Businessmarketing 120324014052 Phpapp01

B
u
s
i
n
e
s
s

M
a
r
k
e
t
i
n
g

Nature of Business Marketing
ISB&M Business Marketing
Business marketing also referred to as Industrial marketing or B2B marketing
or Organizational marketing.
Business marketing is the marketing of products & services to business
organizations.
Business organizations include:
Manufacturing companies
Govt. undertakings
Private sector organizations
Educational institutions
Hospitals
Distributors / Dealers
What is Business Marketing?
Business organizations buy products
& services to satisfy many objectives
like production of other goods &
services, making profits, reducing
costs, & so on.
Consumer marketing is the marketing
of products & services to individuals,
families, & households. The
consumers buy products & services
for their own consumption.
B2B Marketing vs. Consumer Marketing
Areas Industrial Markets Consumer Markets
1. Market characteristics Geographically concentrated
Relatively fewer buyers
Geographically distributed
Mass markets
2. Product characteristics Technical complexity
Customized
Standardized
3. Service characteristics Service, timely delivery &
availability is very important
Service, timely delivery &
availability is somewhat
important
4. Buying behavior Involvement of various
functional areas in both buyer
& supplier firms
Purchase decisions are mainly
made on rational/performance
basis
Technical expertise
Stable interpersonal
relationship between buyers &
sellers
Involvement of family
members

Purchase decisions are
mostly made on physiological
/ social / psychological needs
Less technical expertise
Non-personal relationship
B2B Marketing vs. Consumer Marketing
Areas Industrial Markets Consumer Markets
5. Channel characteristics More direct
Fewer intermediaries
Indirect
Multiple layers of
intermediaries
6. Promotional
characteristics
Emphasis on personal selling Emphasis on advertising
7. Price characteristics Competitive bidding &
negotiated prices
List prices for standard
products
List prices or maximum retail
price (MRP)
Industrial Demand
Derived Demand
The demand for industrial products & services does not exist
by itself. It is derived from the ultimate demand for
consumer goods & services.
Industrial customers buy goods & services for use in
producing other goods & services.
Joint Demand
Joint demand occurs when one industrial product is useful if
other product also exists.
Demand
for pen
Demand
for ink
Cross-Elasticity Demand
Demand is elastic if the %age change in quantity demanded
is more than the %age change in price.
Cross elasticity of demand is the responsiveness of the sales
of one product to a price change in another product.
Demand
for wood
Demand
for
furniture
Demand
for new
homes
Price of
Tea
Back
Industrial Market & Environment
B
u
s
i
n
e
s
s

/

I
n
d
u
s
t
r
i
a
l

c
u
s
t
o
m
e
r
s

C
o
m
m
e
r
c
i
a
l

e
n
t
e
r
p
r
i
s
e

G
o
v
t
.

c
u
s
t
o
m
e
r
s

I
n
s
t
i
t
u
t
i
o
n
a
l

c
u
s
t
o
m
e
r
s

C
o
o
p
e
r
a
t
i
v
e

s
o
c
i
e
t
i
e
s

Industrial
distributors / dealers
Original equipment
manufacturers
Users
Public sector units
Govt. undertakings
Public institutions
Private institutions
Manufacturing units
Non-manufacturing
units
Intermediaries / middlemen, reselling to OEMs,
users, Govt. firms
For Exide (battery manufacturer), Telco, is an OEM
For HMT, TVS-Suzuki is the user
BHEL, ONGC, IOL
Indian Railways, Defence units, State Elec. Boards
Govt. hospitals, prisons
Schools, colleges
Maharashtra Sugar Cooperative Society
Cooperative banks, housing cooperative societies
Industrial Market & Environment
I
n
d
u
s
t
r
i
a
l

p
r
o
d
u
c
t
s

&

s
e
r
v
i
c
e
s

M
a
t
e
r
i
a
l
s

&

p
a
r
t
s

C
a
p
i
t
a
l

i
t
e
m
s

S
u
p
p
l
i
e
r
s

&

s
e
r
v
i
c
e
s

Raw materials
Manufactured
materials
Component parts
Subassemblies
Light equipment or
accessories
Installations or heavy
equipment
Plant & building
Supplies
Services
Basic products like iron ore, crude oil, fish, fruits,
vegetables
Acids, fuel oil, steel, chemicals
Semi-finished parts like bearings, tyres, small
motors, batteries
Semi-finished goods like exhaust pipe in motorcycle
Hand tools, dies, computer terminals
Furnaces, machines, turbines
Offices, plants, warehouses, parking lots, real
estate property
Operating & maintenance suppliers like fuels,
packaging materials, lubricants, paints, elec. items
Legal, auditing, advertising, courier, marketing
research agency
Materials & Parts products, for large OEMs or users, selling is done directly from a
seller organization to a buyer organization.
For smaller volume OEMs & users, standard raw materials or components are sold
through industrial dealers or distributors as it is cost effective.
If the components are custom-made, considerable interaction takes place between
technical & commercial persons from both buyer & seller organizations. Selling is
direct.
Industrial salesman remain in close touch with various departments like purchase,
finance, R&D, marketing, production & quality of buyer organizations as they
influence the buying or payment releasing decisions.
Personal contacts, product leaflets/brochures help as industrial marketer in
communicating product & other information.
For standard products, the factors which influence buying decisions are:
Marketing Implications for Different
Customer & Product Types
Product quality & performance
Delivery dependability
Price
Payment terms
Customer service
Customer rapport
Marketing Strategy for Capital Items,
Supplies & Services
Capital Items (heavy machinery, office buildings, construction of factories etc.)
Direct selling with extensive interactions, involving top executives from both sides.
Negotiations take considerable time on key factors such as price, ROI, credit facilities,
delivery period, installation time etc.
Personal selling is the primary promotional method used.
Suppliers
Direct selling is used for large-volume buying firms.
Distributors or dealers are used to market to diverse markets consisting of small & medium
size companies.
The purchase or materials department generally make buying decisions based on
dependable delivery, price, & location convenience.
Advt. in magazines, trade journals, local newspapers, & yellow pages are used to create
awareness of the company & its products to potential users & distributers/dealers.
Services (consulting, advising etc.)
Buying firms contact the selling firms who have their reputation by way of word-of mouth.
Continuation of service depends upon the quality, price, & timeliness of service.
Business buyers choose one of the three purchasing orientations
Buying Orientation - Firms has narrow & short-term focus.
Lowest price
They follow the practice of Lowest Price where they select the lowest price
supplier.
Quality & availability are the qualifying factors for a supplier.
Negotiation style I win-you lose.
Gain power
Buyer firm gain power over suppliers by applying tactics like Commoditization
all suppliers provide similar technical services, product quality & product
features. Price is the only thing to be negotiated.
Multisourcing the buyer firm asks quotations from various suppliers, & after
negotiations, places order with many suppliers, who compete to get more share of
buying firms purchase.
Purchasing Orientations of Industrial
Customers
Risk
Buyers avoid risk from buying from new suppliers. The tactics used for avoiding
risks are
Follow the standard purchasing procedure of the company.
Depend on suppliers who have proved their performance earlier.
Procurement Orientation Purchasing firm has a strategic (i.e. long term) focus & is
proactive. The buyers seek both quality improvement & cost reduction.
Practices adopted by the company to fulfill the above objectives are:
Collaborative relationship with major suppliers
This results in quality improvements & cost reduction.
The buyer & supplier have inter-firm teams who implement JIT delivery
scheduling & quality assurance to attain zero defects level.
Integrative negotiation resources can be expanded to benefit both buyer &
supplier.
Working closely with other functional areas
Buyers are involved in describing specifications of products & services ensuring
quality & timely availability.
Customers
Supply chain management (SCM) Orientation Focus is on how to improve the value
chain from raw-materials to end users.
Purchasing philosophy
Deliver value to end users
Using market research, the supply managers would understand the requirements
of end-users.
Outsource non-core activities
The firm would outsource those systems or sub-systems that have become non
competitive, are non-strategic, involve mature technology, & have qualified
suppliers.
Support collaborative relationships with major suppliers
Partnering relationship requires cooperation, communication, trust, &
commitment between buyers & suppliers.
The objective is to lower total cost and/or increase value in order to achieve
mutual benefit.
Customers
Customers
Raw Material
Suppliers
Component
&
Subassembly
Suppliers
Final
Assembly
Manufacturer
Intermediaries
(dealers)
Consumers /
End users
SCM Orientation
Procurement Orientation
Buying
Orientation
Back
Purchasing in Commercial Enterprise
Depends on nature of business, size of the enterprise, volume, variety, & technical
complexity of the products purchased.
In large/medium organizations, purchase decision involves persons from departments
like production, materials, quality, finance, engineering, & also senior management
executives.
Various techniques, such as material planning, supplier rating system, EOQ etc. are
used by the buyer organization.
Take use of in-house technical expertise when required.
Major tasks in purchasing process are:
Identifying potential suppliers
Negotiating & selecting suppliers
Ensuring right quality & quantity of material at right time
A long-term business relationship with the suppliers
Many commercial organizations have separated purchasing (material or purchase
function) from manufacturing to form a distinct functional area, on the same level as
marketing, finance, R&D etc.
Purchasing Practices of Industrial
Customers
Purchasing in Govt. Units
Get the name of the company & the products registered with the govt. units.
Registration involves the submission of duly filled standard forms, product leaflets, &
company details certified by a chartered accountant.
Some govt. units depute their inspectors to inspect the companys manufacturing
facilities before approving their registration.
For standard products & services, tender notices are advertised in national
newspapers, based on which suppliers procure tender fees.
In closed & limited tender, tender inquiry is to only few (limited) suppliers who are
registered with govt. unit for certain category of non-standard products.
Based on the lowest price or the lowest landed cost, the orders are released on the
lowest bidder.
If the tender value is large, maximum order is placed on the lowest bidder (L1) & the
balance order is distributed to more than two bidders (L2, L3, L4, .. etc) if they match
the lowest bid.
Customers
Institutional Purchasing & Purchasing in Cooperative Societies
Institutional buyers are either the government or the private organizations.
For govt. organizations, it normally follows the govt. purchase procedure.
An industrial marketer should study the purchasing practices of each institutional buyer
so as be effective in marketing the companys goods or services.
Customers
Purchasing in Resellers Market
Reseller market (replacement market) consists of industrial dealers/distributors whose
main goals are profits & sales volume.
Dealers / distributors select suppliers not only on product quality but also on the
policies of the suppliers product.
Supplier related policies which affect competiveness of traders are
Sharing local advt. cost by the supplier
Providing product leaflets or display materials
Competitive prices & trade discounts
Flexible payment terms with credit facility etc.
Both reseller & supplier has to work harmoniously to beat the competition.
Environmental Analysis in Business
Marketing
E
n
v
i
r
o
n
m
e
n
t

Ecological &
Physical
Internal
External
Air & water pollution, solid waste disposal,
conserving natural resources
Water, power, skilled manpower, low-cost
labor, transportation
Company location, R&D facilities, production
facilities, HR, Financial resources, marketing
effectiveness, reputation or image of the
company
Micro
Macro
Economic
Technological
Govt. & political, & legal
Cultural & social
Public-press, institutional investors,
shareholders, banks, public interest groups
Customers & competitors
Suppliers
Strength & weaknesses analysis
Opportunity & threat analysis
Affects all firms
Affect a
particular firm
Strategies for Managing Industrial
Environment
Effective use of marketing mix such as 4Ps are not adequate for the survival & success in
such a dynamic environment.
The first step is the continuous gathering & monitoring of information on the relevant
external environment. This is done by:
Collecting information on customers & competitors through marketing & field sales
persons.
Analyzing trade & govt. publications.
Carrying out marketing research & economic forecasting.
These activities help the company to:
Understand changes in customer needs.
Monitor competitors actions & strategies.
Identify technological innovations.
Consider the changes talking place in govt., political, & legal factors.
Identify changes in demand of major customers & the total market.
Consider the changes in any other relevant environmental factors.
Environment
The strategies to respond proactively & creatively for managing external environment
Independent Strategies: These are the independent efforts of an industrial firm by using
its own resources (or strengths).
Pricing strategy based on competitors pricing.
Product superiority through product development.
Carry env. protection measure & creates awareness through corporate image advt.
If the product is not performing well, a firm might decide to demarket in that
geographic region.
Cooperative Strategies: An industrial firm cooperates with other firms, industries, or
groups in the environment.
Industry associations like Confederation of Indian Industries (CII) & Federation of Indian
Chamber of Commerce & Industries (FICCI) protect the Indian industries from unfair
political or legal regulations of the govt.
Environment
Strategic Planning: An industrial firm carries out strategic planning by identifying long-
term product/markets, based on forecasts of external env., analysis of its strengths &
weaknesses, & its long-term objectives & goals.
Backward integration A company seeks ownership or control of its supply system.
Eg., Set up new manufacturing plant for the product which earlier was procured from
other supplier.
Forward integration A company seeks ownership or increased control on its
distribution system. Eg., open own branches with warehousing facilities, in place of
agents, in order to improve customer service.
Horizontal integration A company seeks ownership or control of some of its
competitors. Eg., Reduce the competition by acquiring the management control of
some competing firm.
Back
Organizational Buying & Buying Behavior
Purchasing Objectives
The purchase / materials management objective is defined as buying the right items in
the right quantity, at the right price, for delivery at the right time & place.
Delivery / availability Purchased goods are delivered when & where it is needed.
Product quality Consistent quality as per the specifications & product use.
Lowest price Lowest price consistent with availability & quality of the product.
Services Services accompanying the purchase of goods like:
Prompt & accurate information from suppliers
Technical assistance
Spare-parts availability
Repairs & maintenance capability
Training (if required)
Supplier relationship Develop a good long-term supplier/vendor relationship & to
develop new sources of supply.
Buying members are influenced by both purchasing objectives of the firm & personal
objectives like higher status, job security, salary increments, promotions, & social
considerations (friendship, mutually beneficial relationships etc.)
Purchasing Activities
The industrial purchasing/buying activities consists of various phases/stages of buying
decision making process called Buyphases.
Phases in Buying Decision Process
Recognition of a problem or need.
Determination of the application or characteristics & quantity of needed product.
Development of specifications or description of needed product.
Early Supplier Involvement (ESI) Program: Involving purchasing persons as active
members of cross-functional development teams.
Search for & qualification of potential suppliers.
Obtaining & analyzing supplier potential.
Evaluation of proposals & selection of suppliers.
Selection of an order routine. Placements of orders, quantity, frequency, levels of
inventory needed, follow-up of actual delivery to ensure delivery is as per schedule,
payment.
Performance feedback & post-purchase evaluation.
Supplier Evaluation System
Attribute (Factors) Weight (Importance) Supplier
performance
Supplier Rating
Quality 30 0.8 30 X 0.8 = 24
Delivery 25 0.4 25 X 0.4 = 10
Price 15 0.6 15 X 0.6 = 9
Service 20 0.6 20 X 0.6 = 12
Flexibility 10 0.2 10 X 0.2 = 2
Total 100 57
The supplier(s) who gets the highest total score receives the business or the order form
from the buying organization.
Supplier Evaluation - Balanced Scorecards
Technique
The BSC is a new technique or framework that can be used to evaluate supplier performance in
information age companies. It translates a companys mission & strategy into a set of performance
measurements.
The Balanced Scorecard (BSC) Framework
Financial
To succeed financially,
Company should focus on
financial objectives that will
satisfy shareholders.
Learning & Growth
How can company improve &
change to achieve its
mission?
Customer
Which customer value
company should focus on to
achieve its mission?
Internal-Business-Process
To satisfy shareholders &
customers, what business
process company must excel
at?
Mission
&
Strategy
Internal-Business-Process
Identify Customer
Needs & Market
Design & Develop
Product/Services
Make/Buy
Products/Services
Market
Products/Services
Satisfy Customer
Needs
Innovation Processes
O
p
e
r
a
t
i
o
n
s

P
r
o
c
e
s
s
e
s

Company executives should identify the key internal
processes in which the company must excel in order to
deliver superior customer value
satisfy shareholders with excellent financial
performance
Buying Situations
Three types of buying situations also called buyclasses.
New purchase (or New Task) In this situation the company is buying the item for the
first time.
Risk is more
Decision takes longer time
More people are involved in decision making
Change in supplier (or Modified Rebuy) This situation occurs when the company is not
satisfied with the performance of the existing supplier, or there is a need for cost
reduction or quality improvement.
Repeat Purchase (or Straight Rebuy) This situation occurs when the buying
organization requires certain products or services continuously & when such
products/services has been purchased in the past.
Buying Centre or Decision making Unit
(DMU)
The buying center is a useful tool which answers the question Who are involved in
buying decision in an industrial organization?
Buying Center Roles
Initiators This category includes individuals who first recognize a problem or a need,
which could be resolved by purchase of a product or service. Often users play this role.
Buyers Their major responsibility includes
Obtaining quotations
Supplier evaluation & selection
Negotiation
Processing purchase orders
Expediting deliveries
Implementing purchasing policies of the organization
They are usually purchase officers.
Users Individuals who use the product or service that is to be purchased. They may be
floor workers, R&D engineers etc.
(DMU) contd..
Influencers People who can influence the buying decision like technical people (QC
engineers, design engineers etc.)
Deciders People (Senior executives / purchase executives) who make the actual buying
decisions.
Gatekeepers People who control/filter the flow of information regarding
products/services to the members of buying center.
Key members of Buying Centre
Top Management Persons (MD, President, VP, GM etc.)
Generally involved in -
Purchase policy decisions like diversification into a new product/project
Approval of purchase or materials department annual budgets & objectives
Deciding the guidelines for purchase decisions
Technical Persons (Design Engr., Prod. Mgr., Maintenance Mgr., QC Mgr., R&D Mgr.,
Industrial Engr. etc.)
Generally involved in product specification, technical evaluation, negotiation with
suppliers, performance feedback of product supplied etc.
(DMU) contd..
Key members of Buying Centre
Buyer/Purchasers or Purchase Dept. (Sr. Exe., Managers, Purchase Officers or
assistants)
Generally involved in -
Coordinate with Top Management, Technical persons, Finance persons within
the org. as well as with suppliers.
Maintain good relationship with Suppliers & Decision making members.
Accounts/Finance Persons (or Dept.)
The contribution of finance/accounts are seen while finalizing commercial terms
such as mode of payment, financial approval of capital purchases, issuing payments
to suppliers etc.
Marketing Function
Ensure the product is marketable (packaging).
Models of Organizational Buying Behavior
- The Webster and Wing Model
Environmental Variables
Physical
Technological
Economic
Political & legal
Labor unions
Cultural
Customer demands
Competitive practices &
pressures
Supplier information
Organizational Variables
Objectives/goals
Organization structure
Purchasing policies & procedures
Evaluating & reward systems
Degree of decentralization in
purchasing
Buying Centre Variables
Authority
Size
Key influencers
Interpersonal relationship
Communication
Individual Variables
Personal Goals
Education
Experience
Expertise
Values
Job Position
Lifestyle
Income
Organizational Buying Decisions
Choice of suppliers
Delay decision & search for more
information
Do not buy
Models of Organizational Buying Behavior
- The Sheth Model
Component (1) Component (2) Component (3) Situational Factors
Differences among
individual buyers
caused by factors:
Background of
individuals
Their
information
sources
Active search
Perceptual
distortion
Satisfaction with
past purchases
Variables that
determine if the
buying decision is
autonomous or
joint:

(A) Product specific
factors -
Time pressure
Perceived risk
Type of purchase

(B) Company
specific factors
Company size
Company
orientation
Degree of
centralization
Methods used for
conflict resolution in
joint-decision making
process
Problem solving
Persuasion/influence
Politicking
Supplier or
Brand choice
Situational Factors
Economic condition
Labor disputes
Mergers & acquisition
Buyer-Seller Relationship
Buyer-Seller Relationship
Development of mutually satisfying, profitable, long-term relationships with
customers is a major business asset of an industrial marketer.
Dimensions
of Buyer-
Seller
Relationship
Buyers
perception of
sales rep
Role played
by industrial
buyer
Role played
by industrial
sales rep
Is the
industrial
buyer rational
or irrational
Buyer-Seller Interaction A Conceptual
Framework
Ideal
Transaction
Inefficient
Transaction
Inefficient
Transaction
No
Transaction
Compatible Style Incompatible Style
Compatible
Content
Incompatible
Content
Styles of interaction
Self-
oriented
Interaction
Oriented
Task
Oriented
Relationship Marketing
Relationship marketing is a task of creating strong customer bond or loyalty.
Approaches
for
developing
customer
bond
Add financial
benefits
Add social
benefits
Add structural
ties to
financial &
social
benefits
Transaction marketing is
transaction oriented buyer-seller
interaction, which focuses on
closing a sale with a customer.
This is achieved by single sales
person.
For large customer, companies
are moving towards team selling
& relationship marketing.
Methods used to influence Industrial
Customers
Sales Presentation
Get information about the buying centre members, needs of potential customer
firms.
A sales presentation must be tailor made to fit the needs & expectation of the
potential customer.
A sales presentation should first present the positive points about his products,
services & company, & keep difficult or negative points at the en.
Project the products/services as differentiator.
Negotiation with Industrial Customers
Negotiation is a process that tries to maximize the benefits to both buyer & seller,
& takes long-term view of their relationship.
Purpose | Information | Customer Trust | Styles of negotiation | Time factor
Styles of negotiation
I win, you lose | Both of us win | You win, I lose | Both of us lose

Methods used to influence Industrial
Customers contd..
Reciprocity
It is a practice of buying from ones own customers & also using purchasing power
to sell to ones supplier.
When products are homogenous or products have little differentiation & price
competition are less, reciprocal dealings are likely to occur.
Caution must be exercised to keep it to minimum level.

Dealing with Customers Customer
One of the complexities in Industrial marketing is the need to deal with a
customers customer & become the customers competitor.

Customer Service
In B2B, customer service is sometimes more important
than the physical product.
Customer service supplements the sales of physical product &
creates a total value for a customer.
The nature of customer service varies with the type of
the product & the stage of PLC.
Types of Relationship
It include one-time-only exchanges with economy & necessity as the main
motivation factors.
Customers prefer a transactional relationship, when (a) many suppliers are
available, (b) the supply market is stable, (c) the purchase decision is not
complex, & (d) the purchase is considered as less important to meet firms
objective.
Transactional
Exchanges or
Relationships
The focus is on complete understanding of the present & future needs of the
customer, & meeting those needs better than competitors, so as to obtain a
maximum share of the customers business.
Value-added
Exchanges
The focus is between a customer firm & a supplier firm, & it is the process of
building strong social, economic, service, & technical ties over a period of time.
The purpose of partnering is to lower the total cost or increase value, in order
to achieve mutual benefits.
Collaborative
/ Partnering
Exchanges
Marketing Strategies
Concentrated Marketing - is a market segmentation and market coverage strategy
whereby a product is developed and marketed for a very well-defined, specific segment of
the consumer population. The marketing plan is highly specialized one catering to the needs
of that specific consumer segment. Concentrated marketing is particularly effective for small
companies with limited resources because it enables the company to achieve a strong
market position in the specific market segment it serves without mass production, mass
distribution, or mass advertising.
Differentiated Marketing - also called multisegment marketing. It is a market
coverage strategy whereby a company attempts to appeal to two or more clearly defined
market segments with a specific product and unique marketing strategy tailored to each
separate segment.
Undifferentiated Marketing - market coverage strategy whereby a company ignores
differences within a market and attempts to appeal to the whole market with a single basic
product line and marketing strategy. Undifferentiated marketing relies on mass distribution
and mass advertising, aiming to give the product a superior image in the minds of
consumers. It is cost effective because there is only one product line to be produced,
inventoried, distributed, and advertised. Also the absence of segmented market research
lowers the costs of consumer research and product management.
Marketing Strategies
4 criteria - mostly used in Business Marketing:
Technological Contributions
Dependence
Purchasing Orientations
Sales Potential (or Business Potential)
Information for each customer is obtained by the sales person
Customer are categorized into A, B, & C based on high, medium, & low
business potential
Type A Collaborative relationship
Type B Value-added
Type C Transaction relationship
B2B Marketing through E-commerce
What is E-commerce?
E-commerce is defined as a modern business methodology that addresses the needs of
organizations & consumers to cut costs, improve the quality of goods & services, &
increase the speed of service.

It is also defined as the process of using digital technology for transmitting information
between organizations.
Important parts of E-commerce
Internet
World Wide Web (WWW)
Intranet
Extranet
Marketing Strategy for Electronic Market Place
Major Components of Marketing Strategy
Segmenting & Targeting
Product Differentiation & Positioning
Identifying the target customers wants in terms of major benefits
Selecting one or more benefits or niche for differentiation based on
companys strengths or distinctive competencies
Communicating the companys positioning to the target market
Marketing-mix Strategies, i.e., Product, Price, Promotion & Distribution Strategies
Web-design
Domain name
Distribution channel
Logistics
Distribution Channels
Manufacturer
Mfgs Rep /
Agents
Mfgs Sales
force /
Branches
Value-
added
Resellers
Distributor
/ Dealer
Direct
Marketing
Brokers
Commission
Merchants
Distributor
/ Dealer
Industrial Customers
Telemarketing Direct Mail
Online
Marketing
Channel Design Framework
Channel Objective
Channel Alternatives
Evaluation of Alternative
Selection of Channel
Channel tasks
Channel Constraints
External
environment
Competition
Company
Product
Characteristics
Customer
The type of
intermediaries
VARs
Industrial distributors /
dealers
Manufacturers agents
Brokers
Commission merchants
No. of intermediaries /
channels
Selective distribution
Intensive distribution
Exclusive distribution
Terms & responsibility of
channel members
Economic factors
Control factors
Adaptive factors
Logistics Management Business Logistics System
Raw materials
Components
Supplies
Material Storage
Manufacturing
Finished goods
storage
Physical supply Industrial manufacturer Physical distribution
Industrial customers
Industrial distributors /
dealers
Tasks
Transportation
Warehousing
Inventory control
Packaging
Material handling
Order processing
Communication
Factory & warehouse
locations
Customer service
Total Distribution Cost = Freight + Warehouse Cost + Inventory Cost + Cost of Lost
Sales due to Delayed Delivery
Marketing Research & Intelligence
Marketing Research & Marketing Intelligence
Marketing research is defined as the objective & systematic process of obtaining,
analyzing, & reporting of data (or information) for decision making in marketing. It
undertakes periodic projects to collect & analyze data with specific objectives.

Marketing Intelligence is an ongoing activity to provide continuous information for
decision making.
Areas of survey methods Industrial Research Consumers Research
Sample size Small sample due to small
universe (or population) &
concentration of buyers
Large sample due to large
dispersed population
Respondent cooperation &
accessibility
More difficult due to time
constraints; accessibility is
limited to working hours
Less difficult to obtain data;
accessibility is easier
Defining respondent More difficult as buying
decisions are made by several
members of the buying
committee
Simple, as individuals or
household users are the buyers
Difference between survey method
Scope of Industrial Marketing Research
Development of Market potential
Market Share Analysis
Sales Analysis
Forecasting
Competitor Analysis
Benchmarking
New Product Acceptance &
Potential
Business Trend Studies
Sales Quota Determination
Information
type
Sources of
data
Research
methods
Sampling plan
Method of
contacts
Data collection
method
Marketing Research Process
Identify the
problem /
opportunity &
define research
objective
Develop research
design (or plan)
Collect the data (or
information)
Process & analyze
the data
Present the
research findings
(or report)
Primary data
Secondary data
Observational | Exploratory | Survey |
Experimental
Industrial marketing Intelligence
Secondary
data
sources
Marketing
Intelligence
System
Decision
Support
System
Marketing
Strategy
Development
Market
response
Internal
Information
System
Marketing
research
studies
Components of DSS
Statistics
Marketing Manager
Database
Decision
models
Display
Environment
Question Answer
Action
Strategic Planning, Implementing &
Controlling
Market-Oriented Organizations
Market-oriented organizations stay
close to the customers & ahead of
the competitors.
They understand the basic principle
that the purpose of a business is to
attract & satisfy customers at a
profit.
An effective strategic planning
includes market-oriented strategies
in which marketing function has an
important role.
Shared
Values
Organization
Strategy
Stakeholders
Factors Affecting the Market Orientation
Marketing in Strategic Planning
Functional Strategy
(Operations Mgmt.)
Business/SBU Strategy
(Strategic Mgmt.)
Corporate Strategy
(Strategic Mgmt.)
Corporate
Office
SBU A
Finance Marketing Production
SBU B SBU C
Strategy hierarchy
(Type of management)
Organization
structure
Role of Marketing in an Organization
Organizational Level Role of Marketing Formal Name
Corporate Provide information on competition & customer,
& advocate customer orientation for developing
long-term corporate strategy
Corporate
marketing
Business Unit / SBU Provide competition & customer analysis for
developing long-term business strategy, including
competitive advantage
Develop segmenting, targeting, & positioning
strategies
Take product-line decisions
Strategic
marketing
Functional Evolve & implement marketing-mix strategy in
short-term to achieve business unit objective
Coordinate marketing activities
Allocate resources
Marketing
management
Developing Corporate Strategies
Market penetration
strategy
Product
development
strategy
Market
development
strategy
Diversification
strategy
Concentric diversification
Horizontal diversification
Conglomerate
diversification
Product-
Market
Expansion
Grid
Current products New products
Current
markets
New
markets
Strategic planning gap is
filled by:
Intensive growth
Integrative growth
Diversification growth
Concentric diversification: consists
of searching for new products that
have technological / marketing
synergies with firms existing
products.
Horizontal diversification: consists
of adding new products
technologically unrelated to the
existing products.
Conglomerate diversification:
consists of seeking new product-
markets that are unrelated to
existing products.
Strategic Planning Process at BU Level
Define the business units mission
Scanning the ext. env. (Opportunity & threats)
Analysis of the int. env. (Strength & weaknesses)
Developing objectives & goals
Formulating strategies for achieving the goals
Preparing programme or action-plan from the strategies
Implementing the strategies & action-plan
Monitoring results & taking corrective actions (i.e., control)
Business Units Mission
The business mission statement should have the following components:
What business the company is in, & What business it intends to be in?
What methods would be uniquely followed (which are different from competitors) in
pursuing business activities?
What is the social standing of the organization as a business entity?
What business the company is in? [Thermometer manufacturer]
Customer groups/segments: Who are being satisfied? Which customer groups an SBU
intends to satisfy? [Household/Hotels/Health care/ Factories]
Customer needs or functions: What needs of customers are being satisfied? [Body
temperature/Cooking temperature/Atmospheric temperature/ Process temperature]
Technologies used: How customer needs are satisfied? [Mercury-base/Alcohol-
base/Digital]
SBUs Objective & Goals
Corporate mission
SBU Mission
Corporate objectives & goals
SBU objectives & goals
SBUs business strategy
Marketing strategy
Company history
Current preferences
Market environment
Companys resources
Companys core competence
Formulating Strategies at BU Level
Focus
Differentiation
Overall cost
leadership
Uniqueness perceived
by the customer
Low-cost position
Strategic Advantage
S
t
r
a
t
e
g
i
c

T
a
r
g
e
t

Industry wide
Particular
segment only
Porters Generic Strategies Framework
Developing Industrial Marketing Plan
Section Contents
Situational analysis Market situation Includes data on market size, growth, projections, sales,
market share , & profits for past 3/5 years. It also indicate
target customer needs, buying behavior, buying stage, &
buying situations.
Competitive situation Consists of identifying, ranking, market share, objectives
& strategies, strength & weaknesses, & reaction patterns
of major competitors.
Product situation Includes data on sales, unit price, profits for each major
product item in the product line for past 3/5 years.
Macro-env. situation Consists of identifying PEST factors & then forecasting
the future trends & the impact on the product.
SWOT & issues
analysis
SWOT analysis Includes identifying major strengths, weaknesses,
opportunities, & threats faced by the product.
Issues analysis Consists of determining major issues faced by the firm,
based on situational & SWOT analysis.
Objectives & goals Determine sales, market share, & profit, considering the
env. & issues analysis done earlier.
Developing Industrial Marketing Plan
Section Contents
Marketing strategy Selection of target market segments.
Positioning strategy relative to competitors.
Marketing-mix strategy.
Customer service & marketing research strategy.
Action plan Each marketing element is broken down to specific actions to answer:
Who will take the specific action, by when, & at what cost?
Marketing budget Building the revenue & expenditure budget. Revenue budget includes
forecasted sales in units, average unit price, & sales revenue. Expenditure
budget includes estimated marketing expenses on personal selling,
promotion, distribution, etc.
Implementation & control Building marketing org. to implement the marketing plan. Control
includes periodic review of actual performance against goals & taking
corrective actions.
Contingency plans Some firms prepare contingency plans in case uncertain situation arise.
Controlling Marketing Performance
Setting Goals
Performance
Measurement
Performance Analysis
Taking Corrective
Actions
Types Marketing Controls
The firms marketing opportunities & strategies
Use of information technology
Impact of changing environment
Strategy implementation
Strategic Control
(Marketing audit)
Sales analysis
Market share analysis
Expense-to sales ratio
Profit/contribution analysis
Customer satisfaction monitoring
Annual Plan
Control
The control system provides information on the
resources like money & manpower used in product,
promotion, distribution, & pricing strategies &
tactics
Efficiency Control
Purpose is to find if the company is making or loosing money
Companies measure the profitability of each product-line & product-
item, each market segment, each branch, & each distribution
channel
Profitability
Control
Product Strategy & New Product
Development
What is an Industrial Product?
The industrial product is defined not only as a physical entity, but also as a complex
set of economic, technical, legal, & personal relationship between the buyer & the
seller.
From customers point of view, a product is a
combination of basic, enhanced, & augmented
properties.
Basic properties are included in the
generic product, with fundamental
benefits sought by the customer.
Generic products are made differentiable
by adding tangible enhanced properties
like product features, styling, & quality.
Augmented properties include intangible
benefits such as technical assistance,
availability of spare parts, maintenance &
repair services, warranties, training,
timely delivery, & attractive commercial
payment terms.
Changes in Product Strategy
Factors
determining
change in
product
strategy
Customer
Needs
PLC
Govt.
Policies /
Law
Technology
Industrial Product Life Cycle General Model
Technological
Changes
Changing
Competition
Changing
needs of
customer
The behavior of PLC depends on
three factors on which
management has little or no
control.
Industrial products typically follow the
pattern of sales & profits.
Different marketing strategies are needed
at different stages of PLC.
The PLC concept highlights the importance
of long-term planning for a new product.
Time
Introduction Growth Maturity Decline
0
-1
+1
S
a
l
e
s

&

P
r
o
f
i
t
s

(
R
u
p
e
e
s
)

Industry
profits
Industry
sales
Industrial Product Life Cycle High-tech Products
Time
NPD
I&G
Decline
S
a
l
e
s

M
NPD = New Product Development
I&G = Introduction & Growth
M = Maturity Period
Locating Industrial Products in their Life-
Cycle
Develop a trend analysis for the past 3-5 years based
on information for a product on quality, value of
sales, profit %, market share, no. of competitors &
prices.
Analyze competitors market share, product
performance, new product introduction,
diversification or expansion plans.
Estimate & project sales & profits of the
product over the next 3-5 years.
From the above analysis, fix the products
position on its life-cycle curve.
Developing Product Strategies for Existing
Products
Evaluate the performance of all existing products or product
lines by using product evaluation matrix.
By using perceptual mapping technique, examine the
relative strengths & weaknesses of the companys products
in comparison to competitors products.
Based on the above analysis, decide the product strategies
for the existing products.
Product Evaluation Matrix
Decline Stable Growth
Below
Target
Target Above
Target
Below
Target
Target Above
Target
Below
Target
Target Above
Target
Growth
Dominant
P
Average
Marginal
Stable
Dominant
S1
Average
S
Marginal
Decline
Dominant
Average
Marginal
Industry
Sales
Mkt
Share
Company Sales
Profitability
Market Share less than 10% = Marginal
Market Share between 10% to 30% = Average
Market Share greater than 30% = Dominant
Product P (Last 3 years)
Market Share = 40%
Company Share = 30%
Industry Sales = 25%
Profitability = as / target
Product S (Last 3 years)
Market Share = 12%
Company Share = 15%
Industry Sales = 16%
Profitability = below target
Perceptual Mapping Technique
B*
C*
High Quality
Low Quality
W
e
a
k

S
e
r
v
i
c
e

S
t
r
o
n
g

S
e
r
v
i
c
e

A1*
A*
Old
Position
New
Position
This technique is used to study
the strengths & weaknesses of
a firms product in comparison
to that of its competitors.
Deciding Product Strategies
Maintain the product & its
marketing strategy.
Modify the product &
change the marketing
strategy.
Eliminate the product or
product line.
Add new products or
product lines.
Product Elimination
Dropping the product or product line is the most controversial decision as many
stakeholders are threatened by this decision.
Factors to be considered:
Will the customer relationships be affected?
Will the profitability be affected due to change in overhead allocation?
What will be the reaction of the employees?
Will the sales of other products get affected?
Is there a new product to replace the eliminated product?
Will the companys image be affected?
What will be the possible competitive reactions?
New Product Development
Classification of New Products:
Products that are innovative & new to
the world.
Products that are new to the
company, but not new to the world.
Revisions or improvements to the
existing products in the existing
markets.
Additions to the existing product lines
with additional markets.
Repositioning existing products to
new market segments.
Products with substantial cost
reductions without reduction in
performance.
New-Product Development Process
Idea generation
Idea screening
Concept development & testing
Business analysis
Product development
Market testing
Commercialization (Product Launch)
Is the new product in line with the
long-term objectives & strategies?
Do we have adequate resources?
Is it useful to the customers?
What is the future growth, market
size, & competition?
A detailed version of the
product idea that is
stated in a meaningful
customers terms.
The purpose is to develop an
estimated projection of the
sales, costs, & profitability of
the new product for 5-7
years.
Design Process Engr. Tooling Mfg
Final product Testing
Alfa & Beta testing
Introduction at trade shows
Testing at distributors/dealers
showroom
Test marketing
High-Tech Marketing
High-Tech includes a wide range of industries such as telecommunications, computers,
software, biotech, & consumer electronics.
Technology
Product
Technology
Process
Technology
Management
Technology
Two major characteristics that
distinguish hi-tech marketing are:
High Technological Uncertainties
High Market Uncertainties
Other characteristics that
distinguish hi-tech marketing are:
High Competitive Volatility
Short life or High-tech products
High Development Cost
High Technological Uncertainties
Will the product function as promised?
Will the promised delivery be met?
Will the supplier give high quality service?
Will there be a risk of obsolescence?
Will there be any side effects of the new Product/Service?
High Market Uncertainties
Which are the customer needs that new technology can meet?
How will needs change in future?
Will the market accept technical standards?
How fast will the innovation spread?
What is the size of the potential market?
Classification of Marketing Situations
Better
Mousetrap
Marketing
High-tech
Marketing
Low-tech
Marketing
High-
fashion
Marketing
Low High
Low
High
Market Uncertainty
T
e
c
h
n
o
l
o
g
i
c
a
l

U
n
c
e
r
t
a
i
n
t
y

Low-tech marketing includes known
technology applications to meet
clear & well known market needs.
E.g., Pump sets
Hi-fashion marketing consists of
known & slow changing technology
applications to meet difficult to
predict consumer needs. E.g.,
Motion pictures, fashion clothes.
Hi-tech marketing consists of
difficult to predict both technology
applications & market. E.g.,
Biotechnology products.
Better mousetrap marketing
includes a new technology to meet
well-established market. E.g., Water
purifying system.
Technology Adoption Life Cycle
Innovators
(3%)
Early adaptors
(14%)
Early majority
(34%)
Late majority
(34%)
Laggards
(16%)
Time of Adoption of Innovation
Unique nature of High-tech Marketing
Strategy
Target a Niche
market
Plan Whole
Product
Properties
Develop
Partnerships
Unique
Positioning
Strategy
Communication
Strategy
Distribution
Strategy
Pricing Strategy
Business Communication
Steps to Develop Effective Communication
Determine the communication objectives
Identifying the Target Audience
Determining the Promotional Budget
Develop the Message Strategy
Select the Media
Evaluate the Promotional Results
Integrate the Promotional Programme
Role of Advertising in Industrial Marketing
Creating awareness
Reaching members of buying centre
Increasing sales efficiency & effectiveness
Efficient reminding
Sales lead generation
Supporting distribution channel members
Promotional Tools & Media
Promotion
Tools
Advertising Sales
Promotion
PR & Publicity Direct
marketing
Personal
Selling
Promotion
Media, &
Promotion
Support
Print media Trade shows Charitable
donations
Direct mail Sales calls
General business
publications
Exhibitions Adopting
villages
Telemarketing Sales
presentation
Trade journals Catalogues Community
relations
On-line
marketing
channels
Team selling
Industrial
directories
Sales contests News item in
press
Relationship
marketing
Promotional
novelties (gifts)
Seminars
Promotional
letters
Entertainment
Pricing Strategies & Policies
Pricing & Factors Influencing Pricing
Decision
Pricing is the process of
determining what a company will
receive in exchange for its products.
Pricing factors are manufacturing
cost, market place, competition,
market condition, and quality of
product.
Pricing objectives
Survival
Maximum short-term profits
Maximum short-term sales
Maximum sales growth (Market
penetration)
Maximum marketing skimming
Product-quality leadership
Demand analysis
Cost analysis
Break-even analysis
Competitive analysis
Government regulations
Price discrimination
Predatory pricing
Cost Behavior at Different Production Levels
Economies of Scale
0
100 200 300
200
100
300
240
Quantity Produced / Year (in thousand)
C
o
s
t

/

U
n
i
t

(
i
n

r
u
p
e
e
s
)

The Pricing Strategies
Competitive bidding in competitive markets
Probabilistic bidding
Pricing new products
Skimming strategy
Penetration strategy
Pricing across the product life-cycle
Growth stage pricing
Maturity stage pricing
Decline stage pricing
Thank You

Businessmarketing 120324014052 Phpapp01

Загружено:

Сведения о документе

Исходное описание:

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Businessmarketing 120324014052 Phpapp01

Загружено:

Авторское право:

Доступные форматы

B

Вам также может понравиться