HomeRoots Pitch Deck | Investor Insights | April 2024
Industrial marketing
1. Prepared By- Mathew Lawrence
“Small changes in consumer demand can have big changes in the
requirement for industrial parts, components and materials to make
those products”
2. Derived Demand & Joint demand- Introduction
A term used in economic analysis that describes the demand placed on one good or
service as a result of changes in the price for some other related good or service.
Example: demand for wood pulp is derived from the demand for paper, which is
derived from the increase in people printing on paper
Industrial demand is therefore called derived demand.
Joint demand occurs when one industrial product is useful for other product.
Other example: Demand medical shop is more where Clinic are situated.
Demand from
sale of Paper
Demand for
Wood pulp
Demand from
Paper
Derived Derived
Demand for
Cartridges
Demand from
Printer
Derived
3. Industrial Buying Behaviour- Introduction
Buying is the other side of the industrial marketing coin other
than the industrial selling.
Just as industrial marketers seek customers, so the industrial buyers seek suppliers or
vendors.
Purchase department: Purchase department of a firm develops organizational
buying objectives and perform certain activities so as to maintain an adequate flow of
goods and services into the operation.
Many people involved in the decision making process
Industrial buying involves long time to take decisions as compared to consumer
buying.
Need to get the approval of many people to get a final decision
The volume of business to business trade is far greater than consumer marketing
4. Purchasing Objectives
Purchase/Material Management objective is defined as “buying the right items in the
right quantity, at the right price, for delivery at the right time and place”
The objectives of the purchasing function are-
Delivery/Availability of materials: One of the prime objective is to
ensure that purchased goods and services are available throughout.
Product Quality : The product quality should be consistent with the
specification and use of the product. Example- ISI 9000.
Lowest Price: Purchasing of any product is shortlisted on one of the basic parameter of
lowest price.
Services: Industrial buyers needs many types of services like- Training, AMC, Repairing, etc.
5. Purchasing Process
The Industrial purchasing activities consists of various phases of buying decision
making process.
Robinson Faris and Wind developed eight phases of buying decision process in
industrial market in 1967 called the process of Buying phases.
Understanding the various phases of buying decision making is useful to an industrial
marketer as it helps in developing an appropriate product.
6. Stages in Purchasing Process
Problem or Need Recognition
Quantity of Product
Specification of Product
Search for Potential Suppliers
Obtaining Supplier Proposal
Evaluating Proposals
Selection of Proposal
Feedback & Post Purchase Evaluation
7. Types of Purchases or Buying Situations
New Purchase (New Task): In this situation the company
is buying the item for the first time. The need for a new
purchase may be due to internal or external factors.
Reasons for New Purchase- Production of new product line, materials, modification.
Hence in new purchase the company has to obtain a variety of information.
Risks involved is more. Decision may take longer time and more people are involved.
Change in Supplier (Modified Rebuy): A modified rebuy situation occurs when the
organization is not satisfied with the performance of the existing supplier, or need
arise due to cost reduction or quality improvement, changes in the production
specification
Repeat Purchase (Straight Rebuy): This situation occurs when the buying
organisation requires certain products or services continuously. Here the price, deivery
model and payment terms remains same. .
9. Buying Center Roles
Initiators: This category includes individuals who first
recognize a problem or a need, which could be solved
by purchase of a product or service. Eg: Managers,
floor managers,
Buyers: The major roles and responsibilities of buyers
are- Obtaining quotation, supplier evaluation, negotiation,
processing orders, implementing purchase policies. Eg: Purchase manager.
Users: This includes individuals who use the actual product or service that is to be
purchased. They may define the exact specification, dimension etc. Eg: Floor
manager, R&D team.
Influencers: They are the individuals who could influence the buying decision
process. Eg: Designers, Quality control team, Consultants.
10. Deciders: The actual buying decisions are made by the deciders. The deciders may
be one or more individuals involved in the buying decisions. Eg: Top management,
Board of directors,
Gatekeepers: They are the individuals who could control the flow of the information
regarding products and services. They are often the assistants, Juniors involved in the
purchase department.
11. The Webster and Wind Model – Organizational Buying Behaviour
In 1967, the Canadian, American and Israeli marketing researchers, Robinson, Faris
and Wind, introduced the buy grid framework as a generic conceptual model for
buying processes of organizations.
They saw industrial buying not as single events, but as organizational decision-making
processes where multiple individuals decide on a purchase.
12. Environmental Variables
•Technological
•Economic
•Political
•Labour union
•Cultural
•Competition
Organizational Variables
•Objectives/goals
•Ogr Structure
•Purchasing policies
•Degree of decentralization
Buying Center Variables
•Authority
•Size
•Key Influencers
•Communication
Individual Variables
•Personal goals
•Experience
•Expertise
•Values
•Income
•Lifestyle
Organizational Buying Decisions
•Choice of Suppliers
•Delay in decisions
•Make or lease or Buy
•Do not buy.
13. Prepared By- Mathew Lawrence
“Effective marketing decisions are based on information in market place
rather than on intuition or hunches.”
14. In a changing market place, the industrial marketers must
continuously gather information on customers, competitors
and environment.
Industrial marketing research is one of the parts or components of industrial marketing
intelligence.
Marketing Intelligence is an ongoing activity to provide continuous information for
decision making.
Definition: Marketing Research is defined as the objective and systematic process of
obtaining, analyzing and reporting of data for decision making in marketing.
Examples of Firms: CRISIL,
Some of the projects or studies on industrial marketing research are – sales
forecasting, Market share, Market potential, Competitive analysis, New Product
development, Benchmarking.
Industrial Marketing Research - Introduction
15. Industrial Marketing Research Process
Identify the
problem/opportunity
and define research
objectives
Develop the
research design
Collect the data (or
information
Collect the data (or
information
Process and
analyze the data
Present the
research findings or
reports
16. 1 Step- Identify the problem/opportunity and define research objectives.
The first step in the marketing research process is to identify the
marketing problems or opportunity accurately and define the objective.
The problem identification is very important and to avoid any controversy at a latter
stage the marketing manager prepares a “Research Brief”
Research brief explains the background information about the problem and how the
finding of marketing research will be useful for making decision to solve problems.
2 Step- Develop the Research Design/Plan.
The industrial marketing research or the marketing research agency develops the
research design which basically indicates the problem and the cost of conducting the
research study.
The research design includes the decision area -
17. Decision Areas Particulars
Information type Prepare a list of information required from research
objective.
Sources of data Primary, Secondary, Commerical
Research
Methods
Observational, Exploratory, Survey
Sampling Plan Sample unit, size, procedure
Method of
Contacts
Mail, telephone, personal interview.
Data Collection Questionnaire,
Decision Areas in Research Design
18. 3. Collect the data
Although industrial market depends substantially on the secondary data, primary data
is often collected if the research objective are not achieved by secondary.
Research Methods Brief description
Observational People and their behavior are observed and the
information is recorded.
Exploratory Exploratory research methods such as focus
group and in-depth interview are used
Survey Descriptive method by asking questions
4. Process and Analysis the data
This process include activities like- Editing, Coding, Classification, Tabulating.
5. Presenting the research report
The complete research report should be presented in a
written format explaining the findings .
19. Prepared By- Mathew Lawrence
“It is the product or service offer from an industrial firm that must
ultimately satisfy customer”
20. New Product Development- Introduction
Product decisions are both important and complex, and bind
together various departments such as R&D, Engineering,
Materials, Manufacturing.
Definition: The industrial product is defined not only as a physical entity, but also as a
complex set of economic, technical, legal and personal relationship between the buyer
and seller
Example: For instance a company as a buyer of an industrial product- MCCB
(moulded case circuits) can consider economic (i.e price) technical (i.e specification)
legal (delivery time) and personal relationship between them.
In this competitive world every industrial companies should be aware of what
constitutes a total product package in the minds of customers.
21. Factors demanding change in Industrial product
Customer Needs: Products are made to satisfy certain needs and wants of target
customers. To survive and succeed in a competitive market, an individual firm must
continuously monitor changes in the needs of its target customers. Eg: Automobiles
Technology: The changes in technology can require product modification or make
existing product obsolete. Eg: Floppy drive, I pad,
Government Policies: The changes in government policies and laws enacted by
Indian Parliament requires changes in the product strategy. Eg: Tobacco, Cigarette,
liberalization.
Product Life –Cycle: Companies do take decisions regarding the product in its PLC
stage of Maturity and Decline stage. Eg: Mobile models
22. Industrial Product Life cycle and Strategies
The product life cycle (PLC) theory or concept is the basic underlining theory used to
determine marketing strategies.
Industrial PLC is studies with in relation with Sales and Profits.
Acc to the theory products tend to go through different cycles or stages that begin
when they are launched in the market (introduction stage) and end when they are
eliminated from the market (decline stage)
At the dividing line between the Growth and Maturity stage, the profit curve is at its
peak.
In maturity stage sales volumes continues to increase (decreasing rate) but profits fall.
Many studies on PLC concept are carried out in consumer marketing. However a
study conducted on 1148 industrial business confirmed that industrial products
typically follow the patter of sales and profits.
