Industrial Marketing

The Nature of Business Marketing

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What do we study here?

1. Is it totally different from Consumer Marketing ?

2. Which one is tougher?

3. Where do you have better job opportunities?I want to buy a pair of shoes- analyze the situation

4. How Business & Consumer Markets Differ

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Large andLarge andfew buyersfew buyersLarge andLarge andfew buyersfew buyers

ProductsProductsComplex/ Complex/ CustomizedCustomized

ProductsProductsComplex/ Complex/ CustomizedCustomized

Rational Rational BuyingBuyingbehaviorbehavior

Rational Rational BuyingBuyingbehaviorbehavior

Shorter, moreShorter, moreDirect channelsDirect channels

GeographicalGeographicalConcentrationConcentrationGeographicalGeographicalConcentrationConcentration

Distinct,Distinct,Observable Observable stagesstagesOf DecisionOf Decision

Distinct,Distinct,Observable Observable stagesstagesOf DecisionOf Decision

Perhaps prefer Perhaps prefer to buy directto buy direct

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MultipleMultiple sales sales callcallMultipleMultiple sales sales callcall

ReciprocityReciprocityReciprocityReciprocity

Close Close RelationshipRelationship

LeasingLeasingLeasingLeasing

Global Global competitioncompetition

SeveralSeveralinfluencersinfluencers

Professional Professional buyersbuyersProfessional Professional buyersbuyers

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Derived Derived demanddemandDerived Derived demanddemand

Inelastic Inelastic demanddemandinitiallyinitially

Inelastic Inelastic demanddemandinitiallyinitially

FluctuatingFluctuatingDemandDemandFluctuatingFluctuatingDemandDemand

Bull whip Bull whip effect- effect- forecastforecast

StimulatingStimulatingDemandDemandStimulatingStimulatingDemandDemand

Cross-Cross-elasticelasticDemandDemand

Cross-Cross-elasticelasticDemandDemand

Derived Demand

INCREASED INTERNATIONAL

TRADE

DEMAND FOR BUSINESS

FLYING

DEMAND FOR AIRPLANES

DEMAND FOR SHEET METAL AND ALUMINUM

INCREASED MINING

REQUIRED

Demand: Bauxite

inelastic Demand

Price inelasticityPrice/cost increases passed to customerComponent prices small % of total costOrder committed already, cannot back track

Fluctuating Demand

Fluctuating demandLinked to economy’s ups and downsProduct durability

Bullwhip effect ?

Stimulating Demand

Du pont, one of the largest producer of synthetic fibers, spends million dollars annually on advertising in TV despite no competition and not a healthy bottom line. Du pont invested? $ 1 million on advertising stretch polyester yarn cotton blend. They do not produce Jeans nor market to consumers.

Isn’t it weird ? Cried CFO

Cross elastic demand

Philips Transistor radio division at Pune virtually had to pull down his shutters He was doing well, no competitionCustomers were happywith the advent of TV ?

Classified differences- Areas wiseAreasAreas BusinessBusiness ConsumerConsumer

MarketMarket

CharacteristicsCharacteristics

Geographic Geographic concentrationconcentrationFewer buyersFewer buyers

DiverseDiverseLarge massLarge mass

ProductProduct ComplexComplexCustomizedCustomizedService very Service very importantimportantTotal solutionTotal solution

SimpleSimpleStandardStandardSome what importantSome what important

Buyer behaviorBuyer behavior Buyer seller dyadBuyer seller dyadRationalRationalRelationshipRelationship

PsychologicalPsychologicalImpulsiveImpulsiveNon personalNon personal

Classified differences- Areas wiseAreasAreas BusinessBusiness ConsumerConsumer

ChannelChannel

CharacteristicsCharacteristics

DirectDirectFewer intermediariesFewer intermediaries

IndirectIndirectMultiple layersMultiple layers

PromotionalPromotional Personal selling Personal selling emphasisemphasisOne to oneOne to one

Advertising Advertising emphasisemphasisOne to manyOne to many

Price characteristicsPrice characteristics BiddingBiddingNegotiatedNegotiatedList price for List price for standard partsstandard parts

MRPMRPPromosPromos

Business Marketing

Any sale to an industrial user, wholesaler, retailer, or organization other than the ultimate consumer. . .

Local to International

Bought by business

Government bodies

Institution

for consumption

for use

for resale

Upstream

Manufactured materials

Sheet metal

Plastic Resin

Direct

Power streeing

Car Seats

Tyres

Auto Mnfr

Maruthi

Fiat

Ford

Auto Buyers

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