KARTHEEK.

ALDI Definition of Industrial Marketing Industrial marketing consist of all activities involved in the marketing of products & services to organisation (commercial enterprise, profit & non profit institutions, government agencies & resellers) that use products & services in the production of consumer or industrial goods & services, & to facilitate the operation of their enterprise. In simple IM is one where manufacture is selling its products to another business either in the form of raw materials, component parts or selling its service for consumption, use, resale or for value addition

Process of exchange in the IM 1.product or service exchange 2.Information exchange 3.Financial Exchange 4.Social exchange

Contrasting Industrial & consumer marketing 1. The structure of the market 2.product usage 3.the nature of buying behaviour involved 4.The channels of distribution 5.promotional variables 6.Pricing strategies

Characterstics IM

1. Market Characteristics 2. Product Characteristics 3. Service Characteristics 4. 5. 6. 7. Buyer behaviour Decision-making Channel Characteristics. Promotional Characteristics

8. Price Characteristics

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Economics of Industrial Demand Derived Demand

Industrial customer purchase goods & services for use in the producing other goods & services Joint Demand It occurs when products require existence of other products.

Cross elasticity of demand It is the response in the sales of one product to a price change in another.

Fluctuating Demand The industrial marketer must monitor the changing preferences of the consumers & demand patterns

Resellers Market Resellers like industrial firm do not purchase goods & services for personal consumption but do so facilitate the operations of their businesses.

TYPES OF INDUSTRIAL CUSTOMERS

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KARTHEEK.ALDI Purchasing in commercial enterprise The purchase of goods & services by commercial enterprise depends on the nature o the business,the size of the firm & technical complexity of the products purchased.

Activity chart for a typical purchasing process in a commercial enterprise

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Types & Analysis of Environment

ECOLOGI CAL PHYSIC AL ENVIRONM ENT INTERN (S&W AL ANALYSIS)

AIR & WATER POLLUTION SOLID WASTE DISPOSAL CONSERVING NATURAL RESOURCES WATER, POWER, TRANSPORTATION LOW-COST, SKILLED

EXTERN (O&T AL ANALYSIS)

MANPOWER COMPANY LOCATION, IMAGE / REPUTATION R & D & PRODUCTION FACILITIES H R & FINANCIAL RESOURCES MARKETING EFFECTIVENESS CUSTOMERS & MIC (AFFECT COMPETITORS RO PARTICU SA SUPPLIE FIR LAR RS M) ECONO MIC TECHNOLOGI MAC (AFFEC CAL RO GOVT., POLITICAL, ALL TS LEGAL CULTURAL & FIRMS) SOCIAL - PRESS, PUBLIC HOLDERS, SHARE PUBLIC INVESTORS & INTEREST

Strategies for managing industrial environment A continuous monitoring of the external environment will spin out new opportunities & threats which need to be identified Three strategies are available for managing external environment 1.independent strategies 2.cooperative strategies Strategic planning

The nature of Industrial Buying The main objective of purchase /materials management is defined as buying right items in the right quantity,at the right price,for delivery at the right time & Place. Purchasing objectives

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KARTHEEK.ALDI 1.Delivery/Availability 2.Product Quality

Product may satisfy Indian standard or British standard specifications but may fail on shop floor Consistency in product quality to reduce cost of inspection Interruptions in production process due to rejections Loss of time due to arranging of rejected materials 3.Lowest price 4.services

Prompt & accurate information from suppliers Application or technical assistance Spare parts availability Repairs & maintenance capability Training if required 5.Supplier relationship Personal objectives 1.higher status 2.job security 3.salary increments 4.promotions 5.social considerations

Phases in buying decision 1. 2. 3. 4. 5. 6. 7. 8. Recognition of problem or need Determination of the application or characteristics & quantity of the needed product Development of specifications or description of needed product Search for & qualifications of potential suppliers Obtaining & analyzing supplier proposals Evaluation of proposals & selection of suppliers Selection of an order routine Performance feedback & post purchase evaluation

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KARTHEEK.ALDI Types of purchase or buying situations 1.new purchase or new task 2.change in supplier or modified rebuy 3.repeat purchase or straight rebuy

Purchasing Practices of Different Types of Industrial / Business Customers 1. 2. 3. 4. Purchasing in commercial enterprises Purchasing in Govt. units Purchasing in Institutions Purchasing in cooperative societies

The buy grid frame work

DECISION MAKING UNIT The roles of buying center members are as follows/Buying centre roles 1. 2. 3. 4. 5. 6. Initiators Buyers Users Influencers Deciders Gatekeepers

KEY MEMBERS IN BUYING ORGANISATION/Identifying key members of buying centre 1. 2. 3. 4. 5. Top Management Technical Persons Purchasers Accounts/Finance Persons Marketing People

Models of organisation behavior 1.The webster & wind model 2.The sheth model.

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The webster & wind model

The sheth model.

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Industrial market segmentation Market segmentation is the process of dividing a market into groups of customers who have similar requirements for a product or service offering.
Segmenting & Targeting Frame work 1. Conduct marketing research to collect data on buying firms & competition 2. Identify macro segments based on analysis of data 3. Select those macro segments which satisfy company objectives & resources 4. Evaluate each selected macro segment -> if yes select the target macro segments based on specific criteria -> if no identify within each macro segment meaningful micro segments 5. Select the target micro segments based on earlier specified criteria 6. Profile the target segments based on buying Organisation & DMU characteristics

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KARTHEEK.ALDI PROCEDURE USED IN MARKET SEGMENTATION The procedure has 3 steps . 1. Conduct marketing research to collect data / information on existing and potential buyers, and competitors. 2. Carry out data analysis by using statistical techniques of factor and cluster analysis in order to identify different segments. 3. Profile each segment by its characteristics like application (or/use), location, volume of requirements, etc. Benefits & limitations of market segmentation Benefits 1.to compare marketing opportunities of different market segments 2.if resources are available with the organisation it develop separate programs for different segments 3.the budgeted allocation of resources can be done effectively to various segments Limitations 1. Increase in marketing expense such as inventory carrying cost,& advertisement cost. 2. Difficulty in segmenting due to the existence of great differences in buying practices, customer characterstics, & product applications Criteria used for selection of segmentation variables Measurable can the size,growth & buyer characterstics of the segment be measured. Differentiable the segments should be distinguishable & should respond differently to separate marketing plans or strategies Substantial -The segments should be large enough in terms of sales potential & profits

VARIABLES (BASES) USED IN SEGMENTING INDUSTRIAL (BUSINESS) MARKETS Industrial market segmentation is done first based on Macro Variables , and then subdivided into Micro Variables, if necessary. Macro Variables. These segmentation variables are identified based on industry/organizational characteristics like.

(i) Type of industry / Type of customer. (ii) Company size / Usage rate. (iii) Customer location / Geographical area. (iv) End-use / Application / Benefits of a product.

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KARTHEEK.ALDI Micro Variables. Macro segments are further subdivided into micro segments, if needed. Micro Variables are based on purchasing decisions like

(a) Customer interaction needs, (b) Organizational capabilities, (c) Purchasing policies, (d) Purchasing criteria, (e) Personal characteristics. Sequential Segmentation Process. Often, business marketers use more than one variable to subdivide the market.

Target marketing After segmenting the market into various segments the company should then evaluate the various segments Evaluation of market segments can be done by using the following factors 1.size & growth 2.profitability analysis 3.competitive analysis 4.company objectives & resources

Target market strategies 1.concentrated marketing 2.differentiated marketing 3.undifferentiated marketing Niche marketing: A niche is a more narrowly defined customer group that seeks products or services tailored specially to the individual needs & preferences.

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KARTHEEK.ALDI Positioning Is defined as the distinct place a product occupies in the target customers relative to competing products. Procedure for developing a positioning strategy 1.product variables for standard industrial products the product quality or performance can be used for differentaiation 2.service variables offering superior pre sales service is important as industrial products are technical products it is the easy way of positioning considering service variable. 3.personal variable by recruiting capable employees & training them who can differentiate with the competitors 4.Image Variables image is the way buyer perceives a company. this can be achieved by the company by adopting various promotional tools Characterstics of market oriented organisation 1. Shared values 2. Organisation 3. Strategy 4. Stake holders The role of Marketing in strategic planning Hierarchy of strategies 1.corporate strategy 2.business level strategy 3.functional strategy

Strategic planning at corporate level 1.Developing corporate mission & objectives Defining SBU 3.allocation of resources to SBU Developing corporate strategies to fill the strategic planning gap

Developing corporate strategies The strategic planning gap can be filled by three alternative strategies

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KARTHEEK.ALDI A.intensive growth strategy B.market penetration stratgey C.market development strategy

Business unit strategic planning

CHANGES IN PRODUCT STRATEGY Business marketers must understand that a product strategy is dynamic and flexible. It changes due to changes in (i) Customer needs. (ii) Technology. (iii) Government Policies / Laws. (iv) Product Life Cycle. A General Model of Product Life Cycle (PLC)

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CLASSIFICATION OF NEW PRODUCTS (i) Products that are new to the world & innovative. (ii) Products that are new to the company, but not new to the world. (iii) Improvements / Revision to the existing products. (iv) Addition to the existing products. (v) Repositioning existing products to new market segments (vi) Products with substantial cost reductions without reduction in performance. NEW PRODUCT DEVELOPMENT PROCESS It consists of 7 Stages : (i) Idea generation, (ii) Idea Screening, (iii) Concept development and testing, (iv) Business analysis, (v) Product development, (vi) Market testing, & (vii) Commercialization. PRODUCT STRATEGIES FOR EXISTING PRODUCTS Business marketers should take the following steps : 1. Evaluate the performance of existing products by using product evaluation matrix. 2. Examine the relative strengths and weaknesses of the companys products by using perceptual mapping technique. 3. Decide the product strategies, based on above analysis.

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KARTHEEK.ALDI HOW ARE PRICES SET? Price is the only element in the marketing mix that produces revenue. In small companies, prices are often set by top management rather than by marketing or salespeople. In large Top management sets the general pricing objective and policies and often approves the prices proposed by lower levels of management. The most common mistakes what organisations do when pricing are 1. price is not revised often enough to capitalize on market changes 2.price is not varied enough for different market segments, and purchase occasions.

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PRICE DETERMINANTS OR FACTORS INFLUENCING PRICING DECISIONS (i) Pricing objectives, (ii) customer analysis, (iii) cost analysis, (iv) competitive analysis, (v) Govt. policies.

SETTING THE PRICE The firm has to consider many factors in setting its pricing policy. 1. Selecting the pricing objective 2. Determining demand 3. Estimating costs 4. Analyzing competitors' prices and offers 5. Selecting a pricing method 6. Selecting the final price.

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KARTHEEK.ALDI SELECTING THE PRICING OBJECTIVE The company first has to decide what it wants to accomplish with the particular product. For example, if a recreational-vehicle company wants to produce a luxurious truck camper for affluent customers, this implies charging a high price.

FACTORS AFFECTING PRICE SENSITIVITY 1. Unique-Value Effect. Buyers are less price sensitive when the product is more unique. 2. Substitute-Awareness Effect:- Buyers are less price sensitive they are less aware of substitutes. 3. Difficult-Comparison Effect:- Buyers are less price sensitive with they cannot easily compare the quality of substitutes. 4. Total-Expenditure Effect.:- Buyers are less price sensitive the lower the expenditure is to their income. End-Benefit Effect:- Buyers are less price sensitive the lower the expenditure is to the total cost of the end product.

SELECTING A PRICING METHOD Markup pricing, Target-return pricing, Perceived-value pricing, Value pricing, Going-rate pricing, and Sealed-bid pricing. Markup Pricing. The most elementary pricing method is to add a standard markup to the product's cost. Target-Return Pricing. The firm determines the price that would yield its target rate of return on investment (ROI). Perceived-Value Pricing. Companies are basing their price on the product's perceived value. Value Pricing. several companies have adopted value pricing by which they charge a low price for a high-quality offering. GOING-RATE PRICING. In going-rate pricing, the firm bases its price largely on competitors prices with less attention paid to its own cost or demand.

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KARTHEEK.ALDI SEALED-BID PRICING. The firm bases its price on expectations of how competitors will price rather than on a rigid relation to the firm's costs or demand.

Channel Design Process Analyzing Customer Needs Establish Channel Objectives Consider Channel Constraints & List Channel Tasks Identify Channel Alternatives Evaluate Channel Alternatives Select the Channel Member

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