UNIT 1 - Introduction to MIG - Copy
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Transcript of UNIT 1 - Introduction to MIG - Copy
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MARKETING OF INDUSTRIAL
GOODS Industrial Goods
The Demand for Industrial Goods
The Industrial Customer Purchasing System
Marketing Intelligence
Marketing Strategy
Marketing Control
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Industrial Goods
Meaning
Characteristics
The Industrial Marketing System
Participants
Channels
The Relationships: Contract of Sale
Franchise Agreements, Loyalty Confidence
Reciprocity
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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 andorganizational customers.
Customer can be private firm, publicagency, or nonprofit organization.
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An Overview of IndustrialMarketing
Industrial goods, also known as businessgoods, include goods used for businesspruposes and consumer goods which are
bought for organisational consumption orwhich are in the distribution channelinvolving middlemen.
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Industrial Marketing includes the
following1. Marketing of industrial goods2. Marketing of consumer goods to:
Marketing middleman Organisations for in-house consumption
Organisations for giving away as
gifts/compliments Organisations for charitable distribution
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Consumer goods & Business
goodsThe major factors of differences betweenconsumer goods & business goods are:
Market characteristics
Customer characteristics
Demand characteristics
Product characteristics
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Customer Characteristics
The salient features of the business buyercharacterisitics vis-a-vis consumer buyercharcteristics are the following:
Number of Customer
Order size & frequency
Decision making
Buying motives
Contractual penalties
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Reciprocity
Buyer-Seller relationship Vendor loyalty
Bargaining power
Product/Service mix Product Life Cycle
Product Specification
Equipment Compatibility
Consistency of Quality
Service
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Systems selling
Branding
Product line
Degree of Fabrication
Packaging & Labelling
Market Characteristics
Market structure
Market size Horizontal & Vertical Markets
Marketing mix characteristics
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Geographic concentration
Product & demand characteristics
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So whats different about B2B?
Marketing Concept
Marketing Mix
Market SegmentationProduct Life Cycle
All apply in both B2C and B2B.
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So whats different about B2B?
The technical characteristics of theproduct are important.
These products directly affect theoperations and economic health of thecustomer.
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 demandHow the customer buys
Communication process
Economic/Financial factors
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Products/Services
More complex
Functional vs. Symbolic Attributes
Large unit dollar value/Large quantitiesCustom/Tailored
Various Stages from raw material tofinished goods.
Foundation, Entering, Facilitating Goods
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Raw Material Extraction
Material Processing
ManufacturingParts/Subassembly
Assembly
Distribution
Wholesale/Retail Trade
Final Consumers
Facilitators
Firms in
Production
Chain
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Nature of Demand
Derived
Joint/Shared
Concentrated
Inelastic
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How Customer Buys
Group Process
Formal
Lengthy
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 withcompanies that do business with them.
Economic variables: interest rates,inflation, business cycle
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Difference between Consumer &Business Marketing
Personalconsumption
Direct demand
Buyers areindividuals &households
Impulse buying
No. of buyers arelarge
Production of othergoods & services
Derived demand
Buyers are firms &other organisations
Impulse buying is
almost absent
No. of businessbuyers are
relatively small.
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Decision making processis informal & simple
Technical specificationsare less important
Order size is very small
Service aspects aregenerally less important
Sales promotion is very
common Distribution channels are
generally lengthy
Decision making processtends to be complex &
formal
Technical specificationsare important
Order size is very largeService aspects are
generally very important.
Sales promotion is notcommon
Distribution channels aredirect or short & the no.Of resellers small
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Branding plays agreat role
Packaging also playsa promotional role
Consumers aredispersed
geographically Demand for consumer
goods is price elastic
Conformity to productspecifications &
reputation of themanufacturer are moreimportant
Packaging hardly has apromotional role
Business buyers in manycases are
geographicallyconcentrated.
Price sensitivity ofdemand is low.
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AREAS / CHARCTERISTICS IND MARKETS CONSUMER MATKETS
Market GEO Concentrated
Few Buyers
GEO Disbursed
Large no. Of Buyers
(Mass
Markets
Products Technically ComplexCustomized
Non
TechnicalStandardized
Service Very Important Somewhat important
Buyer Behavior Various Functional
specialists involved
Mainly Rational buying
decisions.Interpersonal
relationship between
buyers and sellers.
Family members involved
Physiological /
Psychological Social need
based buying decisionsNonPersonal
Relationship.
Channel More direct
Multi Channel
Indirect
Few Channels with many
layersPromotional Importance to personal
selling
Importance to Advertising.
Pricing Competitive bidding /
Negotiated prices
MRP
www.a2zmba.com By Prof. Havaldar
/ /
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(A) What are the types/classifications of Industrial/Businesscustomers?
www.a2zmba.com By Prof. Havaldar
INTERMEDIARIES /MIDDLEMEN (DISTRIBUTORS)
OEMS
USERS
PUBLIC SECTORUNITS (BHEL)
GOVT. UNDERTAKINGS(RAILWAYS, DEFENCE UNITS)
PUBLIC INSTITUTIONS(GOVT. HOSPITALS)
PRIVATE INSTITUTIONS(SCHOOLS, COLLEGES)
MANUFACTURINGUNITS (SUGAR, MILK)
NON-MANUFACTURINGUNITS (BANKS, HOUSING)
COMMERCIALENTERPRISES
GOVERNMENTCUSTOMERS
INSTITUTIONALCUSTOMERS
CO-OPERATIVESOCIETIES
INDUSTRIAL /BUSINESSCUSTOMERS
FIG. TYPES OF INDUSTRIAL / BUSINESS CUSTOMERS
IM/2-2/10
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FIG. CLASSIFICATION / TYPES OF INDUSTRIAL PRODUCTS / SERVICE
(B) How are Industrial Products / Services Classified?
Classification into 3 Groups shown below.
www.a2zmba.com By Prof. Havaldar
RAWMATERIALS(IRONORE, CRUDEOIL)
MANUFACTUREDMATERIALS
(STEEL, FUELOIL)
COMPONENTPARTS(BEARINGS, TYRES)
LIGHTEQPT(COMPUTERS, HANDTOOLS)
PLANT/BUILDING(FACTORIES, OFFICES)
SUPPLIES(LUBRICANTS, ELECTRICALITEMS)
SERVICES(LEGAL, COURIER)
MATERIALS&PARTS
(ENTERPRODUCT
DIRECTLY)
CAPITALITEMS(USEDIN
PRODUCTION/OPERATIONS)
SUPPLIES/SERVICES(TOSUPPORT
OPERATIONS)
INDUSTRIAL
PRODUCTS/SERVICES
SUBASSEMBLIES(EXHAUSTPIPEINM.C.)
HEAVYEQPT(MACHINES, TURBINES)
IM/2 4/10
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(C) Marketing Implications for different types of products &
customers?i. For Materials & Parts, Direct selling is done to large
OEMs (Original Equipment Manufacturers) and users,but indirect selling through industrial distributors /dealers becomes cost effective for smaller volume OEMs
and users.ii. For Capital items, Direct selling through company sales
force is common, with extensive interactions on technical& commercial factors.
iii. For Supplies Industrial distributors / dealers are mostly
used but for marketing of services, word-of-mouth playsan important marketing role, with quality & price ofservice as key factors.
www.a2zmba.com By Prof. Havaldar
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(D) Purchasing Orientations of Business Buyers Business buyers/ Industrial customers follow one of the three
purchasing orientations:
(i) Buying, (ii) Procurement, or (iii) Supply chain Management.
(i)Buying Orientation : The firm with buying orientation followsthe practice of (a) selecting lowest price supplier, (b) gaining powerover suppliers and (c) avoiding risk of buying from new suppliers. Ithas a Short-term focus.
(ii) Procurement Orientation : The purchasing firm withprocurement orientation has a long-term focus. It achieves theobjectives of quality improvement and cost reductions by followingthe practices of (a) collaborative relationship with major suppliers and(b) working closely with other functional areas in the company.
(iii) Supply chain Management Orientation : Here, the firmfocuses on improving the value chain from raw materials to end users.This is achieved by (a) delivering superior value to end users, (b)outsourcing non-core activities, (c) and supporting collaborativerelationships with major suppliers.
www.a2zmba.com By Prof. Havaldar
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(E) Purchasing Practices of Different Types of Industrial /
Business Customers
(i)Purchasing in commercial enterprises Involve Technical & Commercial depts.
Major Tasks / Procedure: identifying, negotiating, selecting suppliers,building relationship.
Purchasing to improve operational efficiency & contributeto firms
competitive advantage.(ii) Purchasing in Govt. units
DGS&D agencyfinalizes rate contracts for standard products for Govt.units.
Main Tasks / Procedure : Registration of the firm & its Products, Tender
Advertisements, no negotiation in Open tenders, negotiations done inclosed / limited tenders.
Orders Finalised on lowest bidders (suppliers offering Lowest prices /Landed Costs)
www.a2zmba.com By Prof. Havaldar
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(iii) Purchasing in Institutions
If the Institute is a Govt. Hospital Purchasing practices ofGovt. units Followed
Similarly a private School / College follows practices ofcommercial enterprises
However, better to study each major institution.
(iv) Purchasing in cooperative societies
Similar to Institutional purchase.
www.a2zmba.com By Prof. Havaldar
IM/2-7/10
CLASSIFICATION
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CLASSIFICATIONThere are different bases of classification of
industrial goods:
On the basis ofhow the goods are usedare classified as:
1. Capital Equipment & Investments
2. Manufactured Materials & Componentparts.
3. MRO Supplies
4. Process Materials
5. Business Services
6. Raw Materials
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On the basis of the nature of theoutput & its use,
Basic industries
Capital goods industries
Intermediate goods Consumer goods industries
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THE INDUSTRIAL MARKETINGSYSTEM
Industrial buyers
Sellers
Marketing intermediaries
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Industrial Customers
CommercialOrganisations
Non CommercialOrganisations
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