8. Industrial Marketing
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Transcript of 8. Industrial Marketing
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Marketing Application & Practices
INDUSTRIAL MARKETING
INDUSTRIAL PRODUCT (Defn)
It is the Product or Service which is offered toManufacturing, Trading or ServiceOrganisations or to Professionals orProfessional Institutions for their use infunctioning towards their business objective/s.
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Marketing Application & Practices
INDUSTRIAL MARKETING
INDUSTRIAL MARKETING (Defn)
It refers to the process of marketing suchindustrial products or services
HOW IS IT DIFFERENT ?
(a) Focused more on relationship
(b) Approach differs for each market
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Marketing Application & Practices
INDUSTRIAL MARKETING
INDUSTRIAL PRODUCTS Core Product : functional performance
Augmented Product : peripheral productAdditional features
Packaging
Sales Promotion
Before / After Sales Service Company Reputation
Availability / Reliability of delivery commit.
Prices
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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
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Marketing Application & Practices
INDUSTRIAL MARKETINGIncludes all organisations that acquire goods& services used in production of otherproducts or services that are sold, rented or
supplied to othersE.G. Manufacturing, mining, banking,construction, transportation, finance,communication etc.
Key characteristics1. Few buyers
2. Larger buyers
3. Close supplier customer relationship
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Marketing Application & Practices
INDUSTRIAL MARKETING CUSTOMERS
Various types :
1. Producers of goods & services
2. Middlemen3. Government units
4. Non-profit organisation
Are they different from end consumer ?
Less emotional
Focus is economy
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Marketing Application & Practices
INDUSTRIAL MARKETING
MARKET SEGMENTATION
It refers to offering different products, prices,distribution, promotion and / or supportservices to different customer segments
When all elements of Marketing Mix are
differentiated for each market segment, youhave a perfect Segmentation strategy.
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Marketing Application & Practices
INDUSTRIAL MARKETING
MARKET SEGMENTATION OFINDUSTRIAL 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
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Marketing Application & Practices
INDUSTRIAL MARKETING
MARKET SEGMENTATION OFINDUSTRIAL PRODUCTS
2. Who buys it ?
Offices / Manufacturing Industries / ServiceIndustries / Professionals
Type of Industry / Service
Geographical location
Customer Govt / Public / Private
Size of Customer
Heavy User / Light User
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Marketing Application & Practices
INDUSTRIAL MARKETING
MARKET SEGMENTATION OFINDUSTRIAL PRODUCTS
3. Why is it bought ?
Price Lowest / Value for Money / PremiumProduct
Technology Latest / Proven
Aspects determining Customers perception ofquality
e.g. Aesthetics, Durability etc
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Marketing Application & Practices
INDUSTRIAL MARKETING
INTERNAL CUSTOMERS1. Operators ( ease of use)
2. User dept (Up time)3. Maintenance dept ( less / no maintenance)
4. R & D dept ( Technology ?)
5.
Materials / Purchase (Cost / delivery)6. Finance dept (actual cost)
7. Personal ( how safe is product)
8. C.E.O. ( value for money)
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Marketing Application & Practices
INDUSTRIAL MARKETING
Buying chain members1. Gatekeeper/s
2. Influencer/s
3. Decision maker/s
4. Buyer / purchaser
5. User
The composition of above members is alsoknown a buying center
Period for purchase in Industrial marketingvaries from a day to several months
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Marketing Application & Practices
INDUSTRIAL MARKETING
THE BUYING PROCESS
1. Recognition of Need receipt of requisition
2. Make or Buy Decision3. Purchase
From single supplier On the basis of past purchase
On the basis of fresh negotiations From multiple suppliers
On the basis of past purchase
On the basis of fresh negotiations
On the basis of Tenders
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Marketing Application & Practices
INDUSTRIAL MARKETINGTHE BUYING PROCESS
4. Tenders : Open (Advertised / Public Openings)
Closed (Advertised / No public opening)
Limited (By invitation only)
5. Selection among Supplier Integrity
Meeting / Exceeding Specs
Quality
Delivery Time
Pre / After Sales Service
Company Reputation
Commercial Terms
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Marketing Application & Practices
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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Marketing Application & Practices
INDUSTRIAL MARKETING
Buyer Seller Relationship
More of partnership
Mutual trust
Long term outlook
Closely tied firms often work at lowertotal costs simply by reducing the risks& uncertainties
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Marketing Application & Practices
INDUSTRIAL MARKETING
Lower prices are possible with :
Back to back understanding
Annual rate contract
Large volumes
5 key dimensions that help buyer & sellerrelationships :
1. Co operation
2. Information sharing
3. Operational linkages
4. Legal bonds
5. Relationship specific adaptations
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Marketing Application & Practices
INDUSTRIAL MARKETING
Co Operation efforts treats problem asjoint responsibility
Information sharing could be risky
Operational linkages may help in reducingthe total inventory cost
Powerful customers may controlrelationship
Buyers may look for other sources toreduce risks
Reciprocity may influence relationship in
big way
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Marketing Application & Practices
INDUSTRIAL MARKETING
TYPES OF PROMOTION
1. Telephone Directory / Yellow Pages
2. Trade Directories / Publications
3. Journals
4. Press Advertising
5. Direct Marketing
6. Tele Marketing
7. Catalogue / Company Literature
8. Seminars / Exhibitions
9. Give Away
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Marketing Application & Practices
INDUSTRIAL MARKETING
FACTORS INDICATING PRODUCT DELETION
1. A declining volume of sales
2. A falling rate of profit
3. A declining share of the market
4. The appearance of a substitute thatrepresents an improvement
5. An increase in cost of production6. A declining market
7. The need for constant executive attention to
prevent loss
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Marketing Application & Practices
INDUSTRIAL MARKETING
Vendor approval / classification
1. Data gathering
2. Data analysis
3. Visit to vendor works
4. Vendor approval / registration
5. Vendor classification
This helps in limiting the competition for eachtype of product category
Unless vendor is approved the process of sale
cannot start
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Marketing Application & Practices
INDUSTRIAL MARKETING
NEW - TASK
BUYING
MODIFIED
RE-BUY
STRAIGHT
RE-BUY
TIME REQUIRED HIGH MEDIUM LITTLE
MULTIPLE INFLUENCE HIGH SOME LITTLE
REVIEW OF SUPPLIER HIGH SOME NONE
INFORMATION REQUIRED HIGH MEDIUM LITTLE
CHARACTERISTICS
TYPE OF PROCESS
ORGANISATION BUYING PROCESS
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Marketing Application & Practices
INDUSTRIAL MARKETING -DISTRIBUTION
WHY REQUIRED ?
1. Cost of Contacting Customers
2. Channel reach selling support3. Channels influence
4. Faster response
5. Faster Order Execution6. Easy Payment
7. Better Pre-sales/After sales service
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Marketing Application & Practices
INDUSTRIAL MARKETING -DISTRIBUTION
TYPES OF CHANNELS
1. Sales Agent
2. Wholesaler
3. Retailer
4. Authorised Service Center
5. C & F / Storage
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Marketing Application & Practices
INDUSTRIAL MARKETINGKEY PERFORMANCE INDICATORS OFSALES ACTIVITIES
1. Sales / Target (%)
2. Orders / Quotations (%)
3. Margins / Sales (%)
4. Cost of Sales / Sales (%)
5. Sales Value / Number of Order (%)6. Orders / Calls (%)
7. Key Account Contact
8. New Customer Orders / Orders
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Marketing Application & Practices
INDUSTRIAL MARKETINGKEY PERFORMANCE INDICATORS OFSALES ACTIVITIES (cont.)
1. Calls per day / Face to face time
2. New Prospects called
3. Credit Orders / Total Orders (%)
4. Calls to build Customer
Relationship5. Discounts / Sales (%)
6. Timely Submission of reports
7. Timely submission of Itineraries
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Marketing Application & Practices
INDUSTRIAL MARKETING -NEGOTIATION
Defn : Negotiation is the process ofdetermining what the other side really desiresand reaching an agreement so that they getwhat they want while you get what you want
Pre Requisites :
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 ?
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Marketing Application & Practices
INDUSTRIAL MARKETING -NEGOTIATION
Styles 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)
5 Ps of Negotiation :
Positive attitude The will to succeed Preparation before negotiation
Problem solving approach
Probing during negotiation
Promote yourself, company & product
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Marketing Application & Practices
INDUSTRIAL MARKETING -NEGOTIATION
Crucial Factors :
Information / preparation required
Evaluating bargaining power Opening the Negotiation
Rules of Conduct
Handling difficult personality types
Understanding devious negotiationtactics
Follow - up