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INDUSTRIAL MARKETING

INDUSTRIAL PRODUCT (Defn)


It is the Product or Service which is offered to Manufacturing, Trading or Service Organisations or to Professionals or Professional Institutions for their use in functioning towards their business objective/s.

Marketing Application & Practices

INDUSTRIAL MARKETING

INDUSTRIAL MARKETING (Defn)


It refers to the process of marketing such industrial products or services

HOW IS IT DIFFERENT ?
(a) (b) Focused more on relationship Approach differs for each market

Marketing Application & Practices

INDUSTRIAL MARKETING

INDUSTRIAL PRODUCTS

Core Product : functional performance Augmented Product : peripheral product


Additional features Packaging Sales Promotion Before / After Sales Service Company Reputation Availability / Reliability of delivery commit. Prices

Marketing Application & Practices

INDUSTRIAL MARKETING

CLASSIFICATION OF INDUSTRIAL GOODS


Equipments :
Equip organisations for their stated purpose

Materials & Supplies :


Used in Production for resale

Services :
Facilitate the functioning of the organisation

Marketing Application & Practices

INDUSTRIAL MARKETING
Includes all organisations that acquire goods & services used in production of other products or services that are sold, rented or supplied to others E.G. Manufacturing, mining, banking, construction, transportation, finance, communication etc. Key characteristics

1.Few buyers 2.Larger buyers 3.Close supplier customer relationship

Marketing Application & Practices

INDUSTRIAL MARKETING CUSTOMERS

Various types :
1.Producers of goods & services 2.Middlemen 3.Government units 4.Non-profit organisation

Are they different from end consumer ?


Less emotional Focus is economy
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INDUSTRIAL MARKETING

MARKET SEGMENTATION
It refers to offering different products, prices, distribution, promotion and / or support services to different customer segments When all elements of Marketing Mix are differentiated for each market segment, you have a perfect Segmentation strategy.

Marketing Application & Practices

INDUSTRIAL MARKETING

MARKET SEGMENTATION OF INDUSTRIAL PRODUCTS


1. What is brought ?
Type of Product Range of Product Full Line / Niche What need does the Product satisfy Std Product / variance / Non Std Capital Goods / Consumables High Value / Low Value

Marketing Application & Practices

INDUSTRIAL MARKETING

MARKET SEGMENTATION OF INDUSTRIAL PRODUCTS


2. Who buys it ?
Offices / Manufacturing Industries / Service Industries / Professionals Type of Industry / Service Geographical location Customer Govt / Public / Private Size of Customer Heavy User / Light User
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INDUSTRIAL MARKETING

MARKET SEGMENTATION OF INDUSTRIAL PRODUCTS


3. Why is it bought ?
Price Lowest / Value for Money / Premium Product Technology Latest / Proven Aspects determining Customers perception of quality e.g. Aesthetics, Durability etc

Marketing Application & Practices

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INDUSTRIAL MARKETING

1. 2. 3. 4. 5. 6. 7. 8.

INTERNAL CUSTOMERS

Operators ( ease of use) User dept (Up time) Maintenance dept ( less / no maintenance) R & D dept ( Technology ?) Materials / Purchase (Cost / delivery) Finance dept (actual cost) Personal ( how safe is product) C.E.O. ( value for money)

Marketing Application & Practices

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INDUSTRIAL MARKETING

1. 2. 3. 4. 5.

Buying chain members


Gatekeeper/s Influencer/s Decision maker/s Buyer / purchaser User

The composition of above members is also known a buying center Period for purchase in Industrial marketing varies from a day to several months
Marketing Application & Practices 12

INDUSTRIAL MARKETING

THE BUYING PROCESS


1. Recognition of Need receipt of requisition 2. Make or Buy Decision 3. Purchase
From On On From On On On single supplier
the basis of past purchase the basis of fresh negotiations

multiple suppliers
the basis of past purchase the basis of fresh negotiations the basis of Tenders
Marketing Application & Practices 13

INDUSTRIAL MARKETING

THE BUYING PROCESS


4. Tenders :
Open (Advertised / Public Openings) Closed (Advertised / No public opening) Limited (By invitation only) Integrity Meeting / Exceeding Specs Quality Delivery Time Pre / After Sales Service Company Reputation Commercial Terms
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5. Selection among Supplier

INDUSTRIAL MARKETING

THE BUYING PROCESS


6. Information Sources :
Own company record Other company reference / Published literature Catalogues / Exhibitions / Seminars / Presentations

7. Placement of Order 8. Order Follow up 9. Receipt & Inspection of Products & Documents 10. Payment
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INDUSTRIAL MARKETING

Buyer Seller Relationship


More of partnership Mutual trust Long term outlook

Closely tied firms often work at lower total costs simply by reducing the risks & uncertainties
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INDUSTRIAL MARKETING

Lower prices are possible with :


Back to back understanding Annual rate contract Large volumes

5 key dimensions that help buyer & seller relationships :


1. 2. 3. 4. 5. Co operation Information sharing Operational linkages Legal bonds Relationship specific adaptations
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INDUSTRIAL MARKETING

Co Operation efforts treats problem as joint responsibility Information sharing could be risky Operational linkages may help in reducing the total inventory cost Powerful customers may control relationship Buyers may look for other sources to reduce risks Reciprocity may influence relationship in big way e.g. Japan
Marketing Application & Practices

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INDUSTRIAL MARKETING

TYPES OF PROMOTION
1. 2. 3. 4. 5. 6. 7. 8. 9. Telephone Directory / Yellow Pages Trade Directories / Publications Journals Press Advertising Direct Marketing Tele Marketing Catalogue / Company Literature Seminars / Exhibitions Give Away
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INDUSTRIAL MARKETING

NEW PRODUCT INTRODUCTION PROCESS


1. Finding New Product Ideas 2. Preliminary appraisal of new product ideas and selection process 3. Research on Products & Markets 4. Research on Manufacturing process 5. Semiworks operation in Production and Marketing 6. Transition to full scale production and marketing
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INDUSTRIAL MARKETING

FACTORS INDICATING PRODUCT DELETION


1. 2. 3. 4. A declining volume of sales A falling rate of profit A declining share of the market The appearance of a substitute that represents an improvement 5. An increase in cost of production 6. A declining market 7. The need for constant executive attention to prevent loss
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INDUSTRIAL MARKETING

Vendor approval / classification


1. 2. 3. 4. 5. Data gathering Data analysis Visit to vendor works Vendor approval / registration Vendor classification

This helps in limiting the competition for each type of product category Unless vendor is approved the process of sale cannot start
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ORGANISATION BUYING PROCESS


CHARACTERISTICS TIME REQUIRED MULTIPLE INFLUENCE REVIEW OF SUPPLIER TYPE OF PROCESS NEW - TASK MODIFIED STRAIGHT BUYING RE-BUY RE-BUY HIGH HIGH HIGH MEDIUM SOME SOME LITTLE LITTLE NONE LITTLE
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INDUSTRIAL INFORMATION REQUIRED

MARKETING HIGH MEDIUM

Marketing Application & Practices

INDUSTRIAL MARKETING

STRATEGY
ACTIONS AIMED DIRECTLY AT ALTERING THE STRENGTH OF THE ORGANISATION RELATIVE TO THAT OF ITS COMPETITORS Not included are all actions aimed at improving operational effectiveness WITHOUT COMPETITION THERE WOULD BE NO STRATEGY Analysis is the critical starting point of Strategic Thinking
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INDUSTRIAL MARKETING

STRATEGY MAJOR CONSTRAINTS


1. Reality :
Company Competence Customer Competition Time has to be ripe. More strategies fail because they are overripe than premature Limitations of Internal resources Skills , Experience
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2. Ripeness : 3. Resources :

CORPORATE STRATEGY
Market Attractiveness

A Prevent or Minimise Loss

C
B

B Select Opportunities &


Consolidate resources

C Defend & Increase Mkt Share

A
Corporate Strength
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INDUSTRIAL MARKETING

INDUSTRIAL MARKETING

COMPETITIVE STRATEGY :
It involves positioning of business to maximise the value of the capabilities that distinguish it from its competitors

COMPETITIVE STRATEGIES :
Cost Leadership Differentiation Focus
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PORTER'S MODEL
COMP. ADVANTAGE FULL COST LEADERSHIP PRODUCT DIFFERENTIATION

FOCUS NARROW INDUSTRIAL MARKETING LOW HIGH

Marketing Application & Practices

MARKET
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INDUSTRIAL MARKETING

COST LEADERSHIP - FEATURE


1. Follow a strategy of overall cost leadership 2. Focus on lowering the prices to the customers by lowering the COST OF PRODUCTION 3. Competitive advantage lies in their ability to produce goods economically and effectively 4. Avoid marginal accounts 5. Avoid heavy spending on R & D and Advertisement

Marketing Application & Practices

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INDUSTRIAL MARKETING

COST LEADERSHIP STRATEGY


Stresses only costs 2. Lower margins & higher share 3. Lower cost & higher margins
1.

COST LEADERSHIP - PITFALLS


1. Finding market with few low-cost sellers 2. Likely to be an all or nothing
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INDUSTRIAL MARKETING

PRODUCT DIFFERENTIATION
Many products sell on image as well as physical attributes. 2. Strategy of differentiation is making tangible and intangible aspects of product different from those offered by other sellers
1.

FEATURES

Strives to earn higher profit margins by charging higher prices Strategy largely successful as customers are willing to pay extra for special or superior products
Marketing Application & Practices

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INDUSTRIAL MARKETING DISTRIBUTION

WHY REQUIRED ?

1. 2. 3. 4. 5. 6. 7.

Cost of Contacting Customers Channel reach selling support Channels influence Faster response Faster Order Execution Easy Payment Better Pre-sales/After sales service
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INDUSTRIAL MARKETING DISTRIBUTION

TYPES OF CHANNELS

1. 2. 3. 4. 5.

Sales Agent Wholesaler Retailer Authorised Service Center C & F / Storage

Marketing Application & Practices

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INDUSTRIAL MARKETING

KEY PERFORMANCE INDICATORS OF SALES ACTIVITIES

1. 2. 3. 4. 5. 6. 7. 8.

Sales / Target (%) Orders / Quotations (%) Margins / Sales (%) Cost of Sales / Sales (%) Sales Value / Number of Order (%) Orders / Calls (%) Key Account Contact New Customer Orders / Orders
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INDUSTRIAL MARKETING

KEY PERFORMANCE INDICATORS OF SALES ACTIVITIES (cont.)

1. 2. 3. 4.

Calls per day / Face to face time New Prospects called Credit Orders / Total Orders (%) Calls to build Customer Relationship 5. Discounts / Sales (%) 6. Timely Submission of reports 7. Timely submission of Itineraries
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INDUSTRIAL MARKETING NEGOTIATION

1. Is the issue negotiable 2. Are the negotiators interested in compromise trading value for value ? 3. Do they trust each other, at least to some extent 4. Do they have the authority to come to an agreement ? Marketing Application & Practices

Defn : Negotiation is the process of determining what the other side really desires and reaching an agreement so that they get what they want while you get what you want Pre Requisites :

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INDUSTRIAL MARKETING NEGOTIATION

Styles of Negotiation :

5 Ps of Negotiation :

Lose Lose (No desire for agreement) Win Lose (Competitive) Lose Win (Lose now for future) Win Win (Co operative, problem solving) Modified Win Win (Both feel they have won) Positive attitude The will to succeed Preparation before negotiation Problem solving approach Probing during negotiation Marketing Application & Practices Promote yourself, company & product

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INDUSTRIAL MARKETING NEGOTIATION

Crucial Factors :

Information / preparation required Evaluating bargaining power Opening the Negotiation Rules of Conduct Handling difficult personality types Understanding devious negotiation tactics Follow - up
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