Marketing of Industrial Goods

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Chapter 3

Marketing of Industrial Goods


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Meaning of Industrial Goods

Machinery, manufacturing plants,

materials, and other goods or component

parts for use or consumption by otherindustries or firms.

Demand for industrial goods is usuallybased on the demand for consumer goods

they help produce (called derived

demand). 2


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They are classified as

(1) Production goods, that enter the

production of a final product, such as the

raw materials and component parts, or

(2) Support goods, that assist in the

production process, such as fixedequipment and machinery, instruments,

jigs, tools, etc.

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Types of Industrial Goods

InstallationsInstallations are major capital items thatare typically used directly in the production of goods.

Accessory Equipment Goods that fall into thesubcategory of accessory equipment are capital items

that are less expensive and have shorter lives than

installations. Examples include hand tools, computers,desk calculators, and forklifts. While some types of

accessory equipment, such as hand tools, are involved

directly in the production process, most are only

indirectly involved.4


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Contd

Raw MaterialsRaw materials are products that arepurchased in their raw state for the purpose of

processing them into consumer or industrial goods.

Examples are iron ore, crude oil, diamonds, copper,

timber, wheat, and leather.

Fabricated Parts and MaterialsFabricated parts are

items that are purchased to be placed in the final

product without further processing.

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Industrial Marketing

Also called: Business-to-Business (B2B)and Organizational Marketing.

Definition: the creation and managementof mutually beneficial relationshipsbetween organizational suppliers and

organizational customers.Customer can be private firm, public

agency, or nonprofit organization.


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The Marketing Concept

Creating value for customers with goods

and services that address organizational

needs and objectives.


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Marketing Concept

Three major components:

All company activities should begin with,

and be based on, the recognition of afundamental customer need.

A customer orientation should be integratedthroughout the functional areas of the firm:

production, engineering, finance, R&D.Customer satisfaction is viewed as the means

to long-term profitability goals.


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Marketing Mission Statement

State in terms of meeting customer needs,

not in terms of products or technologies.


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Marketing Activities

Identify customer needsResearch 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 placeAllocate resources across product lines

Communicate with customers

Evaluate/control marketing programs


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So whats different about B2B?

Marketing Concept

Marketing Mix

Market Segmentation

Product Life Cycle

All apply in both B2C and B2B.


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So whats different about B2B?

The technical characteristics of the

product are important.

These products directly affect theoperations and economic health of the

customer.

The customer is an organization rather

than an individual consumer, or family.


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Five Major Differences

Between B2B and B2C

Products/Services being marketed

Nature of demand

How the customer buys

Communication processEconomic/Financial factors


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Products/Services

More complex

Large unit dollar value/Large quantities

Custom/Tailored

Various Stages from raw material to

finished goods.


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Raw Material Extraction

Material Processing

Manufacturing

Parts/Subassembly

Assembly

Distribution

Wholesale/Retail Trade

Final Consumers

Facilitators

Firms in Production Chain


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Nature of Demand

Derived

Joint/SharedConcentrated

Inelastic


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How Customer Buys

Group Process

FormalLengthy

Loyal

Decisions based on risk and opportunity


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Communication

Personal selling more important thanmass paid advertising

Support sales with other promotionalactivities: advertising in trade journals,catalogs, trade shows, direct mail, WWW.

Message focused on technical, factual,and descriptive content.

Multiple audience members.


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Economic/Financial Factors

Competition oligopolistic

Power/Dependency relationships

Reciprocity:Doing business with

companies that do business with them.

Economic variables: interest rates,

inflation, business cycle

Marketing of Industrial Goods

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