MODULE 1

BUSINESS MARKETING

PRESPECTIVE

• The place where industrial buyer come into direct contact industrial seller.

• Industrial Marketing/ B2B Marketing/Organizational Marketing

Business Marketing Concept

• Marketing of Products, services and solutions to organizations.

• Unique needs of industrial customers.

• Relatively few buyers and Derived demand.

• Products used for production of other consumption related products.

Business customers are also known as industrial customers, purchase products or services to use in the production of other products.

Classification of industrial customers• Commercial enterprises

• Government customers

• Institutional customers

• Cooperatives societies

Industrial Customers

UNIQUE CHARACTERISTICS OF EACH TYPE OF

INDUSTRIAL CUSTOMERS

1. COMMERCIAL ENTERPRISES Distribution by size Geographic Concentration

2. GOVERNMENT E-Government Influence on Government Buying Understanding Government Contracts

3. INSTITUIONAL CUSTOMERS

Purchasing ProceduresNumber Of CustomersGroup Purchasing

4. CO-OPERATIVE SOCIETIESOpen MembershipSources of FinanceService Motive

*Marketing strategies for industrial customers

Industrial marketer must understand the process & preference of commercial enterprise buying.

Different promotional strategy should be used for industrial product sales.

Proper communication between marketer & buying center of organization.

Assurance of dependable supply.Understanding the requirement of a specific target organisation& building a marketing program around these.

Commercial enterprises

* Government customers

Business marketer must understand the unique c of challenges selling to federal government units.

Contractual guideline fixed price contract

cost- reimbursement contracts

Authorized department asked for proposals from qualified suppliers.

Reverse trade show concept particularly in provincial & territorial govt.

* Institutional customer

Business marketer must carefully evaluate the budgeting status of institutional customers.

Salesperson must carefully analyze both professional staff & purchasing department.

Group purchasing for quantity discount.Discount &effective distribution function play important roles in obtaining & keeping institutions as customers.

Classification of industrial products

Capital equipment and investmentManufactured materials and component partsMRO supplies ( maintenance, repair, operating)Process materials Raw materialsBusiness servicesOverlapping of categories

B2B MARKETINGIS

MARKETING OF GOODS AND SERVICES TO :◦Companies◦Government Bodies◦ Institutions (i.e. hospitals)◦Non-Profit Organizations (i.e. American

Red Cross)

FORUSE IN PRODUCING THEIR

PRODUCTS AND/OR TO FACILITATE THEIR OPERATIONS

Business that sells products or provides services to other businesses. goods or services are sold for any use other than personal consumption sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer. business marketing(industrial marketing) is also called business-to-business marketing

• B2B sale is to a "Business" i.e. organization or firm

• Shorter and more direct channels of distribution.

• For corporate (E.g; ingredient materials or components) for consumption(E.g. process materials, consulting services) or for resale...

• DuPont and IBM spend more than $60 million a day on purchases to support their operations.

Major Uses of B2B Products

For additional production

For use in operations For resale

Characteristics B2B MarketSales volume Greater

Purchase volume Greater

Number of buyers Fewer

Location of buyers Concentrated

Buyer-seller relationship Closer

Nature of channel More direct

Key promotion method Personal Selling

• Their demand is derived from the demand for final consumer goods.

• Industrial demand may be inelastic

• Buyer interest in price depends on the nature of the product.

• Buying is basically concerned with economic factors.

• The buyer’s attitude seems to be affected by the tax treatment according to the product.

NATURE OF INDUSTRIAL GOODS AND SERVICES

PURCHASING ORIENTATION AND PRACTICES OF BUSINESS CUSTOMERS

ORGANISATIONAL BUYING PROCESS

Product Specification

Need Recognition

Supplier Search

Post-Purchase Behavior

Purchase Decision

Proposal Evaluation

PURCHASE ORIENTIATION

1. Buying orientation

2. Procurement Orientation

3. SCM Orientation

Supply Chain Management Orientation

Procurement OrientationBuying

Orientation

Raw Material Supplier

Component &

Subassembly

SupplierFinal

Assembly supplier

Intermediaries

(Distributors,

Dealers)Consumers / End

users

Industrial Marketing Environment

Industrial marketing environment are those factors and institutions which affect the organization and operation of the business activities. It affects the functioning of the businesses.

Nature of Industrial Environment

1.Interdependence

2.Dynamic

3.Media of Social Change

4.Adverse Condition

5.Uncertainties & Restriction

6.Unlimited effect of Uncontrollable Factors

7.To keep regular Vigil on the changing environment

8.Danger of the Causal Change

Types of Industrial Environment

Basically Industrial environment has two types:

Industrial Environment

Internal Environment External Environment

Micro / Operating Environment

Macro/ General Environment

Internal Environment

Internal Environment refers to factor existing within a business firm in the industrial market. These environments are controllable in nature and can be alter or modify to suit the business.

It includes the following Factors:

Value System

Mission and Objective

Management Structure and Nature

Internal Power Relationship

Human Resources

Company Image and Brand

Other Factors:

Physical Assets and Liabilities

R & D and Technological Capabilities

Marketing Resources

Financial Factors

External Environment

External Environment refers to the factors existing outside the business firm in the industrial market. The external factors are by and large, beyond the control of the business. The external environment has two types:

1. Micro/ Operating Environment:

Micro environment consists the company’s immediate environment that affects the performance of company. This environment remains close to the business and affects the ability to work.

The micro environment factors are as follows:

Suppliers

Customers

Facilitator

Competitors

Marketing Intermediaries

Public

2. Macro/ General Environment

Macro environment are general environment of the business and uncontrollable in nature. These factors create opportunities and pose threats to the business.

According to Philip Kotler “ Macro environment includes forces that create opportunities and pose threat to the business units. It includes economic, demographic, natural, technological, political and cultural environment”.

Macro Environment

Political

Economical

Socio-

Cultural

Technological

Demographic

Natural

Environmental Analysis in Industrial Marketing

Environment Analysis is managerial decision making process of assessing and interpreting the information gathered through scanning. The information is evaluated for accuracy, to resolve inconsistencies , and to assign significance. The current change are identified and future changes are predicted.

The steps of Environment Analysis is as follows:

Scanning Monitoring Forecasting Assessment

Strategies For Managing The Industrial Marketing Environment

Industrial environment clearly dictates the need for industrial marketers to develop and maintain strategies to influence, modify, or respond to actions within the environment that may hinder or aid the achievement of organizational objective. Marketers must adopt a proactive , creative stance with respect to the external environment.

The strategies that are available for marketers for environmental management are as mentioned below:

Independent Strategies:- Pricing decision, promotion decision etc

Cooperative Strategies :- Cooperation with other groups, firms or industries (Joint venture) Examples: Myriad computer manufacturer, IBM Compatibles etc.

Strategic Maneuvering:- It involves strategic that are designed to alter or change the firm’s relationship with respect to its interface environment.

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