STP in Organizational Behavior

Industrial Marketing management
BHAGWAN MAHAVIR COLLEGE“AOF MANAGEMENT
Assignment of
Industrial Marketing Management”
Topic:
a) EVALUATING
POTENTIAL
SEGMENT
b) BUSINESS
BUYER
BEHAVIOR
Submitted To: Mr. Sanjay Ghosh
(Asst. Professor, BMCM)
Submitted By: Gautam Dua

(MBA, IV Semester, Roll No. 10)
BMCM
INDEX
Sr. No. Topic Page No.
1 EVALUATING POTENTIAL SEGMENTS 1
2 DECISION SUPPORT SYSTEMS AND THEIR USE IN MARKET SEGMENTATION 3
3 Target Market 3
4 Niche market 4
5 Product Positing 5
6 Business Markets and Business Buyer Behavior 7
7 Buying Situations 10
8 Major buying situations 11
9 Major Influences on buying behavior 12
10 Buying Behavior Process 12
11 Difference between Consumer and Business buying 16
12 Organizational markets in India (Examples) 17
BMCM
 EVALUATING POTENTIAL SEGMENTS:
Market segmentation merely identifies potential opportunities and the most attractive markets
that a firm can serve effectively with its limited resources. Thus before target markets can be
chosen, the potential profit and competitive position of the various segments must be evaluated.
 MARKET PROFITABILITY ANALYSIS:
In analyzing the profitability of any potential market segment, it must be remembered that four
different elements are involved:
1) Market potential; which refers to the most optimistic estimate of the amount of product
that an entire market will purchase in a given time period.
2) Sales potential; which is the most optimistic estimate of a company’s share of market
potential in a given time period.
3) Sales forecast; which is the estimate of a company’s expected sales in a given time
period.
4) Profitability; which is the difference between potential revenue and the cost of serving
and maintaining customers.
Numerous methods exist for measuring market potential within any given market segment.
Along with the Quantitative techniques like regression and time series analysis, qualitative
techniques may be employed.
When markets are clearly defined, it is easier to acquire and examine historical data by the
various statistical methods available.
BMCM
While Quantitative techniques are generally based on available data, qualitative

techniques rely on informed judgment and rating schemes.
Thus, when data do not exist. Management may call on the sales force, top-level
executives, or distributors to exercise their knowledge with the respect to the market and
customers in an effort to estimate market potential.
Once the market and sales potentials are estimated, but before a sales forecast can be
made, it is necessary to determine the firm’s ability to access customers. Accessing
customers within a particular segment is dependent on the firm’s proposed marketing
programme as well as competitors’ position within the segment.
 COMPETITIVE ANALYSIS:
“The success of any marketing strategy depends on the strength of the competitive
analysis on which it is based. Thus, profit potential as well as the ability to penetrate the
particular market segment depends on a careful analysis of the strength and weakness of
the existing and potential competitors. - Both domestic and foreign.” The firm should
seek answers to such questions as: ‘who are the target competitors?’, ‘what are the target
competitors’ strategic weaknesses?’
In formulating strategy, current and future competitors’ abilities to respond must be

evaluated. This includes an assessment of their strengths and weakness in the areas of
manufacturing, R&D, finance, technical service, sales force, advertising distribution and
support systems.
“Competitors are in business to defend or take market share from organization and their
ability to do so vary with their individual strength and weakness.”
BMCM
 DECISION SUPPORT SYSTEMS AND THEIR USE IN MARKET

SEGMENTATION:
Dss can also be used for identifying and evaluating alternative market segments.DSS can
assess the extent to which different grouping of market segments meet organizational
objectives.
The DSS evaluates data for various combinations of markets and in various ways
determines which group best fits management’s objectives. The system can for example,
construct a group of markets that has the least total amount of deviation from the firm’s
Quantitative objectives.
 TARGET MARKETING:
Market segments and profitability analysis allow the marketer to determine where
opportunities exist, how marketing strategy may be developed, and which segments are
profitable. Once accomplished, however, decisions must be made as to which segment
will be served; that is targeted.
Three alternative market strategies are available regarding these segment similarities and
differences: Undifferentiated, Differentiated, Concentrated marketing strategy.
 Undifferentiated or mass marketing strategy:
When products or services produced are relatively standardize and sold in a horizontal
market, this strategy is the most appropriate choice.
Here the firm ignores the idea of segment characteristics and differences and develops a
unified marketing program for the entire market.
This strategy keeps overall cost low and makes it easier to manage.
BMCM
 Differentiated marketing strategy:
A firm may choose to offer its products or services to a number of divers segments whose
need, product usage or market responses are appreciably different.
The main objective of offering a differentiated marketing offer is to cater to different

segments and get higher sales with a dominant position in each of the segment.
 Concentrated marketing strategy:

Even though a number of divers segments exists whose needs could be satisfied through
product and market variation, when company resources are limited, the firm may choose
to go after a large share of one or a few markets.
 Niche marketing:
Niche marketing is a process by which a firm segments the market into finer, more
homogeneous clusters than that which is normally approached under traditional
segmentation strategy.
For example, coca cola has segmented has segmented its market into 4 niches.
Regular coke drinkers, diet coke drinkers, caffeine free coke drinkers, diet caffeine free
coke drinkers.
Provide product to buyer s who are seeking products that are specially tailored to their
individual desires and preferences.
BMCM
 Product Positioning:
In marketing, positioning has come to mean the process by which marketers try to create
an image or identity in the minds of their target market for its product, brand, or
organization.
• A product positioning is the definition that a consumer gives to the product on important
attributes.
• Positioning is the act of developing the company’s offerings and image to occupy a
distinct place in the minds of the target market.
• The end result of positioning strategy is a distinct value-a reason for which the customer
would buy the product.
E.g. – Maggi Noodles, Dove soap, Vicks Vaporub etc.
Positioning strategy in the industrial market is more difficult than in consumer market.
 The difficulty arises for two reasons:
1) Lack of adequate marketing research support.
2) In many cases, a lack of understanding of positioning principles.
 In consumer market, Positioning strategy is primarily accomplished through advertising.
 In industrial market, it is accomplished through personal selling, publicity and trade

shows, as well as advertising and through the company’s performance both with respect
to customer service and product performance.
 Positioning strategy in the consumer market is normally applied along the line of
functional or psychological attributes.
 In the industrial market there are several variables that may be used in developing
Positioning.
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 In addition to product variables, a firm may be able to position itself on the basis pre and
post services, by solving customer problems. Ability to teach and help customers and
new technology development.
 E.g. Foxboro position itself on the basis of helping customers to make more and better for
less through its expertise in the area of process management and control.
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Business Markets and Business Buyer Behavior
• Be able to define the business market and explain how business markets differ from
consumer markets.
• Know the major factors that influence business buyer behavior.
• Buying Situations
• Understand the steps in the business buying decision process.
• Understand institutional and government markets and how buyers in these markets make
their buying decisions.
• Organizational markets in India
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Business Buyer Behavior:
 “The buying behavior of organizations that buy goods and services for use in the
production of other products and services or for the purpose of reselling or renting
them to others at a profit.”
Business Markets
• Characteristics of Business Markets
 Sales in the business market far exceed sales in consumer markets.
 Business markets differ from consumer markets in many ways.
 Marketing structure and demand
 Nature of the buying unit
 Types of decisions and the decision process
• Characteristics
• Marketing Structure and Demand
• Compared to consumer markets:
 Business markets
 have fewer but larger customers
 Business customers
 are more geographically concentrated
 Demand is different
 Demand is derived
 Demand is price inelastic
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• Nature of the Buying Unit
• Compared to consumer purchases:
 Business purchases involve more buyers in the decision process.
 Purchasing efforts are undertaken by professional buyers.
• Types of Decisions and the Decision Process
• Compared to consumer purchases:
 Business buyers face more complex buying decisions.
 The buying process is more formalized.
 Buyers and sellers work more closely together and build long-term relationships.
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Buying Situations
New
New Buy
Buy Modified
Modified
Rebuy
Rebuy
Straight
Straight
Rebuy
Rebuy
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A
A situation
situation requiring
requiring the the
purchase
purchase
New Buy
New Buy of of aa product
product for for the
the first
first
A situation time.
time.where
A situation where thethe
Modified
Modified purchaser
purchaser wants wants somesome
Rebuy
Rebuy changechange
A in
in
situation
A situation
the
the inoriginal
original
in which
which
good
good
the
the
purchaseror
or service.
service.
purchaser reorders
reorders the the
Straight
Straight same same goods
goods or or services
services
Rebuy
Rebuy without
without looking
looking for for new
new
information
information or or investigating
investigating
MAJOR TYPES OF BUYINGother suppliers.
SITUATIONS
other suppliers.
 Straight rebuy
 Reordering without modification
 Modified rebuy
 Requires modification to prior purchase
 New task
 First-time purchase
• Systems Selling:
 Buying a packaged solution to a problem from a single seller.
 Convenience is a major benefit
 Often a key marketing strategy for businesses seeking to win and hold accounts.
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Participants in the Business Buying Process
Approvers
Major Influences on Business Buyers
Business Buying Process
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BMCM
Business Buying Process
• Business Buying on the Internet
 E-procurement is growing rapidly.
Buying
Buying Centers
Centers
Evaluation
Evaluation Criteria
Criteria
Aspects
Aspects of
of
Business
Business
Buying Buying
Buying Situations
Situations
Buying
Behavior
Behavior
Purchasing
Purchasing Ethics
Ethics
Customer
Customer Service
Service
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 Reverse auctions account for much of the online purchasing activity.
 E-procurement offers many benefits:
 Access to new suppliers
 Lower purchasing costs
 Quicker order processing and delivery
Institutional and Government Markets
• Institutional Markets
 Consist of churches, schools, prisons, hospitals, nursing homes and other

institutions that provide goods and services to people in their care.
 Often characterized by low budgets and captive patrons.
 Marketers may develop separate divisions and marketing mixes to service

institutional markets.
• Government Markets
 Governmental units – federal, state, and local – that purchase or rent goods and
services for carrying out the main functions of government.
 More than 82,000 buying units.
 Require suppliers to submit bids.
 Favor domestic suppliers.
 Extensive paperwork is required from suppliers.
 Government buyers often favor:
• Depressed business firms and areas
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• Small businesses
• Minority-owned businesses
• Firms which practice non-discriminatory practices
 Most firms that sell to government buyers are not marketing oriented.
 Some companies have separate government marketing departments.
 Much of government buying has migrated online.
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Difference between Consumer and Business buying
Consumers market Organizational Market
Less time spent on purchasing More time spent in purchasing

process process
Large number of consumers Organizational buyers are few in

buyer number
Quantity of purchase is Quantity of purchase is more

comparatively low
Segmentation on geographic, Segmentation on Purchasing

demographic and approach, situational factors,
psychographic factors personal characteristics
BMCM
Organizational markets in India
Industrial markets in India can be divided into three sectors:
 Chemical and pharmaceutical companies
 Energy and natural resources
 Industrial and automotive sector
Chemical and Pharmaceutical
 Products are produced in bulk quantities & are conventionally sold to organizational
customers
 Opportunity for growth in specialty chemicals segments i.e. chemicals
 Pharmaceutical companies are set to have a very high growth rate with most global
companies making strategic moves such as mergers or acquisitions.
Energy and natural resources
 Due to population growth and increasing urbanization natural resources are depleted
 Dependence upon conventional sources for energy
 Search for alternative source for energy
 Further sub segments: oil& gas, coal & lignite, forests & timber, precious metals
Industrial and automotive
 Success of companies directly linked to financial & economical status of the country
 Over the years has changed into highly competitive industry
 Large number of competitors (related to infrastructure)
 Sub segments: cars two/three wheelers, heavy vehicles, electrical, electronics, hardware.
BMCM

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Industrial Marketing management

BHAGWAN MAHAVIR COLLEGE“AOF MANAGEMENT

Industrial Marketing Management”

Submitted By: Gautam Dua

1 EVALUATING POTENTIAL SEGMENTS 1

2 DECISION SUPPORT SYSTEMS AND THEIR USE IN MARKET SEGMENTATION 3

6 Business Markets and Business Buyer Behavior 7

8 Major buying situations 11

9 Major Influences on buying behavior 12

10 Buying Behavior Process 12

11 Difference between Consumer and Business buying 16

12 Organizational markets in India (Examples) 17

 EVALUATING POTENTIAL SEGMENTS:

 MARKET PROFITABILITY ANALYSIS:

While Quantitative techniques are generally based on available data, qualitative

In formulating strategy, current and future competitors’ abilities to respond must be

 DECISION SUPPORT SYSTEMS AND THEIR USE IN MARKET

 Undifferentiated or mass marketing strategy:

 Differentiated marketing strategy:

The main objective of offering a differentiated marketing offer is to cater to different

 Concentrated marketing strategy:

E.g. – Maggi Noodles, Dove soap, Vicks Vaporub etc.

 The difficulty arises for two reasons:

1) Lack of adequate marketing research support.

2) In many cases, a lack of understanding of positioning principles.

 In consumer market, Positioning strategy is primarily accomplished through advertising.

 In industrial market, it is accomplished through personal selling, publicity and trade

Business Markets and Business Buyer Behavior

• Know the major factors that influence business buyer behavior.

• Understand the steps in the business buying decision process.

• Organizational markets in India

Business Buyer Behavior:

• Characteristics of Business Markets

 Sales in the business market far exceed sales in consumer markets.

 Business markets differ from consumer markets in many ways.

 Marketing structure and demand

 Nature of the buying unit

 Types of decisions and the decision process

• Marketing Structure and Demand

• Compared to consumer markets:

 have fewer but larger customers

 are more geographically concentrated

 Demand is price inelastic

• Nature of the Buying Unit

• Compared to consumer purchases:

 Business purchases involve more buyers in the decision process.

 Purchasing efforts are undertaken by professional buyers.

• Types of Decisions and the Decision Process

• Compared to consumer purchases:

 Business buyers face more complex buying decisions.

 The buying process is more formalized.

 Reordering without modification

 Requires modification to prior purchase

 Buying a packaged solution to a problem from a single seller.

 Convenience is a major benefit

Participants in the Business Buying Process

Major Influences on Business Buyers

Business Buying Process

Business Buying Process

• Business Buying on the Internet

 E-procurement is growing rapidly.

 Reverse auctions account for much of the online purchasing activity.

 E-procurement offers many benefits:

 Access to new suppliers