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The Nature
          of
Industrial Marketing
                By:-
                 Saurabh
                 Swarnim
                 Vivek
?
Why Study INDUSTRIAL MARKETING ???
Because
• Composition is Uniquely different
   – Product – Quality Maintenance
   – Information – Answering Technical, Economic, organizational
            question over a long period of time
   – Financial – Granting Credits, Currency Exchange
   – Social – Trust Interpersonal Relationships

• Forces that affect Industrial Demand are different
  C:UsersVivekDesktopMichael_Porter_Five_Forces_Model.png
  C:UsersVivekDesktopporters-five-forces-model.jpg

• Employment Opportunities
Definition

Industrial Marketing is the human activity directed
toward satisfying wants and needs of organizations
through the exchange process.

Industrial Marketing consists of all the activities involved
in the marketing of products & services to
organizations, institutions etc, that use products and
services in the production of consumer or industrial
goods & services and to facilitate the operation of their
enterprises.
Points of Parity
•    Must define Target Markets
•    Determine the needs of those market
•    Design products for those “needs” satisfaction
•    Communicate and Reach those markets

    Industrial Marketing is more a responsibility of
                General Management
Points of Differentiation
Characterstic                B2B                              B2C
     Product       Technically Complex, Often     Non-Technical, Standardized
                          Customized
      Price           Competitive Bidding,                    MRP,
                    Negotiated Pricing, not so        very critical factor in
                         Critical factor               purchase decision
      Place            Geo Concentrated,              Geo Distributed,
                          Few Buyers                More number of Buyers
    Promotion        Importance to Personal        Importance to Advertising
                            Selling
     Channel             More Direct,                      Indirect,
                         Multi Channel              Few Channels with many
                                                            layers
  Buyer Behavior   Various Functional involved,    Family Members involved,
                     Mainly Rational buying       Physiological/Psychological/S
                      decisions, Technically        ocial need based buying
                            competent                       decision
     Service             Very Important                    Somewhat
Market Characteristics
• Size of the Market
   – Relatively few Industrial Customers

• Geographic concentration
   – Jamshedpur

• Competitive nature of the market
   – Oligopsonistic buying
       • control of the purchase of a commodity or service in a given market by a small number of
         buyers
   – Large firms tend to dominate many markets

• Product Characteristics
   – Technical
   – Service & support more needed
Industrial Demand
• Derived Demand
  – Demand for B2B is derived from the ultimate demand
    for B2C
  – Recessionary Effects


• Joint Demand
  – Demand for B2B depends upon its use in conjunction
    with another product or service
  – B2B customers prefer to buy joint products lines from
    one supplier
Cross Elasticity of Demand
• Substitute Effect
  – a good's demand is increased when the price of another good is increased
  – Steel & Aluminum, Margarine & Butter
  – More the availability of Substitute, more is the Cross Elasticity of demand

• Complementary Effect
  – the demand for a good is decreased when the price of another good is
    increased
  – Computer hardware and computer software, Printer & Cartridge
  – Demand is more closely related




 In B2B, it is important to measure the interrelationships
                      among industries
Reseller’s Market
• Similar to Industrial Market

• Market Characteristics
   – Retailers have strong bargaining power (Wal-Mart)

• Product Characteristics
   – Customized products
   – Additional Cost factors removed
   – After Sales Service is a major differentiating factor

• Buyer Characteristics
   – Compare technical features of different competiting products
   – Unlike industrial buying, multiple buying influencers & decision makers
     are involved
Reseller’s Market
• Channel Characteristics
  – Length of distribution depends on type of Product
  – Availability of Goods is very important, or may lead to
    lost sales

• Promotional Characteristics
  – Emphasis on Personal selling

• Price Characteristics
  – More concerned
Importance of Reseller’s Market

• Ability to affect consumer demand directly
  through
   – Increased promotion
   – Value enhancing services
   – Reduced price

• Positioned closest to ultimate consumers
   – Better feedback, Information catalyst

• Joint Demand
Few Check Points
• Excessive preoccupation with products

• Too much technical orientation and not
  Customer Service

• Customer benefits and Needs satisfaction
  should be the center of attention
THANK YOU
Questions??

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Nature of Industrial marketing,Reeder & brierty,ch 1

  • 1. The Nature of Industrial Marketing By:- Saurabh Swarnim Vivek
  • 2. ? Why Study INDUSTRIAL MARKETING ???
  • 3. Because • Composition is Uniquely different – Product – Quality Maintenance – Information – Answering Technical, Economic, organizational question over a long period of time – Financial – Granting Credits, Currency Exchange – Social – Trust Interpersonal Relationships • Forces that affect Industrial Demand are different C:UsersVivekDesktopMichael_Porter_Five_Forces_Model.png C:UsersVivekDesktopporters-five-forces-model.jpg • Employment Opportunities
  • 4. Definition Industrial Marketing is the human activity directed toward satisfying wants and needs of organizations through the exchange process. Industrial Marketing consists of all the activities involved in the marketing of products & services to organizations, institutions etc, that use products and services in the production of consumer or industrial goods & services and to facilitate the operation of their enterprises.
  • 5. Points of Parity • Must define Target Markets • Determine the needs of those market • Design products for those “needs” satisfaction • Communicate and Reach those markets Industrial Marketing is more a responsibility of General Management
  • 6. Points of Differentiation Characterstic B2B B2C Product Technically Complex, Often Non-Technical, Standardized Customized Price Competitive Bidding, MRP, Negotiated Pricing, not so very critical factor in Critical factor purchase decision Place Geo Concentrated, Geo Distributed, Few Buyers More number of Buyers Promotion Importance to Personal Importance to Advertising Selling Channel More Direct, Indirect, Multi Channel Few Channels with many layers Buyer Behavior Various Functional involved, Family Members involved, Mainly Rational buying Physiological/Psychological/S decisions, Technically ocial need based buying competent decision Service Very Important Somewhat
  • 7. Market Characteristics • Size of the Market – Relatively few Industrial Customers • Geographic concentration – Jamshedpur • Competitive nature of the market – Oligopsonistic buying • control of the purchase of a commodity or service in a given market by a small number of buyers – Large firms tend to dominate many markets • Product Characteristics – Technical – Service & support more needed
  • 8. Industrial Demand • Derived Demand – Demand for B2B is derived from the ultimate demand for B2C – Recessionary Effects • Joint Demand – Demand for B2B depends upon its use in conjunction with another product or service – B2B customers prefer to buy joint products lines from one supplier
  • 9. Cross Elasticity of Demand • Substitute Effect – a good's demand is increased when the price of another good is increased – Steel & Aluminum, Margarine & Butter – More the availability of Substitute, more is the Cross Elasticity of demand • Complementary Effect – the demand for a good is decreased when the price of another good is increased – Computer hardware and computer software, Printer & Cartridge – Demand is more closely related In B2B, it is important to measure the interrelationships among industries
  • 10. Reseller’s Market • Similar to Industrial Market • Market Characteristics – Retailers have strong bargaining power (Wal-Mart) • Product Characteristics – Customized products – Additional Cost factors removed – After Sales Service is a major differentiating factor • Buyer Characteristics – Compare technical features of different competiting products – Unlike industrial buying, multiple buying influencers & decision makers are involved
  • 11. Reseller’s Market • Channel Characteristics – Length of distribution depends on type of Product – Availability of Goods is very important, or may lead to lost sales • Promotional Characteristics – Emphasis on Personal selling • Price Characteristics – More concerned
  • 12. Importance of Reseller’s Market • Ability to affect consumer demand directly through – Increased promotion – Value enhancing services – Reduced price • Positioned closest to ultimate consumers – Better feedback, Information catalyst • Joint Demand
  • 13. Few Check Points • Excessive preoccupation with products • Too much technical orientation and not Customer Service • Customer benefits and Needs satisfaction should be the center of attention