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Marketing
Nature of Business Marketing
What is Business Marketing?
Business marketing also referred to as “Industrial marketing” or “B2B marketing”
or “Organizational marketing”.
Business marketing is the marketing of products & services to business
organizations.
Business organizations include:
Manufacturing companies Business organizations buy products
& services to satisfy many objectives
Govt. undertakings
like production of other goods &
Private sector organizations services, making profits, reducing
costs, & so on.
Educational institutions
Hospitals
Consumer marketing is the marketing
Distributors / Dealers of products & services to individuals,
families, & households. The
consumers buy products & services
for their own consumption.
The demand for industrial products & services does not exist
by itself. It is derived from the ultimate demand for Demand
for
consumer goods & services. furniture
Demand
Industrial customers buy goods & services for use in for wood
producing other goods & services.
Cross-Elasticity Demand
Demand is „elastic‟ if the %age change in quantity demanded
is more than the %age change in price.
Cross elasticity of demand is the responsiveness of the sales Price of
of one product to a price change in another product. Tea
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ISB&M Business Marketing
Industrial Market & Environment
Industrial Intermediaries / middlemen, reselling to OEMs,
Commercial
enterprise
distributors / dealers users, Govt. firms
Business / Industrial customers
Original equipment
For Exide (battery manufacturer), Telco, is an OEM
manufacturers
Manufacturing units
societies
Non-manufacturing
Cooperative banks, housing cooperative societies
units
materials
Semi-finished parts like bearings, tyres, small
Component parts motors, batteries
accessories
Installations or heavy Furnaces, machines, turbines
equipment
Offices, plants, warehouses, parking lots, real
Plant & building
estate property
Suppliers &
Component Intermediaries
& (dealers)
Raw Material Subassembly Final
Suppliers Suppliers Assembly Consumers /
Manufacturer End users
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Buying members are influenced by both purchasing objectives of the firm & personal
objectives like higher status, job security, salary increments, promotions, & social
considerations (friendship, mutually beneficial relationships etc.)
The supplier(s) who gets the highest total score receives the business or the order form
from the buying organization.
Internal-Business-Process
Customer
Mission To satisfy shareholders &
Which customer value
& customers, what business
company should focus on to
Strategy process company must excel
achieve its mission?
at?
The BSC is a new technique or framework that can be used to evaluate supplier performance in
information age companies. It translates a company‟s mission & strategy into a set of performance
measurements.
Operations Processes
Identify Customer Design & Develop Make/Buy
Needs & Market Product/Services Products/Services
Innovation Processes
Market
Products/Services
Organizational Variables
Buying Centre Variables
• Objectives/goals
• Authority
• Organization structure
• Size
• Purchasing policies & procedures
• Key influencers
• Evaluating & reward systems
• Interpersonal relationship
• Degree of decentralization in
• Communication
purchasing
Buyer’s
perception of
sales rep
Is the
Dimensions
of Buyer- Role played
industrial
by industrial
buyer rational Seller buyer
or irrational
Relationship
Role played
by industrial
sales rep
Compatible
Content
Ideal Inefficient
Transaction Transaction
Task
Oriented
Interaction
Incompatible Inefficient No Oriented
Styles of interaction
Add financial
Transaction marketing is
benefits
transaction oriented buyer-seller
interaction, which focuses on
closing a sale with a customer.
Approaches
for This is achieved by single sales
developing
customer person.
Add structural
bond
ties to
Add social For large customer, companies
financial &
benefits
social are moving towards team selling
benefits
& relationship marketing.
Sales Presentation
Get information about the buying centre members, needs of potential customer
firms.
A sales presentation must be tailor made to fit the needs & expectation of the
potential customer.
A sales presentation should first present the positive points about his products,
services & company, & keep difficult or negative points at the en.
Project the products/services as differentiator.
Reciprocity
It is a practice of buying from one’s own customers & also using purchasing power
to sell to one’s supplier.
When products are homogenous or products have little differentiation & price
competition are less, reciprocal dealings are likely to occur.
Caution must be exercised to keep it to minimum level.
Value-added • The focus is on complete understanding of the present & future needs of the
customer, & meeting those needs better than competitors, so as to obtain a
Exchanges maximum share of the customer’s business.
Collaborative • The focus is between a customer firm & a supplier firm, & it is the process of
building strong social, economic, service, & technical ties over a period of time.
/ Partnering • The purpose of partnering is to lower the total cost or increase value, in order
Exchanges to achieve mutual benefits.
It is also defined as the process of using digital technology for transmitting information
between organizations.
Manufacturer
Distributor Online
/ Dealer Telemarketing Direct Mail
Marketing
Industrial Customers
Channel Objective
Channel tasks
Channel Constraints
The type of
External intermediaries
environment • VARs
Channel Alternatives
Competition • Industrial distributors /
Company dealers
Product • Manufacturer’s agents
Characteristics Evaluation of Alternative • Brokers
Customer • Commission merchants
No. of intermediaries /
channels
Selection of Channel • Selective distribution
Economic factors • Intensive distribution
Control factors • Exclusive distribution
Adaptive factors Terms & responsibility of
channel members
Industrial customers
Finished goods
storage Industrial distributors /
dealers
Total Distribution Cost = Freight + Warehouse Cost + Inventory Cost + Cost of Lost
Sales due to Delayed Delivery
Identify the
problem / Present the
Develop research Collect the data (or Process & analyze
opportunity & research findings
design (or plan) information) the data
define research (or report)
objective
Information
type Observational | Exploratory | Survey |
Sources of Primary data
Experimental
data
Research Secondary data
methods
Sampling plan
Method of
contacts
Data collection
method
Marketing
research
studies
Internal
Information
System
Action
Marketing Manager
Question Answer
Decision
Statistics
models
Display Database
Environment
Strategy
Business/SBU Strategy
SBU ‘A’ SBU ‘B’ SBU ‘C’
(Strategic Mgmt.)
Functional Strategy
Finance Marketing Production
(Operations Mgmt.)
Business Unit / SBU Provide competition & customer analysis for Strategic
developing long-term business strategy, including marketing
competitive advantage
Develop segmenting, targeting, & positioning
strategies
Take product-line decisions
Intensive growth
Integrative growth Product
Market penetration
development
Diversification growth Current strategy
strategy
markets
Concentric diversification: consists
of searching for new products that
have technological / marketing Product-
synergies with firm’s existing Market
products. Expansion
Grid
Horizontal diversification: consists
of adding new products Diversification
technologically unrelated to the New
existing products. markets strategy
Market
Concentric diversification
Conglomerate diversification: development
consists of seeking new product- strategy Horizontal diversification
markets that are unrelated to Conglomerate
existing products. diversification
Strategic Advantage
Uniqueness perceived
by the customer Low-cost position
Strategic Target
Particular
segment only
Focus
ISB&M Business Marketing
Developing Industrial Marketing Plan
Section Contents
Situational analysis Market situation Includes data on market size, growth, projections, sales,
market share , & profits for past 3/5 years. It also indicate
target customer needs, buying behavior, buying stage, &
buying situations.
Competitive situation Consists of identifying, ranking, market share, objectives
& strategies, strength & weaknesses, & reaction patterns
of major competitors.
Product situation Includes data on sales, unit price, profits for each major
product item in the product line for past 3/5 years.
Macro-env. situation Consists of identifying PEST factors & then forecasting
the future trends & the impact on the product.
SWOT & issues SWOT analysis Includes identifying major strengths, weaknesses,
analysis opportunities, & threats faced by the product.
Issues analysis Consists of determining major issues faced by the firm,
based on situational & SWOT analysis.
Objectives & goals Determine sales, market share, & profit, considering the
env. & issues analysis done earlier.
Section Contents
Marketing strategy Selection of target market segments.
Positioning strategy relative to competitors.
Marketing-mix strategy.
Customer service & marketing research strategy.
Action plan Each marketing element is broken down to specific actions to answer:
Who will take the specific action, by when, & at what cost?
Marketing budget Building the revenue & expenditure budget. Revenue budget includes
forecasted sales in units, average unit price, & sales revenue. Expenditure
budget includes estimated marketing expenses on personal selling,
promotion, distribution, etc.
Implementation & control Building marketing org. to implement the marketing plan. Control
includes periodic review of actual performance against goals & taking
corrective actions.
Contingency plans Some firms prepare contingency plans in case uncertain situation arise.
Setting Goals
Performance
Measurement
Performance Analysis
Taking Corrective
Actions
• Sales analysis
Annual Plan • Market share analysis
• Expense-to sales ratio
Control • Profit/contribution analysis
• Customer satisfaction monitoring
The industrial product is defined not only as a physical entity, but also as a complex
set of economic, technical, legal, & personal relationship between the buyer & the
seller.
Customer
Needs
Factors
determining
Technology change in PLC
product
strategy
Govt.
Policies /
Law
Changing
Technological
needs of
Changes Industry
customer
Sales & Profits
sales
(Rupees)
Changing Industry
Competition profits
+1
0
-1 Introduction Growth Maturity Decline
Time
Time
M = Maturity Period
Strong Service
Weak Service
Dropping the product or product line is the most controversial decision as many
stakeholders are threatened by this decision.
Factors to be considered:
Will the customer relationships be affected?
Will the profitability be affected due to change in overhead allocation?
What will be the reaction of the employees?
Will the sales of other products get affected?
Is there a new product to replace the eliminated product?
Will the company’s image be affected?
What will be the possible competitive reactions?
Which are the customer needs that new technology can meet?
High
Hi-fashion marketing consists of
known & slow changing technology
applications to meet difficult to
predict consumer needs. E.g.,
Motion pictures, fashion clothes.
Laggards
Early adaptors (16%)
(14%)
Innovators
(3%)
Plan Whole
Target a Niche Develop
Product
market Partnerships
Properties
Unique
Distribution Communication
Positioning
Strategy Strategy
Strategy
Pricing Strategy
Creating awareness
Reaching members of buying centre
Increasing sales efficiency & effectiveness
Efficient reminding
Sales lead generation
Supporting distribution channel members
Promotional
letters
Entertainment
300
Cost / Unit (in rupees)
200
100