8. Industrial Marketing

8/6/2019 8. Industrial Marketing

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Marketing Application & Practices

INDUSTRIAL MARKETING

INDUSTRIAL PRODUCT (Defn)

It is the Product or Service which is offered toManufacturing, Trading or ServiceOrganisations or to Professionals orProfessional Institutions for their use infunctioning towards their business objective/s.


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INDUSTRIAL MARKETING (Defn)

It refers to the process of marketing suchindustrial products or services

HOW IS IT DIFFERENT ?

(a) Focused more on relationship

(b) Approach differs for each market


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INDUSTRIAL PRODUCTS Core Product : functional performance

Augmented Product : peripheral productAdditional features

Packaging

Sales Promotion

Before / After Sales Service Company Reputation

Availability / Reliability of delivery commit.

Prices


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CLASSIFICATION OF INDUSTRIAL GOODS

Equipments :

Equip organisations for their stated purpose

Materials & Supplies :

Used in Production for resale

Services :Facilitate the functioning of the organisation


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INDUSTRIAL MARKETINGIncludes all organisations that acquire goods& services used in production of otherproducts or services that are sold, rented or

supplied to othersE.G. Manufacturing, mining, banking,construction, transportation, finance,communication etc.

Key characteristics1. Few buyers

2. Larger buyers

3. Close supplier customer relationship


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INDUSTRIAL MARKETING CUSTOMERS

Various types :

1. Producers of goods & services

2. Middlemen3. Government units

4. Non-profit organisation

Are they different from end consumer ?

Less emotional

Focus is economy


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MARKET SEGMENTATION

It refers to offering different products, prices,distribution, promotion and / or supportservices to different customer segments

When all elements of Marketing Mix are

differentiated for each market segment, youhave a perfect Segmentation strategy.


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MARKET SEGMENTATION OFINDUSTRIAL PRODUCTS

1. What is brought ?

Type of Product

Range of Product Full Line / Niche

What need does the Product satisfy Std Product / variance / Non Std

Capital Goods / Consumables

High Value / Low Value


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2. Who buys it ?

Offices / Manufacturing Industries / ServiceIndustries / Professionals

Type of Industry / Service

Geographical location

Customer Govt / Public / Private

Size of Customer

Heavy User / Light User


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3. Why is it bought ?

Price Lowest / Value for Money / PremiumProduct

Technology Latest / Proven

Aspects determining Customers perception ofquality

e.g. Aesthetics, Durability etc


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INTERNAL CUSTOMERS1. Operators ( ease of use)

2. User dept (Up time)3. Maintenance dept ( less / no maintenance)

4. R & D dept ( Technology ?)

5.

Materials / Purchase (Cost / delivery)6. Finance dept (actual cost)

7. Personal ( how safe is product)

8. C.E.O. ( value for money)


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Buying chain members1. Gatekeeper/s

2. Influencer/s

3. Decision maker/s

4. Buyer / purchaser

5. User

The composition of above members is alsoknown a buying center

Period for purchase in Industrial marketingvaries from a day to several months


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THE BUYING PROCESS

1. Recognition of Need receipt of requisition

2. Make or Buy Decision3. Purchase

From single supplier On the basis of past purchase

On the basis of fresh negotiations From multiple suppliers

On the basis of past purchase

On the basis of fresh negotiations

On the basis of Tenders


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INDUSTRIAL MARKETINGTHE BUYING PROCESS

4. Tenders : Open (Advertised / Public Openings)

Closed (Advertised / No public opening)

Limited (By invitation only)

5. Selection among Supplier Integrity

Meeting / Exceeding Specs

Quality

Delivery Time

Pre / After Sales Service

Company Reputation

Commercial Terms


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THE BUYING PROCESS

6. Information Sources :

Own company record

Other company reference / Published literature

Catalogues / Exhibitions / Seminars /Presentations

7. Placement of Order

8. Order Follow up

9. Receipt & Inspection of Products &Documents

10. Payment


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Buyer Seller Relationship

More of partnership

Mutual trust

Long term outlook

Closely tied firms often work at lowertotal costs simply by reducing the risks& uncertainties


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Lower prices are possible with :

Back to back understanding

Annual rate contract

Large volumes

5 key dimensions that help buyer & sellerrelationships :

1. Co operation

2. Information sharing

3. Operational linkages

4. Legal bonds

5. Relationship specific adaptations


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Co Operation efforts treats problem asjoint responsibility

Information sharing could be risky

Operational linkages may help in reducingthe total inventory cost

Powerful customers may controlrelationship

Buyers may look for other sources toreduce risks

Reciprocity may influence relationship in

big way


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TYPES OF PROMOTION

1. Telephone Directory / Yellow Pages

2. Trade Directories / Publications

3. Journals

4. Press Advertising

5. Direct Marketing

6. Tele Marketing

7. Catalogue / Company Literature

8. Seminars / Exhibitions

9. Give Away


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FACTORS INDICATING PRODUCT DELETION

1. A declining volume of sales

2. A falling rate of profit

3. A declining share of the market

4. The appearance of a substitute thatrepresents an improvement

5. An increase in cost of production6. A declining market

7. The need for constant executive attention to

prevent loss


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Vendor approval / classification

1. Data gathering

2. Data analysis

3. Visit to vendor works

4. Vendor approval / registration

5. Vendor classification

This helps in limiting the competition for eachtype of product category

Unless vendor is approved the process of sale

cannot start


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NEW - TASK

BUYING

MODIFIED

RE-BUY

STRAIGHT

RE-BUY

TIME REQUIRED HIGH MEDIUM LITTLE

MULTIPLE INFLUENCE HIGH SOME LITTLE

REVIEW OF SUPPLIER HIGH SOME NONE

INFORMATION REQUIRED HIGH MEDIUM LITTLE

CHARACTERISTICS

TYPE OF PROCESS

ORGANISATION BUYING PROCESS


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INDUSTRIAL MARKETING -DISTRIBUTION

WHY REQUIRED ?

1. Cost of Contacting Customers

2. Channel reach selling support3. Channels influence

4. Faster response

5. Faster Order Execution6. Easy Payment

7. Better Pre-sales/After sales service


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INDUSTRIAL MARKETING -DISTRIBUTION

TYPES OF CHANNELS

1. Sales Agent

2. Wholesaler

3. Retailer

4. Authorised Service Center

5. C & F / Storage


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INDUSTRIAL MARKETINGKEY PERFORMANCE INDICATORS OFSALES ACTIVITIES

1. Sales / Target (%)

2. Orders / Quotations (%)

3. Margins / Sales (%)

4. Cost of Sales / Sales (%)

5. Sales Value / Number of Order (%)6. Orders / Calls (%)

7. Key Account Contact

8. New Customer Orders / Orders


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INDUSTRIAL MARKETINGKEY PERFORMANCE INDICATORS OFSALES ACTIVITIES (cont.)

1. Calls per day / Face to face time

2. New Prospects called

3. Credit Orders / Total Orders (%)

4. Calls to build Customer

Relationship5. Discounts / Sales (%)

6. Timely Submission of reports

7. Timely submission of Itineraries


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INDUSTRIAL MARKETING -NEGOTIATION

Defn : Negotiation is the process ofdetermining what the other side really desiresand reaching an agreement so that they getwhat they want while you get what you want

Pre Requisites :

1. Is the issue negotiable

2. Are the negotiators interested in

compromise trading value for value ?3. Do they trust each other, at least to some

extent

4. Do they have the authority to come to an

agreement ?


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Styles of Negotiation : Lose Lose (No desire for agreement)

Win Lose (Competitive)

Lose Win (Lose now for future) Win Win (Co operative, problem solving)

Modified Win Win (Both feel they have won)

5 Ps of Negotiation :

Positive attitude The will to succeed Preparation before negotiation

Problem solving approach

Probing during negotiation

Promote yourself, company & product


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Crucial Factors :

Information / preparation required

Evaluating bargaining power Opening the Negotiation

Rules of Conduct

Handling difficult personality types

Understanding devious negotiationtactics

Follow - up