Presentation onIndustrial Marketing(B2B Marketing)

By:- Abhishek jain Manik gupta Sandeep

ranjan Vaibhav

tiwari

IntroductionBroadly marketing could be split into :

1)Consumer marketing (B2C "Business to Consumer")

2)Industrial marketing (B2B "Business to Business").

Industrial marketing is the marketing of goods and services from one business to another.

The concept of organisational or industrial marketing is used to describe marketing activities targeted at all individuals and organisations that acquire products and services that are used in the production of other products and services.

These products include :

Capital goods (e.g. buildings, land and machines),

Operational products (e.g. Accessory equipment, supplies, maintenance services)

Output products (e.g. raw materials,components, production services).

Difference betweenB2B and B2C

Marketing is one-to-one in nature. It is relatively easy for the seller to identify a prospective customer and to build a face-to-face relationship.

High value considered purchase.

Purchase decision is typically made by a group of people ("buying team") not one person.

Often the buying/selling process is complex and includes many stages (for example; request for expression of interest, request for tender, selection process, awarding of tender, contract negotiations, and signing of final contract).

Marketing is one-to-many in nature. It is not practical for sellers to individually identify the prospective customers nor meet them face-to-face.

Lower value of purchase.

Decision making is quite often impulsive (spur of the moment) in nature.

Greater reliance on distribution (getting into retail outlets). More effort put into mass marketing (One to many).

Business 2 Business Business 2 Consumer

Selling activities involve long processes of prospecting, qualifying, wooing, making representations, preparing tenders, developing strategies and contract negotiations.

E.g. of B2B selling process:

An organization is seeking to build a new warehouse building. After carefully documenting their requirements, it obtains three proposals from suitable construction firms and after a long process of evaluation and negotiation it places an order with the organization that it believes has offered the best value for money

More reliance on branding. Higher use of main media (television, radio, print media) advertising to build the brand and to achieve top of mind awareness.

E.g. of the B2C selling/buying process are...

A family are at home on a Sunday night and are watching television. An advertisement appears that advertises home delivered pizza. The family decides to order a pizza

Shapiro and Bonoma (1995) suggest that industrial markets can be meaningfully segmented using the following criteria:

1. Demographics2. Operating variables3. Purchasing approaches4. Situational factors5. Personal characteristics

1. Demographics2. Operating variables3. Purchasing approaches4. Situational factors5. Personal characteristics

Situational factors

–Urgency–Specific application–Size of order

Operating variables–Technology–User/nonuser status–Customer capabilities

Operating variables–Technology–User/nonuser status–Customer capabilities

Personal characteristics

–Buyer-seller similarity–Attitudes towards risk–Loyalty

Purchasing approaches

–Purchasing function organization–Power structure–Nature of existing relationship–General purchase policy–Purchasing criteria

Demographic-Which industry-Company size-Geographical area

RkCharateristics of B2B MarketingGEOGRAPHIC MARKET CONCENTRATION

• Business market more concentrated than consumer market.

• Geographic concentration decreasing as Internet technology improves.

SIZES AND NUMBER OF BUYERS

• Business market has smaller number of buyers than consumer market.

• Many buyers are large organizations, such as Boeing, which buys jet engines.

THE PURCHASE DECISION PROCESS

• Often involves multiple decision makers, is more formal, and may require bidding and negotiations.

BUYER-SELLER RELATIONSHIPS

• Often more complex than in consumer market with a greater reliance on relationship marketing.

EVALUATING INTERNATIONAL BUSINESS MARKETS

• Business purchasing patterns differ from country to country.

• Global sourcing Purchasing goods and services from suppliers worldwide.

The buygrid model (Robinson et al 1967)

Buyclasses

Buyphase New task Modified re-buy Straight re-buy

Need identification X X XDetermine requirement XSpecify requirement XSearch for possible sources

X

Source evaluation XSelect source X X XEstablish order routine X XEvaluate performance feedback

X X X

Composition of the buying centre•Includes all the members of the organisation who play any of the following seven roles in the purchase decision process:

• Initiators•Users•Influencers•Deciders•Approvers•Buyers •Gatekeeper

Determinants of organisational buying behaviour

Environment•Government regulations•Economic climate•Technological change•Derived demand

Organisation•Structure and style•Politics•Product use

Buying centre•Group decisions•Individual behaviour•Gatekeeper•Conflict resolution

ORGANISATIONAL BUYING

“the decision making process by which formal organisations establish the need for purchased products and services and identify evaluate and choose among alternative brands and

suppliers” Webster and Wind 1972

Sheth’s model of organisational buying

Sales territory modelSales territory:-A sales territory is a

particular geographical area that has potential customers for a particular product. The sales territory also has present customers. The territory is assigned to a salesperson who is responsible for the sales management activity in the region. Dividing the entire sales region into a number of sales territories facilitates in smoothing the sales management operations.

Sales ForceA group of salespeople or sales

representatives responsible for the sales of either a single product or the entire range of an organization's products. A sales force normally reports to a sales manager.

Sales Force Size And Territory Alignment ProcessAn efficient and effective salesforce is

required for enhancing the sales productivity of an organization.

An important tasks of sales management is to ascertain the salesforce size to be deployed in a particular sales territory

Organizing The Sales ForceThe selling activity in the organization is

carried out by the salesforce. It is imperative for the management to cultivate and nurture an efficient salesforce towards enhancing the sales productivity. Sales management is the process of attaining the salesforce goals through the activities of planning, staffing, training, leading, and controlling the salesforce.

Time And Territory Management For effective management of the sales

process, different sales territories are assigned to the salesforce.

Time and territory management are two of the most significant aspects of the sales management process.

A company has four sales territories and four salesmen available for an assignment.

All terrotories are equally rich in sales potential.

Following are the estimates of sales expected from a typical salesman:

Territory 1 2 3 4

Annual sales(rs)

1,26,000

1,05,000

84,000 63,000

The four sales man also differ in their ability. It is estimated working under same

condition,their yearly sales would be proportionately as follows:

For max. expected sales,the intuitive answer is to assign the best salesman the the richest territory,next best to the next richest and so on.

Salesman

A B C D

Proportion

7 5 5 4

Applying assignment method

1 2 3 4 Sales proportion

A 42 35 28 21 7

B 30 25 20 15 5

C 30 25 20 15 5

D 24 20 16 12 4

SALES(Rs ‘000)

6 5 4 3

Considering their yearly sales as 21, taking Rs 1000 as one unit,dividing individual sales unit to calculate sales by each saleman

TERRITORY

salesman

1 2 3 4

A 0 3 6 9

B 0 1 2 3

C 0 1 2 3

D 0 0 0 0

1 2 3 4

A 0 3 6 9

B 0 1 2 3

C 0 1 2 3

D 0 0 0 0

1 2 3 4

A 0 2 5 8

B 0 0 1 2

C 0 0 1 2

D 0 0 0 0

Subtracting 1 from each uncovered element and adding it to the element at the intersection of two lines

1 2 3 4

A 0 2 5 8

B 0 0 1 2

C 0 0 1 2

D 1 0 0 0

Salesman Territory Sales(Rs)

A 1 42

B 2 20

C 3 25

D 4 12

Total 99

Salesman Territory Sales(Rs)

A 1 42

B 2 25

C 3 20

D 4 12

D Total 99

Assignment set 2

Assignment set 1

Thank you !!