Nature of Industrial Marketing

By
Mahendra Singh
Industrial Marketing
Business-to-Business (B2B) and Organizational
Marketing.
Business-to-Business direct marketing involves the
process of providing goods and services to industrial
market intermediaries, as opposed to ultimate (final)
consumers

Industrial goods are differentiated from final consumer
goods based on their ultimate use


Definition: the creation and management of mutually
beneficial relationships between organizational
suppliers and organizational customers.

Customer can be private firm, public agency, or
nonprofit organization.
2
Marketing Concept
Three major components:
All company activities should begin with,
and be based on, the recognition of a
fundamental customer need.
A customer orientation should be
integrated throughout the functional areas
of the firm: production, engineering,
finance, R&D.
Customer satisfaction is viewed as the
means to long-term profitability goals.
3
4
Follower Interact





Isolate Shaper
Customer
Focus
Low Technology Focus High
High
Low
Strategic Focus Grid
Market Orientation
Acquire intelligence from the external
environment.

Disseminate that intelligence
throughout the organization.

Respond to the intelligence: take
action.
5
Marketing Mission Statement

State in terms of meeting customer
needs, not in terms of products or
technologies.

Marketing Myopia (Levitt 1960 HBR)
6
Marketing Activities
Identify customer needs
Research customer behavior
Divide market into manageable segments
Develop new products/services
Establish/negotiate prices
Deliver, install, service products
Ensure adequate and timely supply of
products at correct place
Allocate resources across product lines
Communicate with customers
Evaluate/control marketing programs
7
Marketing Mix
Limited number of variables under
Marketings control to create position
that is attractive to the target market
segment.

Four Ps
Product
Price
Promotion
Place (Distribution)
8
External Environment
Characterized by:
Degree of Stability
Complexity
Diversity
Hostility
9
Challenges
Marketing costs are increasing while the
audience reached is decreasing
Face-to-face selling, down in efficiency,
is up in cost
Customer relationship managers often
do not integrate an analytical approach
to combining operations with marketing
programs and campaigns
Standard Industry Classification is not as
predictive in the current business
environment
Communication clutter is at an all time
high

10
External Environment
Six Environments
Technological
Economic
Social/Cultural (Customer)
Political/Legal
Natural/Climatic
Competitive
11
whats different about B2B?
Marketing Concept
Marketing Mix
Market Segmentation
Product Life Cycle

All apply in both B2C and B2B.
12
whats different about B2B?
The technical characteristics of the
product are important.

These products directly affect the
operations and economic health of
the customer.

The customer is an organization
rather than an individual consumer, or
family.
13
Five Major Differences
Between B2B and B2C

Products/Services being marketed
Nature of demand
How the customer buys
Communication process
Economic/Financial factors
14
Products/Services
More complex
Functional vs. Symbolic Attributes
Large unit dollar value/Large
quantities
Custom/Tailored
Various Stages from raw material to
finished goods.
Foundation, Entering, Facilitating
Goods
15
16
Raw Material Extraction
Material Processing
Manufacturing
Parts/Subassembly
Assembly
Distribution
Wholesale/Retail Trade
Final Consumers
Facilitators
Firms in Production Chain
Nature of Demand
Derived Demand
Inelastic Demand
Widely Fluctuating Demand
Knowledgeable Demand
These characteristics/types of demand
distinguish industrial demand from
consumer demand

17
How Customer Buys
Group Process

Formal

Lengthy

Loyal

Decisions based on risk and
opportunity
18
Communication
Personal selling more important than
mass paid advertising
Support sales with other promotional
activities: advertising in trade journals,
catalogs, trade shows, direct mail,
WWW.
Message focused on technical,
factual, and descriptive content.
Multiple audience members.
19
Economic/Financial Factors
Competition oligopolistic
Power/Dependency relationships
Reciprocal: Doing business with
companies that do business with
them.
Economic variables: interest rates,
inflation, business cycle
20