Industrial Marketing

Dr. Vishal Chavan

 Factors affecting strategy changes
• Market characteristics
• Customer characteristics
• Demand characteristics
• Product characteristics
• Marketing mix strategy
• Facilitating variables ( Marketing Research etc)
 Product and Demand Characteristics
• Industrial product demand characteristics vary
substantially from consumer products
• Some product and demand characteristics are
unique to the industrial market
• Demand for industrial products is derived demand
• Also subject to reverse price elasticity of demand
 Customer Characteristics
• Number of customers is relatively small needing often direct and short
channel
• Order size is very large in quantity or value but frequency of purchase is
very low
• Quantity & Frequency of order of several items are affected by
economic order quantity i.e. which minimizes ordering & inventory cost
• Decision making involve- except straight re buy- long term process &
several people
• Decision Making Unit (DMU) in industrial buying situation is often larger
than in consumer buying
• Business buying decision are entirely or predominantly guided by
rational, economic motives, however sometimes non-economic
motives also play a part
 Customer Characteristics
• As business goods are brought for commercial use or for the benefit of large
community, cost and consequences of non-performance would be very high
• Business marketers hence has to be extremely careful of product, service and
delivery
• Business buyers are interested in reciprocity which reinforces the business
relationship
• Close and strong buyer-seller relationship is the prime characteristics of
many business situations
• Many businesses demand certain skills, other capabilities and commitment
on the part of business marketers
• Business buyer are interested in enduring relationship & this tends to create
vendor loyalty
• Bargaining power of many industrial buyers become of their dominant
position, is very high & mighty.
 Product Characteristics
• Product/service mix is an area with greatest number of
differences between business and consumer market
• Product life cycle of industrial product is shorter than
consumer goods due to technological changes
• Shorter PLC points to the need for strategies for rapid
market penetration with need for R&D facilities
• Pay back period is an important criteria in project
evaluation
• Product characteristics plays an important role in the
industrial products. Need to have specifications at
manufacturing stage, including specifications of material
used in the production
 Product Characteristics
• Very often industrial products are customized as per buyers
technical requirement
• Technical demand clearly shows need of high technical skills &
other capabilities for industrial marketer
• Service requirement for the same product can also vary from
customer to customer depending upon availability of in house
maintenance facilities
• System selling has great appeal in industrial marketing & covers
complete package of product design, installation & service
• Branding does not play the same role in Industrial Marketing as
it plays in consumer marketing. However reputation of the
supplier is definitely important
 Market Characteristics
• Business markets tend to be more Oligopolistic (few sellers) &
Consumer markets more Monopolistic ( characterized by
product differentiation & many sellers & buyers)
• Marketing implication of oligopolistic competition is that the
strategies of one firm is closely watched & responded by other
firms
• Aggregate size of business markets is often several times larger
than of consumer markets
• Market is vertical when its is very narrow, limited to a segment
of the industry e.g. special purpose equipment
• On the other hand, if the product are sole to very broad &
diverse spectrum of individuals, the market is termed as
horizontal market e.g. multipurpose equipment & MRO supplies
 Marketing Mix Characteristics
• Several marketing mix elements differ between business
marketing & consumer marketing
• There marketing mix elements – popularly know as r p’s
comprising
a. Product- Technical specification, user friendly features etc.
b. Price- Competitive bidding, tendering & negotiations
c. Promotion- direct marketing with sales staff, consultants etc
d. Place (Distribution)- Physical distribution of goods is of prime
importance
• The industrial marketing manager prime task is to evaluate all
these variables & optimize them to achieve the company’s
marketing objectives
it is common to find less than 20 companies to represent the total market for an industrial
product or service.

: Industrial customers also tend to be concentrated in specific areas. Such concentration

occurs mainly because of natural resources and manufacturing processes. Manufacturers
whose production processes add weight to their products tend to locate near customers,
while those whose processes subtract weight tend to locate near sources of input.

An additional difference between the two markets is the nature of oligopolistic buying.
In the industrial arena, oligopolistic buying organizations, organizations that are very
large firms, tend to dominate many markets.
Thank You