Industrial and Services Marketing

Industrial Marketing -

An Introduction

ISM/08/SIM
 What Is Business Marketing?
2

 Those activities that facilitate exchanges involving

products and customers in business markets
 A business transaction between a professional seller
(representing a selling company) and a professional buyer
(representing a buying company)
 Activities in which goods or services are sold for any use
other than personal consumption
 Note: It is not the nature of the product; it’s the nature of
the transaction.

ISM/08/SIM
 Business-to-Business Marketing
3

 Marketing of goods and services that businesses and

organizations buy for purposes other than personal
consumption

Also called organizational markets

Relationship
Relationship Marketing
Marketing
Building
Building long
long term
term relationships
relationships with
with key
key parties
parties for
for
the
the purpose
purpose of
of retaining
retaining their
their long
long term
term business.
business.

ISM/08/SIM
 Customer Focus Vs Managerial Focus

 Features  Design

 Consequences, Values  Values Cost

 Ease of Operation  Ease of Production

 Unique Qualities  Unique Technologies

 Consumption  Production

ISM/08/SIM
 Characteristics of B2B Markets
5

Generally, the same principles are true for

business and consumer customers
There are characteristics that make B2B buying
more complex
 Multiple buyers
 Number of customers

 Size of purchases

 Geographic concentration

ISM/08/SIM
 Business Vs Consumer Marketing
6

Characteristic B2B Market Consumer Mkt

Sales Volume High Low

Number of Buyers Small Large

Location of Buyers Geographically Diffuse

Concentrated
Buyer-seller More
Relationship Closer impersonal

ISM/08/SIM
 Business Vs Consumer Marketing
7

Characteristic B2B Market Consumer Mkt

Nature of channel More Direct Less Direct

Buying influencers Multiple Single/limited

Type of negotiations Complex Simpler

Reciprocity Yes No

Promotion method Personal sales Advertising

ISM/08/SIM
 Industrial vs Consumer Markets
8

Market Structure
Industrial Market Consumer Market

 Geographic Dispersed
Concentration
 Lesser numbers Mass market
 Oligopolistic

ISM/08/SIM
 Industrial vs Consumer Markets
9

Products and Services

Industrial Market Consumer Market

 Technically complex Standardized

 Customised
Service & Delivery
 Service, Delivery & Somewhat important
availability very
important

ISM/08/SIM
 Industrial vs Consumer Markets
10

Buyer Behavior
Industrial Market Consumer Market

 Functional Involvement Family Involvement

 Rational (Motives vs actions)
Social / Psychological
 Technical expertise – gives Motives
suggestions
 Stable relations-long term Less Technical Expertise
contracts
 Interpersonal Relationships Non-personal Relationships

ISM/08/SIM
 Industrial vs Consumer Markets
11

Decision Making
Industrial Market Consumer Market

Distinct, Observable Unobservable,

Stages mental stages

ISM/08/SIM
 Industrial vs Consumer Markets
12

Channels

Industrial Market Consumer Market

Shorter, Direct, fewer Indirect, multiple

linkages linkages

ISM/08/SIM
 Industrial vs Consumer Markets
13

Promotion
Industrial Market Consumer Market

Emphasis on
Emphasis on Personal
Advertising
selling

ISM/08/SIM
 Industrial vs Consumer Markets
14

Pricing
Industrial Market
Consumer Market
 Competitive Bidding,
 Negotiating on complex List Prices / MRP
purchases,
 List price for standard items
 OEM Rates, DN, Rate
Contract

ISM/08/SIM
 B2B Demand Characteristics
15

Derived Demand
Inelastic Demand
Fluctuating Demand
Joint Demand
Cross Elasticity of Demand

ISM/08/SIM
 Derived Demand
16

B2B demand is derived demand because a

business’s demand for goods and services

comes either directly or indirectly from

consumers’ demands.

Cotton-thread-clothes

ISM/08/SIM
 Inelastic Demand
17

Inelastic demand means that business customers

buy the same quantity whether the price goes
up or down

ISM/08/SIM
 Fluctuating Demand
18

Small changes in consumer demand can create

large increases or decreases in business demand
Acceleration principles (multiplier effect) means
that changes in consumer behavior have effect
through several related businesses

ISM/08/SIM
 Joint Demand
19

Joint demand occurs when two or more goods are

necessary to create a product
Companies try to avoid dependence on specific
suppliers by dealing with multiple suppliers
whenever possible

 Locomotives SAN/VT – engines, Wagons, Axles

 Generators – Engines, alternators, Filters, Control Panels

ISM/08/SIM
 Cross Elasticity of Demand
20

Price depends on other products like substitutes.

 Price of Aluminium windows depends on price of steel / wood

 Plastic bags replaces jute as a major packing material

 Nylon replaced coir

ISM/08/SIM
 Major Categories of Customers
21

Commercial enterprises
 Channel members and facilitators
 OEMs (Original Equipment Manufacturers)
 User customers
Governmental organizations
Institutions

ISM/08/SIM
 Classification of Business Goods and Services
22

Major equipment, Installations

Accessory equipment
Process materials
MRO (maintenance, repair, operating) supplies
Fabricated and component parts
Business services
Raw materials

ISM/08/SIM