Govt. & political, & legal • Cultural & social
Affects all firms • Public-press, institutional investors, shareholders, banks, public
interest groups ISB&M Business Marketing
19. 19. Strategies for Managing Industrial Environment Effective use of marketing mix such
as 4Ps are not adequate for the survival & success in such a dynamic environment. The
first step is the continuous gathering & monitoring of information on the relevant external
environment. This is done by: Collecting information on customers & competitors
through marketing & field sales persons. Analyzing trade & govt. publications. Carrying
out marketing research & economic forecasting. These activities help the company to:
Understand changes in customer needs. Monitor competitors actions & strategies.
Identify technological innovations. Consider the changes talking place in govt., political,
& legal factors. Identify changes in demand of major customers & the total market.
Consider the changes in any other relevant environmental factors. ISB&M Business
Marketing
20. 20. Strategies for Managing Industrial Environment. The strategies to respond proactively
& creatively for managing external environment Independent Strategies: These are the
independent efforts of an industrial firm by using its own resources (or strengths). Pricing
strategy based on competitors pricing. Product superiority through product development.
Carry env. protection measure & creates awareness through corporate image advt. If the
product is not performing well, a firm might decide to demarket in that geographic
region. Cooperative Strategies: An industrial firm cooperates with other firms, industries,
or groups in the environment. Industry associations like Confederation of Indian
Industries (CII) & Federation of Indian Chamber of Commerce & Industries (FICCI)
 protect the Indian industries from unfair political or legal regulations of the govt. ISB&M
Business Marketing
21. 21. Strategies for Managing Industrial Environment Strategic Planning: An industrial
firm carries out strategic planning by identifying long- term product/markets, based on
forecasts of external env., analysis of its strengths & weaknesses, & its long-term
objectives & goals. Backward integration – A company seeks ownership or control of its
supply system. Eg., Set up new manufacturing plant for the product which earlier was
procured from other supplier. Forward integration – A company seeks ownership or
increased control on its distribution system. Eg., open own branches with warehousing
facilities, in place of agents, in order to improve customer service. Horizontal integration
– A company seeks ownership or control of some of its competitors. Eg., Reduce the
competition by acquiring the management control of some competing firm. Back ISB&M
Business Marketing
22. 22. Organizational Buying & Buying Behavior
23. 23. Purchasing ObjectivesThe purchase / materials management objective is defined as
buying the right items inthe right quantity, at the right price, for delivery at the right time
& place. Delivery / availability – Purchased goods are delivered when & where it is
needed. Product quality – Consistent quality as per the specifications & product use.
Lowest price – Lowest price consistent with availability & quality of the product.
Services – Services accompanying the purchase of goods like: Prompt & accurate
information from suppliers Technical assistance Spare-parts availability Repairs &
maintenance capability Training (if required) Supplier relationship – Develop a good
long-term supplier/vendor relationship & to develop new sources of supply. Buying
members are influenced by both purchasing objectives of the firm & personal objectives
like higher status, job security, salary increments, promotions, & social considerations
(friendship, mutually beneficial relationships etc.) ISB&M Business Marketing
24. 24. Purchasing Activities the industrial purchasing/buying activities consists of various
phases/stages of buying decision making process called ‘Buy phases’. Phases in Buying
Decision Process Recognition of a problem or need. Determination of the application or
characteristics & quantity of needed product. Development of specifications or
description of needed product. Early Supplier Involvement (ESI) Program: Involving
purchasing persons as active members of cross-functional development teams. Search for
& qualification of potential suppliers. Obtaining & analyzing supplier potential.
Evaluation of proposals & selection of suppliers. Selection of an order routine. –
Placements of orders, quantity, frequency, levels of inventory needed, follow-up of actual
delivery to ensure delivery is as per schedule, payment. Performance feedback & post-
purchase evaluation. ISB&M Business Marketing
25. 25. Supplier Evaluation System Attribute (Factors) Weight (Importance) Supplier
Supplier Rating performance Quality 30 0.8 30 X 0.8 = 24 Delivery 25 0.4 25 X 0.4 = 10
Price 15 0.6 15 X 0.6 = 9 Service 20 0.6 20 X 0.6 = 12 Flexibility 10 0.2 10 X 0.2 = 2
Total 100 57The supplier(s) who gets the highest total score receives the business or the
order form the buying organization. ISB&M Business Marketing
26. 26. Supplier Evaluation - Balanced Scorecards Technique the Balanced Scorecard (BSC)
Framework Financial to succeed financially, Company should focus on financial
objectives that will satisfy shareholders. Internal-Business-Process Customer Mission To
satisfy shareholders & Which customer value & customers, what business company
 should focus on to Strategy process company must excel achieve its mission? at?
Learning & Growth How can company improve & change to achieve its mission? The
BSC is a new technique or framework that can be used to evaluate supplier performance
in information age companies. It translates a company’s mission & strategy into a set of
performance measurements. ISB&M Business Marketing
27. 27. Internal-Business-Process Operations Processes Identify Customer Design & Develop
Make/Buy Needs & Market Product/Services Products/Services Innovation Processes
Market Products/Services Company executives should identify the key internal processes
in which the company must excel in order to – Satisfy Customer • deliver superior
customer value Needs • satisfy shareholders with excellent financial performance
ISB&M Business Marketing
28. 28. Buying Situations Three types of buying situations also called ‘buy classes’. New
purchase (or New Task) – In this situation the company is buying the item for the first
time. Risk is more Decision takes longer time More people are involved in decision
making Change in supplier (or Modified Rebuy) – This situation occurs when the
company is not satisfied with the performance of the existing supplier, or there is a need
for cost reduction or quality improvement. Repeat Purchase (or Straight Rebuy) – This
situation occurs when the buying organization requires certain products or services
continuously & when such products/services has been purchased in the past. ISB&M
Business Marketing
29. 29. Buying Centre or Decision making Unit (DMU)The buying center is a useful tool
which answers the question – Who are involved in buying decision in an industrial
organization? Buying Center Roles Initiators – This category includes individuals who
first recognize a problem or a need, which could be resolved by purchase of a product or
service. Often users play this role. Buyers – Their major responsibility includes Obtaining
quotations Supplier evaluation & selection Negotiation Processing purchase orders
Expediting deliveries Implementing purchasing policies of the organization They are
usually purchase officers. Users – Individuals who use the product or service that is to be
purchased. They may be floor workers, R&D engineers etc. ISB&M Business Marketing
30. 30. Buying Centre or Decision making Unit (DMU) contd.. Influencers – People who can
influence the buying decision like technical people (QC engineers, design engineers etc.)
Deciders – People (Senior executives / purchase executives) who make the actual buying
decisions. Gatekeepers – People who control/filter the flow of information regarding
products/services to the members of buying center. Key members of Buying Centre Top
Management Persons (MD, President, VP, GM etc.) Generally involved in - • Purchase
policy decisions like diversification into a new product/project • Approval of purchase or
materials department annual budgets & objectives • Deciding the guidelines for purchase
decisions Technical Persons (Design Engr., Prod. Mgr., Maintenance Mgr., QC Mgr.,
R&D Mgr., Industrial Engr. etc.) Generally involved in product specification, technical
evaluation, negotiation with suppliers, performance feedback of product supplied etc.
ISB&M Business Marketing
31. 31. Buying Centre or Decision making Unit (DMU) contd.. Key members of Buying
Centre Buyer/Purchasers or Purchase Dept. (Sr. Exe., Managers, Purchase Officers or
assistants) Generally involved in - • Coordinate with Top Management, Technical
persons, Finance persons within the org. as well as with suppliers. • Maintain good
relationship with Suppliers & Decision making members. Accounts/Finance Persons (or
 Dept.) The contribution of finance/accounts are seen while finalizing commercial terms
such as mode of payment, financial approval of capital purchases, issuing payments to
suppliers etc. Marketing Function Ensure the product is marketable (packaging). ISB&M
Business Marketing
32. 32. Models of Organizational Buying Behavior- The Webster and Wing Model
Environmental Variables • Physical Individual Variables • Technological • Personal
Goals • Economic • Education • Political & legal • Experience • Labor unions • Expertise
• Cultural • Values • Customer demands • Job Position • Competitive practices & •
Lifestyle pressures • Income • Supplier information Organizational Buying Decisions •
Choice of suppliers • Delay decision & search for more information • Do not buy
Organizational Variables Buying Centre Variables • Objectives/goals • Authority •
Organization structure • Size • Purchasing policies & procedures • Key influencers •
Evaluating & reward systems • Interpersonal relationship • Degree of decentralization in •
Communication purchasing ISB&M Business Marketing
33. 33. Models of Organizational Buying Behavior- The Sheth Model Component (1)
Component (2) Component (3) Situational Factors Differences among Variables that
Methods used for individual buyers determine if the conflict resolution in caused by
factors: buying decision is joint-decision making Supplier or • Background of
autonomous or process individuals joint: Brand choice • Problem solving • Their •
Persuasion/influence information (A) Product specific • Politicking sources factors - •
Active search • Time pressure • Perceptual • Perceived risk distortion • Type of purchase
• Satisfaction with past purchases (B) Company specific factors – • Company size •
Company Situational Factors orientation • Economic condition • Degree of • Labor
disputes centralization • Mergers & acquisition ISB&M Business Marketing
34. 34. Buyer-Seller Relationship
35. 35. Buyer-Seller Relationship Development of mutually satisfying, profitable, long-term
relationships with customers is a major business asset of an industrial marketer. Buyer’s
perception of sales rep Is the Dimensions of Buyer- Role played industrial by industrial
buyer rational Seller buyer or irrational Relationship Role played by industrial sales rep
ISB&M Business Marketing
36. 36. Buyer-Seller Interaction – A Conceptual Framework Compatible Style Incompatible
Style Compatible Content Ideal Inefficient Transaction Task Oriented Interaction
Incompatible Inefficient No Oriented Content Transaction Self- oriented Styles of
interaction ISB&M Business Marketing
37. 37. Relationship Marketing Relationship marketing is a task of creating strong customer
bond or loyalty. Add financial Transaction marketing is benefits transaction oriented
buyer-seller interaction, which focuses on closing a sale with a customer. Approaches for
This is achieved by single sales developing customer person. Add structural bond ties to
Add social For large customer, companies financial & benefits social are moving towards
team selling benefits & relationship marketing. ISB&M Business Marketing
38. 38. Methods used to influence Industrial Customers Sales Presentation Get information
about the buying centre members, needs of potential customer firms. A sales presentation
must be tailor made to fit the needs & expectation of the potential customer. A sales
presentation should first present the positive points about his products, services &
company, & keep difficult or negative points at the en. Project the products/services as
differentiator. Negotiation with Industrial Customers Negotiation is a process that tries to
 maximize the benefits to both buyer & seller, & takes long-term view of their
relationship. Purpose | Information | Customer Trust | Styles of negotiation | Time factor
Styles of negotiation I win, you lose | Both of us win | You win, I lose | Both of us lose
ISB&M Business Marketing
39. 39. Methods used to influence Industrial Customers contd.. Reciprocity It is a practice of
buying from one’s own customers & also using purchasing power to sell to one’s
supplier. When products are homogenous or products have little differentiation & price
competition are less, reciprocal dealings are likely to occur. Caution must be exercised to
keep it to minimum level. Dealing with Customer’s Customer One of the complexities in
Industrial marketing is the need to deal with a customer’s customer & become the
customer’s competitor. ISB&M Business Marketing
40. 40. Customer Service In B2B, customer service is sometimes more important than the
physical product. Customer service supplements the sales of physical product & creates a
total value for a customer. The nature of customer service varies with the type of the
product & the stage of PLC. ISB&M Business Marketing
41. 41. Types of Relationship • It include one-time-only exchanges with economy &
necessity as the main Transactional motivation factors. • Customers prefer a transactional
relationship, when (a) many suppliers are Exchanges or available, (b) the supply market
is stable, (c) the purchase decision is not Relationships complex, & (d) the purchase is
considered as less important to meet firm’s objective. Value-added • The focus is on
complete understanding of the present & future needs of the customer, & meeting those
needs better than competitors, so as to obtain a Exchanges maximum share of the
customer’s business. Collaborative • The focus is between a customer firm & a supplier
firm, & it is the process of building strong social, economic, service, & technical ties over
a period of time. / Partnering • The purpose of partnering is to lower the total cost or
increase value, in order Exchanges to achieve mutual benefits. ISB&M Business
Marketing
42. 42. Marketing Strategies Concentrated Marketing - is a market segmentation and market
coverage strategy whereby a product is developed and marketed for a very well-defined,
specific segment of the consumer population. The marketing plan is highly specialized
one catering to the needs of that specific consumer segment. Concentrated marketing is
particularly effective for small companies with limited resources because it enables the
company to achieve a strong market position in the specific market segment it serves
without mass production, mass distribution, or mass advertising. Differentiated
Marketing - also called multi segment marketing. It is a market coverage strategy
whereby a company attempts to appeal to two or more clearly defined market segments
with a specific product and unique marketing strategy tailored to each separate segment.
Undifferentiated Marketing - market coverage strategy whereby a company ignores
differences within a market and attempts to appeal to the whole market with a single
basic product line and marketing strategy. Undifferentiated marketing relies on mass
distribution and mass advertising, aiming to give the product a superior image in the
minds of consumers. It is cost effective because there is only one product line to be
produced, inventoried, distributed, and advertised. Also the absence of segmented market
research lowers the costs of consumer research and product management. ISB&M
Business Marketing
43. 43. Marketing Strategies4 criteria - mostly used in Business Marketing: Technological
Contributions Dependence Purchasing Orientations Sales Potential (or Business
Potential) Information for each customer is obtained by the sales person Customer are
categorized into A, B, & C based on high, medium, & low business potential • Type A –
Collaborative relationship • Type B – Value-added • Type C – Transaction relationship
ISB&M Business Marketing
44. 44. B2B Marketing through E-commerce
45. 45. What is E-commerce? E-commerce is defined as a modern business methodology that
addresses the needs of organizations & consumers to cut costs, improve the quality of
goods & services, & increase the speed of service. It is also defined as the process of
using digital technology for transmitting information between organizations. Important
parts of E-commerce Internet World Wide Web (WWW) Intranet Extranet ISB&M
Business Marketing
46. 46. Marketing Strategy for Electronic Market Place Major Components of Marketing
Strategy Segmenting & Targeting Product Differentiation & Positioning Identifying the
target customers’ wants in terms of major benefits Selecting one or more benefits or
niche for differentiation based on company’s strengths or distinctive competencies
Communicating the company’s positioning to the target market Marketing-mix
Strategies, i.e., Product, Price, Promotion & Distribution Strategies Web-design Domain
name Distribution channel ISB&M Business Marketing
47. 47. Logistics
48. 48. Distribution Channels Manufacturer Mfg’s Sales Value-Mfg’s Rep / Distributor
Direct Commission force / added Brokers Merchants Agents / Dealer Marketing
Branches Resellers Distributor Online / Dealer Telemarketing Direct Mail Marketing
Industrial Customers ISB&M Business Marketing
49. 49. Channel Design Framework Channel Objective Channel tasks Channel Constraints
The type of External intermediaries environment • VARs Channel Alternatives
Competition • Industrial distributors / Company dealers Product • Manufacturer’s agents
Characteristics Evaluation of Alternative • Brokers Customer • Commission merchants
No. of intermediaries / channels Selection of Channel • Selective distribution Economic
factors • Intensive distribution Control factors • Exclusive distribution Adaptive factors
Terms & responsibility of channel members ISB&M Business Marketing
50. 50. Logistics Management – Business Logistics System Physical supply Industrial
manufacturer Physical distribution Tasks Transportation Raw materials Warehousing
Inventory control Packaging Components Material Storage Material handling Order
processing Communication Supplies Factory & warehouse Manufacturing locations
Customer service Industrial customers Finished goods storage Industrial distributors /
dealers Total Distribution Cost = Freight + Warehouse Cost + Inventory Cost + Cost of
Lost Sales due to Delayed Delivery ISB&M Business Marketing
51. 51. Marketing Research & Intelligence
52. 52. Marketing Research & Marketing Intelligence Marketing research is defined as the
objective & systematic process of obtaining, analyzing, & reporting of data (or
information) for decision making in marketing. It undertakes periodic projects to collect
& analyze data with specific objectives. Marketing Intelligence is an ongoing activity to
provide continuous information for decision making. Difference between survey method
Areas of survey methods Industrial Research Consumers Research Sample size Small
 sample due to small Large sample due to large universe (or population) & dispersed
population concentration of buyers Respondent cooperation & More difficult due to time
Less difficult to obtain data; accessibility constraints; accessibility is accessibility is
easier limited to working hours Defining respondent More difficult as buying Simple, as
individuals or decisions are made by several household users are the buyers members of
the buying committee ISB&M Business Marketing
53. 53. Scope of Industrial Marketing Research Development of Market potential Market
Share Analysis Sales Analysis Forecasting Competitor Analysis Benchmarking New
Product Acceptance & Potential Business Trend Studies Sales Quota Determination
ISB&M Business Marketing
54. 54. Marketing Research Process Identify the problem / Present the Develop research
Collect the data (or Process & analyze opportunity & research findings design (or plan)
information) the data define research (or report) objective Information type Observational
| Exploratory | Survey | Sources of Primary data Experimental data Research Secondary
data methods Sampling plan Method of contacts Data collection method ISB&M
Business Marketing
55. 55. Industrial marketing Intelligence Marketing research studies Secondary Marketing
Decision Marketing Market data Intelligence Support Strategy System Development
response sources System Internal Information System ISB&M Business Marketing
56. 56. Components of DSS Action Marketing Manager Question Answer Decision Statistics
models Display Database Environment ISB&M Business Marketing
57. 57. Strategic Planning, Implementing &Controlling
58. 58. Market-Oriented Organizations Market-oriented organizations stay close to the
customers & ahead of the competitors. Shared They understand the basic principle
Values that the purpose of a business is to attract & satisfy customers at a profit. An
effective strategic planning includes market-oriented strategies Stakeholders
Organization in which marketing function has an important role. Strategy Factors
Affecting the Market Orientation ISB&M Business Marketing
59. 59. Marketing in Strategic Planning Strategy hierarchy Organization (Type of
management) structure Corporate Strategy Corporate (Strategic Mgmt.) Office
Business/SBU Strategy SBU ‘A’ SBU ‘B’ SBU ‘C’ (Strategic Mgmt.) Functional
Strategy Finance Marketing Production (Operations Mgmt.) ISB&M Business Marketing
60. 60. Role of Marketing in an Organization Organizational Level Role of Marketing
Formal Name Corporate Provide information on competition & customer, Corporate &
advocate customer orientation for developing marketing long-term corporate strategy
Business Unit / SBU Provide competition & customer analysis for Strategic developing
long-term business strategy, including marketing competitive advantage Develop
segmenting, targeting, & positioning strategies Take product-line decisions Functional
Evolve & implement marketing-mix strategy in Marketing short-term to achieve business
unit objective management Coordinate marketing activities Allocate resources ISB&M
Business Marketing
61. 61. Developing Corporate Strategies Strategic planning gap is filled by: Current products
New products Intensive growth Integrative growth Product Market penetration
development Diversification growth Current strategy strategy markets Concentric
diversification: consists of searching for new products that have technological /
marketing Product-synergies with firm’s existing Market products. Expansion Grid
 Horizontal diversification: consists of adding new products Diversification
technologically unrelated to the New existing products. markets strategy Market
Concentric diversification Conglomerate diversification: development consists of seeking
new product- strategy Horizontal diversification markets that are unrelated to
Conglomerate existing products. diversification ISB&M Business Marketing
62. 62. Strategic Planning Process at BU Level Define the business unit’s mission Scanning
the ext. env. (Opportunity & threats) Analysis of the int. env. (Strength & weaknesses)
Developing objectives & goals Formulating strategies for achieving the goals Preparing
programme or action-plan from the strategies Implementing the strategies & action-plan
Monitoring results & taking corrective actions (i.e., control) ISB&M Business Marketing
63. 63. Business Unit’s Mission The business mission statement should have the following
components: What business the company is in, & What business it intends to be in? What
methods would be uniquely followed (which are different from competitors) in pursuing
business activities? What is the social standing of the organization as a business entity?
What business the company is in? [Thermometer manufacturer] Customer
groups/segments: Who are being satisfied? Which customer groups an SBU intends to
satisfy? [Household/Hotels/Health care/ Factories] Customer needs or functions: What
needs of customers are being satisfied? [Body temperature/Cooking
temperature/Atmospheric temperature/ Process temperature] Technologies used: How
customer needs are satisfied? [Mercury-base/Alcohol- base/Digital] ISB&M Business
Marketing
64. 64. SBU’s Objective & Goals Corporate mission Corporate objectives & goals SBU
Mission SBU objectives & goals Company history SBU’s business strategy Current
preferences Market environment Marketing strategy Company’s resources Company’s
core competence ISB&M Business Marketing
65. 65. Formulating Strategies at BU Level Porter’s Generic Strategies Framework Strategic
Advantage Uniqueness perceived by the customer Low-cost position Strategic Target
Industry wide Overall cost Differentiation leadership Particular segment only Focus
66. 66. Developing Industrial Marketing Plan Section Contents Situational analysis Market
situation Includes data on market size, growth, projections, sales, market share , & profits
for past 3/5 years. It also indicate target customer needs, buying behavior, buying stage,
& buying situations. Competitive situation Consists of identifying, ranking, market share,
objectives & strategies, strength & weaknesses, & reaction patterns of major competitors.
Product situation Includes data on sales, unit price, profits for each major product item in
the product line for past 3/5 years. Macro environment. Situation Consists of identifying
PEST factors & then forecasting the future trends & the impact on the product. SWOT &
issues SWOT analysis Includes identifying major strengths, weaknesses, analysis
opportunities, & threats faced by the product. Issues analysis Consists of determining
major issues faced by the firm, based on situational & SWOT analysis. Objectives &
goals Determine sales, market share, & profit, considering the environment. & issues
analysis done earlier. ISB&M Business Marketing
67. 67. Developing Industrial Marketing Plan Section Contents marketing strategy
Selection of target market segments. Positioning strategy relative to competitors.
Marketing mix strategy. Customer service & marketing research strategy. Action
plan each marketing element is broken down to specific actions to answer: Who will
take the specific action, by when, & at what cost? Marketing budget Building the
 revenue & expenditure budget. Revenue budget includes forecasted sales in units,
average unit price, & sales revenue. Expenditure budget includes estimated marketing
expenses on personal selling, promotion, distribution, etc. Implementation & control
Building marketing org. to implement the marketing plan. Control includes periodic
review of actual performance against goals & taking corrective actions. Contingency
plans some firms prepare contingency plans in case uncertain situation arise. ISB&M
Business Marketing
68. 68. Controlling Marketing Performance Setting Goals Performance Measurement
Performance Analysis Taking Corrective Actions ISB&M Business Marketing
69. 69. Types Marketing Controls • The firm’s marketing opportunities & strategies Strategic
Control • Use of information technology (Marketing audit) • Impact of changing
environment • Strategy implementation • Sales analysis Annual Plan • Market share
analysis • Expense-to sales ratio Control • Profit/contribution analysis • Customer
satisfaction monitoring • The control system provides information on the resources like
money & manpower used in product, Efficiency Control promotion, distribution, &
pricing strategies & tactics • Purpose is to find if the company is making or loosing
money Profitability • Companies measure the profitability of each product-line &
product- Control item, each market segment, each branch, & each distribution channel
ISB&M Business Marketing
70. 70. Product Strategy & New Product Development
71. 71. What is an Industrial Product? The industrial product is defined not only as a physical
entity, but also as a complex set of economic, technical, legal, & personal relationship
between the buyer & the seller. From customer’s point of view, a product is a
combination of basic, enhanced, & augmented properties. Basic properties are included in
the generic product, with fundamental benefits sought by the customer. Generic products
are made differentiable by adding tangible enhanced properties like product features,
styling, & quality. Augmented properties include intangible benefits such as technical
assistance, availability of spare parts, maintenance & repair services, warranties, training,
timely delivery, & attractive commercial payment terms. ISB&M Business Marketing
72. 72. Changes in Product Strategy Customer Needs Factors determining Technology
change in PLC product strategy Govt. Policies / Law ISB&M Business Marketing
73. 73. Industrial Product Life Cycle – General Model Industrial products typically follow
the The behavior of PLC depends on pattern of sales & profits. three factors on which
Different marketing strategies are needed management has little or no at different stages
of PLC. control. The PLC concept highlights the importance of long-term planning for a
new product. Changing Technological needs of Changes Industry customer Sales &
Profits sales (Rupees) Changing Industry Competition profits +1 0 -1 Introduction
Growth Maturity Decline Time ISB&M Business Marketing
74. 74. Industrial Product Life Cycle – High-tech Products Sales Time NPD I&G M Decline
NPD = New Product Development I&G = Introduction & Growth M = Maturity Period
ISB&M Business Marketing
75. 75. Locating Industrial Products in their Life-Cycle Develop a trend analysis for the past
3-5 years based on information for a product on quality, value of sales, profit %, market
share, no. of competitors & prices. Analyze competitors’ market share, product
performance, new product introduction, diversification or expansion plans. Estimate &
 project sales & profits of the product over the next 3-5 years. From the above analysis, fix
the product’s position on its life-cycle curve. ISB&M Business Marketing
76. 76. Developing Product Strategies for Existing Products Evaluate the performance of all
existing products or product lines by using product evaluation matrix. By using
perceptual mapping technique, examine the relative strengths & weaknesses of the
company’s products in comparison to competitors’ products. Based on the above
analysis, decide the product strategies for the existing products. ISB&M Business
Marketing
77. 77. Product Evaluation Matrix Company Sales Decline Stable Growth Profitability
Below Target Above Below Target Above Below Target Above Industry Mkt Sales
Share Target Dominant P Growth Average Product ‘P’ (Last 3 years) Market Share =
40% Marginal Company Share = 30% Dominant Industry Sales = 25% S1 Profitability =
as / target Average Stable S Marginal Product ‘S’ (Last 3 years) Market Share = 12%
Dominant Company Share = 15% Average Industry Sales = 16%Decline Profitability =
below target Marginal Market Share less than 10% = Marginal Market Share between
10% to 30% = Average Market Share greater than 30% = Dominant ISB&M Business
Marketing
78. 78. Perceptual Mapping Technique High Quality This technique is used to study the
strengths & weaknesses of a firm’s product in comparison B* A1* to that of its
competitors. New C* Position Deciding Product Strategies Strong Service Weak Service
Maintain the product & its marketing strategy. Modify the product & A* change the
marketing Old strategy. Position Eliminate the product or product line. Low Quality Add
new products or product lines. ISB&M Business Marketing
79. 79. Product Elimination Dropping the product or product line is the most controversial
decision as many stakeholders are threatened by this decision. Factors to be considered:
Will the customer relationships be affected? Will the profitability be affected due to
change in overhead allocation? What will be the reaction of the employees? Will the sales
of other products get affected? Is there a new product to replace the eliminated product?
Will the company’s image be affected? What will be the possible competitive reactions?
ISB&M Business Marketing
80. 80. New Product Development Classification of New Products: Products that is
innovative & new to the world. Products those are new to the company, but not new to
the world. Revisions or improvements to the existing products in the existing markets.
Additions to the existing product lines with additional markets. Repositioning existing
products to new market segments. Products with substantial cost reductions without
reduction in performance. ISB&M Business Marketing
81. 81. New-Product Development Process Is the new product in line with the long-term
objectives & strategies? Do we have adequate resources? Is it useful to the customers?
What is the future growth, market size, & competition? A detailed version of the product
idea that is stated in a meaningful customers terms. The purpose is to develop an
estimated projection of the sales, costs, & profitability of the new product for 5-7 years.
Design Process Engr. Tooling Mfg Final product Testing Alfa & Beta testing
Introduction at trade shows Testing at distributors/dealers showroom Test marketing
ISB&M Business Marketing
82. 82. High-Tech Marketing High-Tech includes a wide range of industries such as
telecommunications, computers, software, biotech, & consumer electronics. Two major
 characteristics that Product distinguish hi-tech marketing are: Technology High
Technological Uncertainties High Market Uncertainties Other characteristics that
Technology distinguish hi-tech marketing are: High Competitive Volatility Management
Process Short life or High-tech products Technology Technology High Development
Cost ISB&M Business Marketing
83. 83. High Technological Uncertainties Will the product function as promised? Will the
promised delivery be met? Will the supplier give high quality service? Will there be a
risk of obsolescence? Will there be any side effects of the new Product/Service? ISB&M
Business Marketing
84. 84. High Market Uncertainties Which are the customer needs that new technology can
meet? How will needs change in future? Will the market accept technical standards? How
fast will the innovation spread? What is the size of the potential market? ISB&M
Business Marketing
85. 85. Classification of Marketing Situations Low-tech marketing includes known
technology applications to meet clear & well known market needs. E.g., Pump sets
Technological Uncertainty High Hi-fashion marketing consists of known & slow
changing technology applications to meet difficult to predict consumer needs. E.g.,
Motion pictures, fashion clothes. Hi-tech marketing consists of Low difficult to predict
both technology applications & market. E.g., Biotechnology products. Low High Better
mousetrap marketing includes a new technology to meet Market Uncertainty well-
established market. E.g., Water purifying system. ISB&M Business Marketing
86. 86. Technology Adoption Life Cycle Early majority Late majority (34%) (34%) Laggards
Early adaptors (16%) (14%) Innovators (3%) Time of Adoption of Innovation ISB&M
Business Marketing
87. 87. Unique nature of High-tech MarketingStrategy Plan Whole Target a Niche Develop
Product market Partnerships Properties Unique Distribution Communication Positioning
Strategy Strategy Strategy Pricing Strategy ISB&M Business Marketing
88. 88. Business Communication
89. 89. Steps to Develop Effective Communication Determine the communication objectives
Identifying the Target Audience Determining the Promotional Budget Develop the
Message Strategy Select the Media Evaluate the Promotional Results Integrate the
Promotional Programme ISB&M Business Marketing
90. 90. Role of Advertising in Industrial Marketing Creating awareness Reaching members
of buying centre Increasing sales efficiency & effectiveness Efficient reminding Sales
lead generation Supporting distribution channel members ISB&M Business Marketing
91. 91. Promotional Tools & Media Promotion Advertising Sales PR & Publicity Direct
Personal Tools Promotion marketing Selling Promotion Print media Trade shows
Charitable Direct mail Sales calls Media, & donations Promotion General business
Exhibitions Adopting Telemarketing Sales Support publications villages presentation
Trade journals Catalogues Community On-line Team selling relations marketing
channels Industrial Sales contests News item in Relationship directories press marketing
Promotional novelties (gifts) Seminars Promotional letters Entertainment ISB&M
Business Marketing
92. 92. Pricing Strategies & Policies
93. 93. Pricing & Factors Influencing PricingDecision Pricing is the process of Pricing
objectives determining what a company will Survival receive in exchange for its
 products. Maximum short-term profits Pricing factors are manufacturing Maximum
short-term sales cost, market place, competition, Maximum sales growth (Market market
condition, and quality of penetration) product. Maximum marketing skimming Product-
quality leadership Demand analysis Cost analysis Break-even analysis Competitive
analysis Government regulations Price discrimination Predatory pricing ISB&M Business
Marketing
94. 94. Cost Behavior at Different Production Levels– Economies of Scale 300 Cost / Unit
(in rupees) 200 100 0 100 200 240 300 Quantity Produced / Year (in thousand) ISB&M
Business Marketing
95. 95. The Pricing Strategies Competitive bidding in competitive markets Probabilistic
bidding Pricing new products Skimming strategy Penetration strategy Pricing across the
product life-cycle Growth stage pricing Maturity stage pricing Decline stage pricing
ISB&M Business Marketing