Strategy formulation in the

industrial markets
Industrial marketing depends on identifying
promising market segments to serve,
understanding their needs, and then
developing marketing strategy and plans to
satisfy those needs better than competitors in
such a way as to achieve organizational
objectives.
It is not easy to accomplish in todays
dynamic environment.

Strategy formulation in the

industrial markets
Strategic planning in the industrial market
Planning in the industrial marketing arena requires a higher degree of
integrated effort across functional areas and a closer relationship with overall
corporate strategy than in the consumer market.
Functional Isolation: Failing to recognize the interdependency between
marketing and other functional areas
Functional Conflict: Potential conflicting areas between Marketing & Engg
Alleviating Conflict: Understanding the reasons: rises due to differences in
perception of their prestige, power and knowledge, budget constraint, rapid
company growth, rapid technological change etc
Organizational design for interfunctional cooperation.: Hierarchy of
authority or through committee work and liaison roles. Co-ordination,
broader organizational goals obtained etc.

Strategy formulation in the

industrial markets
Design for competitive advantage:
What major task groupings are feasible design alternatives?
What linkages are needed essary(attempt) between groupings?
What support systems are needed?
Task force: Tackle a specific group problem
Team: To respond recurring problems that cross over groups
Integrating role: An individual is charged with formal responsibilities to
coordinate b/w groupings
Integrating department: Ensure coordination b/w different functions
Matrix: Reports to two bosses simultaneously

Strategy formulation in the

industrial markets
Decision support systems:
DSS contributes much towards integrating personnel in different
departments, enabling a firm to use its competitive advantages better
and to overcome interdepartmental conflict.
DSS are computer systems developed to aid managerial decision
making by employing state of the art quantitative models that
analyze proposed actions by evaluating how those actions would
affect all primary areas of an organization. Ex: for product price
reduction, its analysis such considerations as effects on amount sold,
inventory levels, mfg scheduling, input availabilities, capital
expenditure, additional revenues, anticipated computer reactions.

Assessing Market opportunities

Understand the role of marketing research in strategic decision
making
Understand how secondary and primary data are collected and used
Become aware of the vast changes taking place in the area of
secondary research
Appreciate the industrial applications of decision support systems
and the software for them

Difference between Industrial Marketing

Research and Consumer Marketing Research
Sample Size: Small sample
due to small
universe(population) &
Concentration of buyers as
well as information concern
More diff to get data, time
constraint Accessibility is
limited to working time
More diff as buying
decisions are made by
several members
Managers perform less
Marketing research activities
Technical background
should required
Descriptive (survey
method) used commonly
More reliance on
secondary data

Large sample due to large

universe, & ind or house hold
buyers.
Geographically dispersed of
buyers as well as information
Less difficult to obtain data,
accessibility is easier
Simple as individuals or house
hold users are generally buyers
Managers perform more
Marketing research activities
Since not techy product no
need of much techy
background
Experimental or Observation
method
On primary data

Assessing Market opportunities

Defining the problem and research objectives
Developing the information sources
Collecting the information
Analyzing the information
Presenting the findings

Industrial Marketing
Segmentation
Targeting
and
Positioning

Market Segmentation
Market segmentation perhaps defined as the sub dividing of
a heterogeneous market into groups of homogeneous
customers so as to facilitate effective target marketing.
Market segmentation is a strategy of selecting customers, for
differentiating customers according to differences, choosing
among alternative market opportunities, tailoring marketing
strategies to those distinctive opportunities.

STP Framework
Target
Marketing

Market
Segmentation

1.

To Carry Out
Market
Research

2.

To Identify
Segmentation
Variables

3.

To prepare
Profile of the
Resulting
Segments

1.

Evaluate
The
Resulting
Segments
Select the
Target
Segment(s)
3. Decide
Target
Marketing
Strategies

Positioning
1.

2.

Identify
Target
Customers
Attributes
Select
Matching
Benefits

3. Communicate
Chosen
Position
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Benefits
Dividing in to Distinct Group of Buyers for
Product or

Service

To Facilitate Targeting
To Decide Strategic Positioning
To Determine Product, Pricing, Distribution and
Promotion Policies
11

To Organize Sales Force

Benefits

Enables to Develop Separate Marketing Plans or

programmes
To Meet the Needs of Different Small Firms
Could also helps to Survive
Succeed by Focusing in few Segments
Make Efficient and Effective Allocation of
Resources
Compare Marketing Opportunities in Different
Market
seg by Analysing Customer Needs
12

Limitations
Not Always Beneficial or Practical
Market Consists of Few Customers Or a
Single Large Customer
Many Persons with Different Background
involved in Decision Making

13

Limitations
Great Differences in
- Buying Practices,
- Customer Characteristics,
- Product Applications
- Benefits Sought by
Different Members of
Buying Centers

14

Characteristics
Segmentation Variables
Measurable

Differentiable

Substantial (Sales Potential And Profits)

Accessible

Actionable

Sustainable

15

Market Targeting
Evaluate Various Segments

Segments Size and Growth

Current Segments Sales

Future Growth Potential

Growth Rate

Expected Profitability
16

Selection process of Target Market

Analyse Market and Customer Characteristics

Identify Relevant Variables for segmentation
Segment the Market draw up profiles of the segments
Evaluate segments
Select the target segments

Profitability Analysis
Market Potential Estimate of
Quantity and Value of a Product
That the Total Market Will Purchase
in a Specified Time Period
Sales Forecast for the Company
Profitability Difference Between the
Estimated
Revenue and Marketing Cost

18

Purchasing Approach
Purchasing Orientation /
Function

Power Structure

Buyer-Seller Relationship

Purchasing Policies

Purchasing Criteria

19

Self (Swot) Analysis

Manufacturing Capability

Technical Competency
R & D Investments
Financial Strength
Product Quality
Delivery Performance
Sales Force, Advertising
Brand Equity

Competition Analysis
Segments Structural Attractiveness
Strength and Weaknesses of Existing and
Potential Competitors both Domestic and
Foreign
Actual and Potential Substitute Products
Relative Bargaining Power of Buyers
Powerful Suppliers

21

Competition Analysis
Identifying Key Factors for Competitive
Success

Technology
Innovative Capability
Organizational Resources

Strength and Weaknesses of

Existing and Potential Competitors both Domestic and
Foreign
Predicting Rivals Move
22

MICHAEL PORTERS FIVE-FORCES

MODEL OF COMPETITION
Threat of
New
Entrants

Bargaining
Power of
Suppliers

COMPETITIVE
RIVALRY AMONG
EXISTING FIRMS

Threat of
Substitute
Products or
Services

Bargaining
Power of
Buyers

23

Company Objective and Resources

In Line With Companys Long Term

Objective
Skill and Resources (Strengths)
Superior to Competitors
Capacity to offer Superior Value
Strength in Success Factors For
Targeted Segment

24

Target
Market
Strategies
Differentiated Marketing: A firm may also choose to
offer its products or services to a number of diverse
segments whose needs, product usage. This strategy to
meet the differences among target markets, however
increases over all costs to such areas as product doep,
modification, production, marketing, & administration.

Undifferentiated Marketing:

It refers to the fact

that the file ignores segment differences & develops a

single marketing program that will focus on what is
common to all buyers within the market. Ex: Lubricants may
market their products to all types of mfg facilities
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Target Market Strategies

Concentrated Marketing:
This strategy can be applied when company
resources are limited, the firm may choose to go
after a large share of one or a few markets.
When marketing strategy is well conceived, its
possible for the firm to achieve a strong market
position with in the chosen markets as well as
operating economies.

Niche Marketing:
Niche marketing is a process by which a firm
segments the market into finer, more
homogeneous clusters than that which is
normally approached tradition segmentation
strategies.

Undifferentiated
Marketing

Companys
Marketing
Mix

Market

Mass Marketing Strategy

Ignores Market Segment Difference
Based on Common Needs of Buyers

Mass Distribution and Mass

Advertising

Difficulty in Satisfying All Buyers

Cant Compete
Firms
B. Focused
Differentiated
Marketing

27

Differentiated Marketing

Companys Marketing
Mix 1

Companys Marketing
Mix 1

Companys Marketing
Mix 2

Companys Marketing
Mix 2

Companys Marketing
Mix 3

Companys Marketing
Mix 3

Target Several Marketing Segments

Design Separate Offer and Plan
Increases Cost of Doing Business
Extra Marketing Research, Sales Analysis
Promotion, Planning and Channel Mgt.28

Concentrated Marketing
Segment - 1
Companys
Marketing
Mix

Segment - 2
Segment - 3

Low Cost of Setting up

Large Share of One or Few Segments
or Niches

29

Positioning
Identifying Major Attributes for
Differentiation
- Product Variable
- Service Variable
- Personnel Variable
- Image Variable
Selecting The Differentiating
Attributes

30

Essentials of
Differentiation

Distinctive

Superior

Communicable

Sustainable

Economic

Profitable
31

Positioning
Strategies
Attribute Positioning: Based on the certain attributes.
Benefit Positioning: Any distinctive benefit becomes core
Cost Positioning: low cost meanwhile worth for the cost
Segment Positioning: May be positioned with reference
to specific segments
Application / Use / User Positioning: Use/ Application is
important
Product Category: sometimes associated with product
class or category
Quality Positioning: A product quality can also use for
positioning
Competitors positioning: directly against the competitors

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Thank You
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