Unit 1: (6 Hours)

Nature of Business Marketing: Business Marketing

Concept, Business vs. Consumer Marketing, Economics of
Industrial demand, Types of Industrial Markets, Types of
Business Customers, Classifying Industrial Products &
Services, Business customers purchase orientations,
Organizational Procurement Characteristics, Environment
Analysis in Business Marketing.
 Nature of Business Marketing

•Industrial Marketing Manager must react differently to

changing markets .

•Develop products to meet those changes.

•Market the products in uniquely specialized ways to

sophisticated customers.

•Faces many marketing situations not encountered in

consumer market.

•It is dynamic and challenging.

Definition of Business Marketing/Industrial Marketing

Industrial marketing consists of all activities involved in the

marketing of products and service to organizations
(Commercial enterprises, profit and not for profit
institutions, government agencies, and resellers) that use
products and services in the production of consumer or
industrial goods and services, and to facilitate the operation
of their enterprises
 Business Marketing
Business marketing is a marketing practice of
individuals or organizations (including
commercial businesses, governments and
institutions). It allows them to sell products or
services to other companies or organizations that
resell them, use them in their products or services
or use them to support their works.
 Why study Industrial Marketing
•To provide proper guidance and stimulation for research
and development of new products.
•Develop markets for new products.
•To innovate in
•Distribution,
•New methods for promoting products.
•Doing business on a Multinational basis.
• To seek new competition through traditional ways of
doing business.
 Exchange transaction in industrial Market

1.Product Exchange
2.Information Exchange
3.Financial Exchange.
4.Social Exchange
 Industrial Marketing V/S Consumer Marketing

Sl Particulars Industrial Marketing Consumer Marketing

No
1 Market Geographically Concentrated, Geographically
Structure Relatively few buyers, dispersed, mass
oligopolistic competition markets, monopolistic
competition
2 Products Technical complexity, Standardized, service
customized service delivery delivery and
and availability very availability is some
important what important
3 Buyer behavior Functional involvement, Family involvement ,
rational/ task motives social/psychological
predominate technical motives predominate
expertise stable relations less technical expertise
interpersonal relations, non-personal
reciprocity decision making relationships
Sl No Particulars Industrial Marketing Consumer Marketing
4 Decision making Distinct, observable stages Unobservable, mental
stages
5 Channels Shorter, more direct fewer Indirect, multiple
linkages linkages
6 Promotion Emphasis on personal selling Emphasis on
advertising
7 Price Competitive bidding, List prices
negotiating on complex
purchases, list price on
standard items
Industrial Market Characteristics

1. The size of the Market.

2. Geographical concentration
3. Competitive nature.
4. Product characteristics
5. Buyer characteristics
6. Stable relationships
7. Buyer-seller interfaces
8. Channel characteristics
9. Promotional characteristics
10.Price characteristics
 Economics of Industrial Demand

1. Derived Demand.
2. Joint Demand
3. Cross elasticity of demand.
 Resellers Market

1. Market Characteristics.
2. Product Characteristics
3. Buyer Characteristics.
4. Channel characteristics
5. Promotional characteristics
6. Price characteristics
 Organizational Customers

1.Commercial enterprises
2.Government Agencies
3.Institutions
1.Commercial enterprises
1. Industrial Distributors or Dealers
2. OEM (Original Equipment Manufacturer)
3. User
 Classifying Industrial Products

1. Material and Parts (Goods that enter the product

directly)
2. Capital Items (Goods that affect the cost structure of the
firms)
3. Supplies and services (Goods that facilitate the firm’s
operations)
1.Material and Parts (Goods that enter the
product directly)
1. Raw materials
2. Manufactured materials and component parts

2.Capital (Goods that affect the cost structure of

the firms)
1. Installations
2. Accessories

2.Supplies and services (Goods that facilitate the

firm’s operations)
1. Supplies
2. Accessories
 Organizational procurement Characteristics

Purchasing in Commercial Enterprises

• Multiple influencers
•Technical Sophistication
•Value analysis

Purchasing in Government Enterprises

• Widely dispersed Markets
•Complicated procurement laws
•Understanding Government contracts

Institutional purchasing
• Mixture of Government and private organizations
•Formal biding
Industrial Marketing Environment
Buyer seller interface

Publics

Macro environment

Government
Interface level Publics
•Input suppliers •Financial publics
•Distributors •Independent press
•Facilitators •General public
•Competitors •Internal publics

The Macro environment

•Economic influence
•Ecological influence
•Physical environment influences
•Cultural influence
•Technological influences
•Demographic influence
Government influence on the Industrial
Marketing environment

1. Anticipating Governmental actions

2. Influencing Governmental actions
3. Political and legal Influence
4. Government Agencies and Legislators