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B to B MARKETING

INDUSTRIAL BUYING is defined as


the decision making process by
which formal organisations
establish the need for purchased
products and services by
identifying , evaluating , and
choosing among alternative
brands and supplier

B to B MARKETING

Business buying concerns


the purchase of products
& services for use in
business activities & not
for the buyer's self
gratification.

B to B MARKETING

The organization either:


incorporates the purchased
product or service in the product it
makes, or
the purchased product or service
is used to facilitate the running of
the organization or
the purchased product is resold
with or without adding value.

TYPES
OF BUSINESS
MARKETS/
(CUSTOMERS)

BUSINESS MARKETS

The business market


consists of all the
organizations that acquire
goods & services used in the
production of other products
or services that are sold,
rented, or supplied to others.

BUSINESS MARKETS
The major industries making up the
business market are
Agriculture,
Forestry,
Fisheries;
Mining;
Manufacturing;
Construction;

Transportation;
Communication;
Public utilities;
Banking, finance,
Insurance;
Distribution;
Services.

TYPES OF BUSINESS MARKETS:


INDUSTRIAL MARKET:

Concerns those companies

that buy products & services to


help them produce other goods
& services.
Industrial goods include raw
materials, components & capital
goods such as machinery.

TYPES OF BUSINESS MARKETS

RESELLER MARKET

Comprises
organizations that buy
products & services to
resell.
For instance, retailers
& wholesalers.

TYPES OF BUSINESS MARKETS

GOVERNMENT MARKET

Consists of government
agencies that buy
products & service to
help them carry out
their activities.

TYPES OF BUSINESS MARKETS

NON-PROFIT ORGANIZATIONS
Buy products & services to serve

their chosen agenda of social


service.
Though non-profit organizations
do not seek profits, they are keenly
interested in improving the
effectiveness & efficiency of their
organizations.

BUSINESS
MARKETS
CHARACTERISTICS

BUSINESS MARKETS CHARACTERISTICS

FEWER, LARGER BUYERS.


The business marketer normally deals with
far fewer, much larger buyers than the
consumer marketer does.
Tyres companies such as MRF, Apollo
Tyres, JK Tyres, Bridgestone, & Birla Tyres
depend on the major automobile
manufacturing companies to get contracts
as "Original Equipment Manufacturer" or
OEM supplier of tyres.

BUSINESS MARKETS CHARACTERISTICS


CLOSE SUPPLIER-CUSTOMER RELATIONSHIP.

Because of the smaller customer base and the


importance and power of the larger customers,
suppliers are frequently expected to customize
their offerings to individual business customer
needs.
Business buyers often select suppliers who also
buy from them.
An example would be a paper manufacturer that
buys chemicals from a chemical company that
buys a considerable amount of its paper.

BUSINESS MARKETS CHARACTERISTICS

PROFESSIONAL PURCHASING.
Business goods are often purchased by
trained purchasing agents, who must follow
their organizations' purchasing policies,
constraints, and requirements.
Many of the buying instruments-for
example, requests for quotations,
proposals, and purchase contracts- are not
typically found in consumer buying.

BUSINESS MARKETS CHARACTERISTICS

PROFESSIONAL PURCHASING.
Professional buyers spend their
careers learning how to buy better.
This means that business
marketers have to provide greater
technical data about their product &
its advantages over competitors
products.

BUSINESS MARKETS CHARACTERISTICS


SEVERAL BUYING INFLUENCES.
More

people typically influence business


buying decisions.
Buying committees consisting of
technical experts & even senior
management are common in the purchase
of major goods.
Business marketers have to send welltrained sales representatives & sales
teams to deal with the well-trained buyers.

BUSINESS MARKETS CHARACTERISTICS

MULTIPLE SALES CALLS.


Because more people are involved in the
selling process, it takes multiple sales calls
to win most business orders, & some sales
cycles can take years.
In the case of capital equipment sales for
large projects, it may take multiple attempts
to fund a project, the sales cycle-between
quoting a job & delivering the product is
often measured in years.

BUSINESS MARKETS CHARACTERISTICS

DERIVED DEMAND.

The demand for business goods is

ultimately derived from the demand for


consumer goods.
For this reason, the business marketer
must closely monitor the buying patterns
of ultimate consumers.
For instance, the boom in the
construction industry-due to investments
in infrastructure projects & housing sector
is driving the demand for cement & steel.

THE CHAIN OF DERIVED DEMAND

BUSINESS MARKETS CHARACTERISTICS

DERIVED DEMAND.
Business buyers must also pay close attention
to current & expected economic factors, such as
the level of production, investment, consumer
spending, & the interest rate.
In a recession, business buyers reduce their
investment in plant, equipment, & inventories.
Business marketers can do little to stimulate
total demand in this environment.
They can only fight harder to increase or
maintain their share of demand.

BUSINESS MARKETS CHARACTERISTICS

INELASTIC DEMAND.
Demand is especially inelastic in the
short run because producers cannot
make quick changes in production
methods.
Demand is also elastic for business
goods that represent a small
percentage of the item's total cost, such
as shoelaces.

BUSINESS MARKETS CHARACTERISTICS

INELASTIC DEMAND.
The total demand for many business
goods & services is inelastic that is, not
much affected by price changes.
Shoe manufacturers are not going to
buy much more leather if the price of
leather falls, nor will they buy much less
leather if the price rises, unless they
can find satisfactory substitutes.

BUSINESS MARKETS CHARACTERISTICS

FLUCTUATING DEMAND.

The demand for business


goods and services tends
to be more volatile than
the demand for consumer
goods & services.

BUSINESS MARKETS CHARACTERISTICS


FLUCTUATING DEMAND.

A given percentage increase in consumer


demand can lead to a much larger
percentage increase in the demand for plant
end equipment necessary to produce the
additional output.
Economists refer to this as the acceleration
effect.
Sometimes a rise of only 10 percent in
consumer demand can cause as much as a
200 percent rise in business demand for
products in the next period; a 10 percent
fall in consumer demand may cause a

BUSINESS MARKETS CHARACTERISTICS


GEOGRAPHICALLY CONCENTRATED BUYERS.
Different types of industries tend to get

concentration of specific regions of different


states.
For example, there is a concentration of
hosiery industry in and around Coimbatore
in Tamilnadu whereas the diamond cutting
and polishing industry is concentrated in
Surat in Gujarat.
There are a large number of automobile
and auto-ancillary industries in Pune and
Nasik in Maharashtra.

BUSINESS MARKETS CHARACTERISTICS

GEOGRAPHICALLY CONCENTRATED BUYERS.

There

is a concentration of
pharmaceutical & chemical industries in
industrial townships near Ahmedabad
in Gujarat.
Several software companies are
based in Bangalore in Karnataka.
The geographical concentration of
producers helps to reduce selling costs.
At the same time, business marketers
need to monitor regional shifts of
certain industries.

BUSINESS MARKETS CHARACTERISTICS

DIRECT PURCHASING.

Business buyers often buy


directly from manufacturers
rather than through
intermediaries, especially
items that are technically
complex or expensive (such
as mainframes or aircraft).

BUSINESS MARKETS CHARACTERISTICS


MORE COMPLEX DECISION MAKING UNIT.

Ordering products of low value and low risk (such


as the ubiquitous paper clip) may well be the
responsibility of the office junior.
However, the purchase of a new plant that is vital
to a business may involve a large team who
makes their decision over a protracted period.
The DMU at any one time is often ephemeral
specialists enter and leave to make their different
contributions and, of course, over time people
leave the company or change jobs far more
frequently than they change family unit.

BUSINESS MARKETS CHARACTERISTICS


MORE COMPLEX DECISION MAKING UNIT.

Ordering products of low value and low risk (such


as the ubiquitous paper clip) may well be the
responsibility of the office junior.
However, the purchase of a new plant that is vital
to a business may involve a large team who
makes their decision over a protracted period.
The DMU at any one time is often ephemeral
specialists enter and leave to make their different
contributions and, of course, over time people
leave the company or change jobs far more
frequently than they change family unit.

ORGANISATIONAL
BUYING
BEHAVIOUR
INDIVIDUAL BUYING
BEHAVIOUR

ORGANISATIONAL BUYING
BEHAVIOUR

INDIVIDUAL BUYING
BEHAVIOUR

1. Meaning: The buyer


behaviour of organisation
relating to purchase of
goods and services is called
as organisational buying
behaviour.

1. Meaning: The buyer


behaviour of Individual
relating to purchase of
goods and services is
called as Individual buying
behaviour.

2. Size of Purchases:
Organisations generally
purchase, in larger
quantities.

2. Size of Purchases:
Individuals generally
purchase in smaller
quantities than
organisations

ORGANISATIONAL BUYING
BEHAVIOUR

INDIVIDUAL BUYING
BEHAVIOUR

3. Buying Motives: The


organisational buying
motives emphasize on
business factors such as
quality, efficiency,
economy, etc.

3. Buying Motives: The


individual buying motives
may be pride and
possession, love and
affection, comfort and
convenience etc.

4. People Involved:
Generally, more people
or departments are
involved in buying or
decisions.

4. People Involved:
Generally, only the
individual and family
and friends may be
involved in buying
decisions.

ORGANISATIONAL BUYING
BEHAVIOUR

INDIVIDUAL BUYING
BEHAVIOUR

5. Type of Buying Decision:


Organisational buying
decision is generally wellplanned and rational in
nature.

5. Type of Buying Decision:


Individual buying decision
may be emotional and
impulsive in nature.

6. Complexity of Products:
In case of organisational
buying, organisational
products may be more
complex in nature as
compared to consumer
products.

6. Complexity of Products:
In case of individual buying,
consumer products are not
so complex as compared to
organisational products.

ORGANISATIONAL BUYING
BEHAVIOUR

INDIVIDUAL BUYING
BEHAVIOUR

7. Advertising:
The organisational buying
is influenced mainly by ads
business magazines or
business journals.

7. Advertising:
The individual buying is
influenced in mainly by ads
in magazines, newspapers,
radio, T.V. etc.

8. Personal Selling:
Personal selling is
emphasized in case of
organisational buying
behaviour.

8. Personal Selling:
Personal selling may not be
emphasized in case of
individual buying
behaviour.

ORGANISATIONAL BUYING
BEHAVIOUR

INDIVIDUAL BUYING
BEHAVIOUR

9. Knowledge of Products:
Generally, organisational
buyers have a good
knowledge of products
which they buy for their
business purpose.

9. Knowledge of Products:
Generally, individual buyers
may not have complete
knowledge of the products,
especially technical
aspects.

10. Need for Processing:


In case of organisational
buying, there is a need for
further processing.

10. Need for Processing:


In case of individual buying,
there is no need to process
the goods.

ORGANISATIONAL BUYING
BEHAVIOUR

INDIVIDUAL BUYING
BEHAVIOUR

11.Channels of Distribution:
In case of organisational
buying, the goods are
mostly distributed through
direct channels.

11.Channels of Distribution:
In case of individual buying,
the goods are mostly
distributed through indirect
channels.

12. Pricing:
Organisational products
are priced low due to
bulk purchases.

12. Pricing:
The individual products
are priced high due to
purchases in smaller
quantities.

BUYING
SITUATIONS

BUYING SITUATIONS

The business buyer faces many


decisions in making a purchase.
The number of decisions depends on
the buying situation:
Complexity of the problem being
solved,
Newness of the buying requirement,
Number of people involved, and
Time required.

BUYING SITUATIONS

Patrick Robinson and others


distinguish three types of
buying situations:
Straight rebuy,
Modified rebuy, &
New task.

BUYING SITUATIONS

STRAIGHT REBUY
A business buying
situation in which the
buyer routinely reorders
something without
any modifications .

BUYING SITUATIONS

MODIFIED REBUY

A business buying
situation in which the
buyer wants to modify
product specifications,
prices, terms, or suppliers.

BUYING SITUATIONS

NEW TASK

A business buying
situation in which the
buyer purchases a
product or service for
the first time.

BUYING SITUATIONS

BUY GRID ANALYTIC FRAMEWORK FOR


INDUSTRIAL BUYING SITUATIONS

BUSINESS
MARKETING
SEGMENTATION

INDUSTRIAL MARKETING SEGMENTATION

Demographic
Industry: Which industries
should we focus on?
Company size: What size
companies should we focus on?
Location: What geographic
areas should we focus on?

INDUSTRIAL MARKETING SEGMENTATION

OPERATING VARIABLES

Technology: What customer


technologies should we focus on?
User/nonuser status: Should we focus
on heavy, medium, or light users or
nonusers?
Customer capabilities: Should we focus
on customers needing many or few
services?

INDUSTRIAL MARKETING SEGMENTATION

Purchasing Approaches
Purchasing function organization: Should
we focus on companies with highly
centralized or decentralized purchasing
organizations?
Power structure: Should we focus on
companies that are Engineering dominated
or Financially dominated?
Nature of existing relationships: Should
we focus on companies with which we have
strong relationships or simply go after the
most desirable companies?

INDUSTRIAL MARKETING SEGMENTATION

Purchasing Approaches
General purchase policies:
Should we focus on companies
that prefer leasing? Service
contracts? Systems purchases?
Sealed bidding?
Purchasing criteria: Should we
focus on companies that are
seeking quality? Service? Price?

INDUSTRIAL MARKETING SEGMENTATION

SITUATIONAL FACTORS
Urgency: Should we focus on
companies that need quick delivery or
service?
Specific application: Should we focus
on certain applications of our product
rather than all applications?
Size of order: Should we focus on
large or small orders?

INDUSTRIAL MARKETING SEGMENTATION

PERSONAL CHARACTERISTICS
Buyer-seller similarity: Should we
focus on companies whose people and
values are similar to ours?
Attitudes toward risk: Should we focus
on risk-taking or risk-avoiding
customers?
Loyalty: Should we focus on companies
that show high loyalty to their suppliers?

FACTORS
INFLUENCES/
AFFECTING CHANGING
ORGANISATIONAL
BEHAVIOUR

FACTORS INFLUENCES/ AFFECTING CHANGING ORGANISATIONAL BEHAVIOUR

I.ORGANISATIONAL INFLUENCES:

The structure of the organisation


affects organisation buying
behaviour.
Some organisations have a
centralised purchasing function at
company headquarters.
Other organisations decentralise
their purchasing. Some
organisations even allow individual
departments to place orders directly

FACTORS INFLUENCES/ AFFECTING CHANGING ORGANISATIONAL BEHAVIOUR

2. Personal Influences: The buyer(s) and


others involved in organisational buying
decision are influenced by personal
considerations. Their personalities can
influence the nature and result of
organisational buying decision. Some of the
personal influences are:
Attitude towards risk
Job position
Quality consideration
Perceptions, etc.

FACTORS INFLUENCES/ AFFECTING CHANGING ORGANISATIONAL BEHAVIOUR

3. INTERPERSONAL INFLUENCES:
In

organisational buying, several people


are involved in the purchase decision
process.
These people interact and communicate
with each other and influence the
purchase decision process.
These people play the following different
roles a certain brand/product:

FACTORS INFLUENCES/ AFFECTING CHANGING ORGANISATIONAL BEHAVIOUR

3. INTERPERSONAL INFLUENCES:

(a) User - who actually uses the product.


(b) Buyer - who has the formal authority to
purchase the product.
(c) Gatekeeper - who facilitates the flow of
information related to
the product.
(d) Decider - who actually takes the
purchase decision.
(e) Influencer - who significantly influences
the purchase decision.

FACTORS INFLUENCES/ AFFECTING CHANGING ORGANISATIONAL BEHAVIOUR

4. ENVIRONMENTAL INFLUENCES:

Organisational buying behaviour is


affected by environmental factors
such as :
Political factors
Economic factors
Scio- Cultural factors
Technological factors

FACTORS INFLUENCES/ AFFECTING CHANGING ORGANISATIONAL BEHAVIOUR

5. MARKETING INFLUENCES:

Organisational buying is also


affected by marketing variables
such as :
Product Variables
Packaging
Delivery & Service conditions
Suppliers capabilities etc.

ORGANISATION
BUYING
PROCESS

ORGANISATION BUYING PROCESS


1. NEED IDENTIFICATION:
The

organisation buying process begins when


someone in the company identifies a problem or
a need.
This identification may come from internal
stimuli (such as need to buy new spare parts
due to machinery breakdown) or an external
one (such as striking a new idea by seeing an
ad or at a trade show).
Business marketers can stimulate problem
recognition by direct mail, telemarketing, and
calling on prospects.

ORGANISATION BUYING PROCESS

2. Product Specification: The next


stage is specifying product
characteristics as per the company
requirements. The company may
specify the product features such as :
Reliability
Durability
Packaging, etc.

ORGANISATION BUYING PROCESS

3. SUPPLIER IDENTIFICATION:
The

organisational buyer, then,


tries to identify the most suitable
supplier.
The buyer can identify the supplier
from various sources such as trade
directories, trade advertisements,
trade shows, etc.
The suppliers that meet the
requirements of the buyer are
short listed as qualified suppliers.

ORGANISATION BUYING PROCESS


4. INVITATION AND EVALUATION:

The

buyer invites the qualified


suppliers to submit proposals.
The buyer may require a detailed
written proposal.
After screening the written
proposal, the buyer may invite a
few suppliers to make formal oral
presentations.

ORGANISATION BUYING PROCESS

5. SUPPLIER SELECTION:
On

the basis of written and oral


presentations, and supplier attributes
such as flexibility, reliability, reputation,
etc., the buyer selects appropriate
suppliers.
The buyer, then, attempts to negotiate
with the selected suppliers for better
price and other terms and conditions.

ORGANISATION BUYING PROCESS

6. ORDER SPECIFICATION:

The
buyer places an order with the
suppliers and mentions the
specifications with respect to :
Quantity needed
Technical aspects
Delivery time, etc.

ORGANISATION BUYING PROCESS

7. REVIEW:
In this stage, the buyer periodically reviews the
performance of the chosen suppliers.
Generally, the buyer reviews the performance
by obtaining the feedback from the users of the
suppliers products.
If the users are satisfied with the product, the
buyer may continue with the same supplier.
But, if the users are not satisfied, then, the
buyer may decide to modify or end the
relationship with the supplier.

BUSINESS
BUYER
BEHAVIOR

BUSINESS BUYER BEHAVIOR

BUSINESS BUYER BEHAVIOR

DECISION-MAKING UNIT (DMU) OR BUYING CENTRE.

Almost every company has either a buying

department or a designated person 'who


does the purchasing for the company.
But these are not the only persons who
influence buying decision, or who actually
has the authority to make the ultimate
decision.
The ultimate decision is in the hands of a
Decision-Making Unit (DMU) or Buying
Centre.

DECISION-MAKING UNIT (DMU) OR BUYING CENTRE.

THE RISK-VALUE
PURCHASING
DECISION
MATRIX

THE RISK-VALUE PURCHASING DECISION MATRIX

THE RISK-VALUE PURCHASING DECISION MATRIX

A) LOW-RISK, LOW-VALUE PURCHASES are the least


distinct from consumer purchases. They often involve
just one, frequently junior person. There is little financial
or business risk involved on getting the decision wrong,
meaning that relatively little thought goes into the
decision.
B) LOW-RISK, HIGH-VALUE items such as raw
materials typically involve a mixture of technical and
purchasing personnel, and often very senior people such
as board members. This complexity is necessary to
ensure that price is minimised without impacting upon
quality. Purchasing personnel would usually be the key
decision makers on a transaction-by-transaction basis,
under the general guidance of more technical

THE RISK-VALUE PURCHASING DECISION MATRIX

C) LOW-VALUE, HIGH-RISK items such as office


insurance would similarly involve a mixture of specialists
and purchasers. As the risk is in the product rather than
the price, and as each transaction is likely to be unique,
an expert (in this case perhaps an in-house legal expert)
would tend to be the key decision maker every time a
purchase takes place.
D) HIGH-VALUE, HIGH-RISK purchases are the most
distinct from consumer purchases, with a large number
of senior decision makers evaluating a large range of
purchase criteria. In the case of plant equipment, we
might expect a CFO, R&D Director, Production Director,
Purchasing Director, Head of Legal Department, CEO
and a number of upper-management department heads

THE DMU/
BUYING
CENTRE ROLE
IN BUYING
PROCESS

THE DMU/ BUYING CENTRE ROLE IN BUYING PROCESS

Initiators: Define the buying


situation and start the buying
process.
Users: Actually use the
product,
Deciders: Have the authority
to choose among potential
product offerings, and vendors.

THE PARTICIPANTS ROLE IN BUYING PROCESS

Influencers: Add
information or constraints
in the buying process.
Gatekeepers: Can
control the flow of
information into the
buying process.

TYPES OF
PURCHASING
PROCESSES

TYPES OF PURCHASING PROCESSES

Marketers need to understand how


business purchasing departments
work. Peter Kraljic distinguished four
product-related purchasing processes:
1.Routine products. These products
have low value and cost to the
customer and involve little risk (e.g.,
office supplies).
Customers will seek the lowest price
and emphasize routine ordering.
Suppliers will offer to standardize and

TYPES OF PURCHASING PROCESSES

2. Leverage products. These


products have high value and cost
to the customer but involve little
risk of supply (e.g., engine pistons)
because many companies make
them.
The supplier knows that the
customer will compare market
offerings and costs, and it needs
to show that its offering minimizes
the customer's total cost.

TYPES OF PURCHASING PROCESSES

3. Strategic products. These


products have high value and cost to
the customer and also involve high
risk (e.g., mainframe computers).
The customer will want a well-known
and trusted supplier and be willing to
pay more than the average price.
The supplier should seek strategic
alliances that take the form of early
supplier involvement, co-development
programs, and co-investment.

TYPES OF PURCHASING PROCESSES

4. Bottleneck products.
These products have low
value and cost to the
customer but they involve
some risk (e.g., spare
parts).
The customer will want a
supplier who can

STAGES OF
BUSINESS
BUYER

STAGES OF BUSINESS BUYER


Recognition of the problem/ Need.
Determination of specification and quantity of
needed item
Search for and qualification of potential sources
Acquisition and analysis of proposals
Evaluation of proposals and selection of suppliers
Selection of order routine
Performance feedback and evaluation

TARGET
BUSINESS
SEGMENTS

TARGET BUSINESS SEGMENTS


Four types of business customers can often
be identified, with corresponding
marketing implications.
1. Price-oriented customers
(transactional selling). Price is
everything. A price-focused segment,
which has a transactional outlook to
doing business and does not seek any
extras.
Companies in this segment are often
small, working to low margins and regard
the product/service in question as of low
strategic importance to their business.

TARGET BUSINESS SEGMENTS

2. Solution-oriented customers
(consultative selling). They want
low prices but will respond to
arguments about lower total cost
or more dependable supply or
service.

TARGET BUSINESS SEGMENTS

(quality
selling). They want the best
performance in terms of
product quality, assistance,
reliable delivery, and so on.
4. Strategic-value customers (enterprise
selling). They want a fairly
permanent sole-supplier
relationship with your
company.
3. Gold-standard customers

TARGET BUSINESS SEGMENTS


5) Quality And Brand-focused Segment, which

wants the best possible product and is


prepared to pay for it. Companies in this
segment often work to high margins, are
medium-sized or large, and regard the
product/service as of high strategic
importance.

6. Service-focused Segment, which has high

requirements in terms of product quality and


range, but also in terms of after sales,
delivery, etc. These companies tend to work in
time-critical industries and can be small,
medium or large. They are usually purchasing
relatively high volumes.

TARGET BUSINESS SEGMENTS

7) A Partnership-focused Segment,

usually consisting of key


accounts, which seeks trust
and reliability and regards the
supplier as a strategic partner.
Such companies tend to be
large, operate on relatively
high margins, and regard the
product or service in question
as strategically important.

BUSINESS
MARKETING
STRATEGY FOR
STP

BUSINESS MARKETING STRATEGY FOR STP

The process begins with a focus on customer


needs, not the product. The steps are:
(1) Needs-based segmentation: Grouping
customers into segments according to their
needs and the benefits sought,
(2) Segment identification: Selecting customer
characteristics including usage behaviour that
make the segment distinctive and actionable,
(3) Segment attractiveness: Evaluating the
business value in terms of economic value and
strategic fit of each needs-based segment,

BUSINESS MARKETING STRATEGY FOR STP


(4) Segment profitability: Estimating the net
contribution to marketing profit from each potential
segment.
(5) Segment positioning: Creating a value proposition
offering based on the customers' needs and buying each
segment. and product/ price offering based on
customers need & buying characteristics within each
segment.
(6) Segment 'acid test': Creating and testing segment
storyboards (communications) for implementing each
segment's positioning,
(7) Marketing mix strategy: Creating a complete
marketing programme (product, price, promotion and
distribution) to implement the positioning strategy,

GUIDE LINES
FOR
SUCCESSFUL
BRANDS

GUIDE LINES FOR SUCCESSFUL BRANDS

1. The role & importance of branding should


be tied directly into the industrial marketer's
business/ profit model & value-delivery
strategy.
2. Understand the role of the brand in the
organisational buying process.
3.Be sure the basic value proposition has
relevance for all significant players in the
decision-making unit & decision-making
process.

GUIDE LINES FOR SUCCESSFUL BRANDS

4. Emphasise a corporate branding


approach.
5. Build the corporate brand around brand
intangibles such as expertise, trust
-worthiness, ease of doing business and
likeability.
6. Avoid confusing corporate
communication strategy and brand strategy.
7.Build brand communications around the
interactive effects of multiple media.

GUIDE LINES FOR SUCCESSFUL BRANDS

8. Apply detailed segmentation analysis


within and across industry-defined
segments, based on differences in the
composition and functioning of buying
centers within those segments.
9. Adopt a top-down and bottom-up
brand management approach.
10. Educate the entire organisation as
to the value of branding and the
organisation's role in delivering brand
value.

BUYERSUPPLIER
RELATIONSHIPS

BUYER-SUPPLIER RELATIONSHIPS

1. Basic buying and selling - relatively simple,


routine exchanges with moderately high
levels of cooperation and information exchange.
2. Bare bones - similar to basic buying and
selling but more adaptation by the seller and
less cooperation and information exchange.
3. Contractual transaction - generally low
levels of trust, cooperation, and interaction;
exchange is defined by formal contract.
4. Customer supply - traditional custom supply
situation where competition rather than
cooperation is the dominant form of
governance.

BUYER-SUPPLIER RELATIONSHIPS
5. Cooperative systems - although coupled
closely in operational ways, neither party
demonstrates structural commitment through
legal means or adaptation approaches.
6. Collaborative- much trust and commitment
leading to true partnership.
7. Mutually adaptive - much relationshipspecific adaptation for buyer and seller, but
without necessarily strong trust or cooperation.
8. Customer is king - although bonded by a
close, cooperative relationship, the seller adapts
to meet the customer's needs without expecting
much adaptation or change on the part of the

MANAGING BUSINESS
MARKETING CHANNELS

THE DOMAIN OF INDUSTRIAL DISTRIBUTION (WHOLESALING)

Industrial distribution (wholesaling) encompasses


the buying and/or handling of goods and services and
their subsequent resale to organizational users,
retailers, and/or other wholesalers but not the sale of
significant volume to final consumers.
Manufacturers and service providers sometimes act as
their own wholesalers; other times, independent firms
are employed.
Independents may or may not take title to or possession
of products, depending on the type of wholesaling.
Industrial, commercial, and government institutions are
wholesalers leading customers, followed closely by
retailers. Sales from one wholesaler to another also
represent a significant proportion of wholesaling activity.

THE DIVERSITY OF INDUSTRIAL DISTRIBUTION


(WHOLESALING) TRANSACTIONS

Industrial Distribution (Wholesaling) includes:


Sales of goods and services to manufacturers, service
providers, oil refiners, railroads, public utilities, and
government departments.
Sales of office or laboratory equipment, supplies, and
services to professionals such as doctors,
chiropractors, and dentists.
Sales of materials and services to builders of offices
and homes.
Sales to grocery stores, restaurants, hotels, apparel
stores, stationery stores, and all other retailers.
Manufacturer/service provider sales to wholesalers,
and wholesaler sales to other wholesalers.

THE FUNCTIONS OF INDUSTRIAL DISTRIBUTORS


(WHOLESALERS)

Facilitate
local
distribution

Process
returns

Provide a
trained
sales force
Provide
marketing &
research support

Gather
assortments
for customers

Industrial
Distributors
(Wholesalers)
provide some or all
of these functions

Purchase
large quantities

Provide
warehousing &
delivery facilities

Take
responsibility
for inventory
obsolescence
Handle
financial
records

Offer financing

INDUSTRIAL DISTRIBUTORS (WHOLESALERS)


SELLING TO VS. SELLING THROUGH THE WHOLESALER

Selling To the Wholesaler


Manufacturer/
Service Provider

Wholesaler

Retailer

The wholesaler is viewed as a customer who is researched and satisfied.


Selling Through the Wholesaler
Manufacturer/
Service Provider

Wholesaler

Retailer

The retailer (or final consumer) is the object of the manufacturers/ service
providers interests. The needs of the wholesaler are considered unimportant.

The Broad Categories of B2B Industrial


Distributors (Wholesalers)
There are three broad categories of
wholesalers:
Manufacturer/Service Provider
Wholesaling
Merchant Wholesaling
Agents and Brokers
Wholesalers have obligations to both
suppliers and customers.

B2B INDUSTRIAL DISTRIBUTORS (WHOLESALERS),


OWNED - FRANCHISED

Direct distribution
Manufacturer has full responsibility
to perform all channel tasks
May be required as a result of
customer needs, control over the
selling job, size of customers, and
extensive negotiation

B2B INDUSTRIAL DISTRIBUTORS (WHOLESALERS), OWNED


- FRANCHISED

Indirect distribution
Use of middlemen in the channel
Business channels involve relatively
few alternatives
Manufacturer's representatives and
distributors are most prevalent
Distributors perform full range of tasks
Reps focus on the selling job

DEGREE OF DIRECTNESS
1. Greater tendency for direct distribution in

business markets

2. Indirect often required for repetitively purchase

items bought in large quantities


3. More than one channel required to reach all
market segments
4. Customer size and different purchasing
processes require different channels

B2B INDUSTRIAL DISTRIBUTORS (WHOLESALERS),


OWNED - FRANCHISED
Echannels now used by business marketers

Information platform
Transactional platform
Managing customer relationships

TYPES OF
DISTRIBUTION

TYPES OF DISTRIBUTION
INTENSIVE DISTRIBUTION
Needed when the availability of product at places very
convenient to the customers is a very important
determinant of sales eg. Consumables, raw materials
etc
EXCLUSIVE DISTRIBUTION
A distributor is given exclusive rights over a particular
geography . This is common with high value and high
tech products particularly when customer servicing is
very important
The company can have an exclusive network by not
allowing its dealers to sell competitor products
SELECTIVE DISTRIBUTION
It imparts better channel control. Usually adopted
where the product requires specialised servicing

IMPORTANCE AND
ADVANTAGES OF
PERSONAL SELLING

IMPORTANCE AND ADVANTAGES OF PERSONAL SELLING


Personal Selling the most effective method of marketing
communication .The efforts of
sales people can have a direct impact on such diverse activities
as
The success of new products
Keeping existing products in strong market positions
Construction of manufacturing facilities
Opening new businesses and keeping them going
Getting new customers to buy the companys products
Retaining existing customers through better service
Regaining customers lost in the past
Latest developments in the markets
Competitor information ( market strategy , new products ,
promotion schemes )
New competitors entering the market
New technical trends that are developing

TYPES OF
INDUSTRIAL
SALESMEN

TYPES OF INDUSTRIAL SALESMEN


SALES ENGINEER
Possesses academic qualification in a technical subject & is a
field salesman
Technically trained to handle sales of technical products
Calls upon technically trained personnel at the customer
. Design Engr. / Production Engr.
EXECUTIVE SALESMAN
Possesses adequate technical knowledge & often deals with
business executives
Typically sells computer software , consulting services ,
company insurance programs , advertising
etc
Calls upon Purchasing Managers , Personnel Managers , IT
Managers etc & is a field salesman

TYPES OF INDUSTRIAL SALESMEN


INDUSTRIAL SUPPLIES SALESMAN
Possesses some technical knowledge & is a field salesman
Technically trained to handle sales of standard technical
products like raw material , component
parts etc
INSIDE SALESMAN
Operates from the office via telecommunication & deal with
established customers
MISSIONARY SALESMAN
Works with industrial customers and middlemen in consulting or
an advisory capacity
Sometimes called factory representative , they are more involved
with indirect sales that may accrue from helping a customer .
Rather than making sales , they are instrumental in generating
future sales

WHY DO WE NEED KEY ACCOUNT MANAGEMENT ?

Every organisation has to make a choice .


It cannot be everything to everybody
but it can be something to someone

RATIONALE FOR KEY ACCOUNT MANAGEMENT


Environment :
Increasing competition
Increasing expectations of customers
Faster & first time right service
Better products & services
Standardised service levels across all locations & levels of the organisation
Turnkey contracts
Corporate relationship
One face to deal in all types of situation
Understand the business requirements
Cost cutting the need of the hour
Vendor consolidation
Fewer vendors lesser administrative cost
Higher volumes reduced prices
Standardised solutions
Organisations
Doors closing as buyers consolidate vendors
Cost of retaining an existing customer is low compared to acquiring new
customers
Customers have wide choice and are willing to experiment

NEW PRODUCT
INTRODUCTION

NEW PRODUCT INTRODUCTION CRITERIA

The starting point for any new product development is


the market criteria because evaluation of all its
parameters will decide whether the product will sustain
itself in the long run

NEW PRODUCT INTRODUCTION CRITERIA

SIX TYPES OF
NEW
PRODUCTS

SIX TYPES OF NEW PRODUCTS


INNOVATIVE PRODUCT : A product which is entirely original and
new to the market
DISCONTINUOUS INNOVATION
Introduce entirely new or very substantially different & serve
needs that were not served earlier
( eg . First airplane , Integrated Circuits , Walkman )
DYNAMICALLY CONTINUOUS INNOVATION
Generally do not alter substantially the ways of satisfying the
needs
Improved features help enhance the application of products
Eg. Electric grinder , Cellular Phone
CONTINUOUS INNOVATION
Incremental improvements to existing products such as
improvement in quality , addition of new features
Very little risk for the marketer and quickly accepted by
customers

SIX TYPES OF NEW PRODUCTS

ADAPTATIONS

Most successful products are adaptations of existing products


The difference between a break through & adapted product is one of degree
( eg . Laptop , split Air Conditioner )
LINE EXTENSIONS
Leverages the strength & popularity of an existing product
Reduces the cost of establishing a new product
eg. Domestic Fans to Industrial Fans , Dot Matix to Ink Jet & laser printers
NEW USE
A new product can be a new use or a new market
Eg. New usage of Nylon , Aluminium , PVC etc

COPY
A new product to the company but not to the market
Intense competition the me too product has to face
Eg. Anchor Tooth paste / Colgate Tooth paste
NEXT GENERATION
Existing products in which better features are incorporated due to
technological
developments
eg . Petrol Dispensing Pumps

CHARACTERISTICS
OF INDUSTRIAL
PRICES

CHARACTERISTICS OF INDUSTRIAL PRICES


The true price an industrial customer pays is often different
from the list price on account of factors like delivery and
installation costs , discounts , training costs , trade in allowances,
financing costs etc.
Price is not an independent variable , it is intertwined with
product , promotion and distribution strategies.
Price for industrial goods cannot be set out without considering
other products that are complements or substitutes sold by the
company sold by the company. Cross elasticity's exists, when the
price of one item affects the sales of other items ( eg. Computer
Terminals and Printers )
Prices can be changed in many ways such as
changing the quantity of goods and service provided by the seller
changing the premium and discounts that are offered.
changing the time and place of payment.
This means that pricing is a more flexible decision than products
or distribution.

CHARACTERISTICS OF INDUSTRIAL PRICES


Characteristics of Industrial Prices
Industrial prices are established through
Competitive bidding on a project by project basis
through negotiations
through a channel pricing policy
Industrial pricing is characterised by an emphasis on fairness.
Experienced Industrial buyers are able to estimate the vendors
production costs and expect that price increases to be justifiable
on basis of cost increases or product improvements
Industrial prices are affected by a host of economic factors
such as
Inflation
Interest rates
Foreign Exchange rates
This is particularly critical for an organisation locked into a long
term contract with no price escalation

FACTORS
AFFECTING
PRICING

FACTORS AFFECTING PRICING

PRICING
METHODS /
APPROACHES

PRICING METHODS / APPROACHES

Cost Based Pricing


Market Oriented Pricing
Following Competitors
Negotiated Prices
Customer Determined Pricing
Marginal Cost Pricing
Competitive Bidding
Open Bidding
Closed Bidding
e-Bidding

PRICING
POLICIES

PRICING POLICIES
Discount Pricing
Trade Discount
Policy discount to Channel Partners
Quantity Discounts
Basic discount on targeted volume
Additional discount for additional off take
Seasonal Discounts
Additional discount during low sales period
to stimulate sales
Cash Discounts
Discount for paying before due date

GEOGRAPHIC PRICING

EX- WORKS
Goods manufactured and left outside the factory premises
FOB Factory
Freight on Board i.e Goods loaded on to a transport vehicle but
transportation cost to destination not paid
FOB DESTINATION
Freight on Board i.e Goods loaded on to a transport vehicle &
transportation cost to destination paid
FREIGHT EQUALISATION
The supplier assumes a certain freight cost in his price & balance is to be
paid by the customer . This is to ensure that there is no disadvantage with
competition due to high freight cost . This was used in the steel industry
during the price control regime.
BASING POINT
Another form of freight equalisation in which the price is considered by to
an important city or town , after which , the freight cost to the destination is
levied
CIF
Cost , Insurance and Freight used for International sales

COMMUNICATION
MIX

COMMUNICATION MIX
ADVERTISING
Newspaper
Magazines General & Trade specific
Internet
Television
SALES PROMOTION
Trade Shows / Industrial Exhibitions
Contests
Road Shows / In shop demonstrations
Seminars / Product demonstration
Volume linked pricing
PERSONAL SELLING
Direct sales presentation to the prospective buyer by a company salesman
Used when the product is highly technical in nature , is high in unit value , and
the number of customers is limited
Very important medium in B2B markets
PUBLICITY
Variety of programs designed to promote a product eg. Positive news through
the media on order wins / product performance

ADVERTISING DEFINITION

The dissemination of information concerning an


idea , product or service to compel
action in accordance with the intent of the advertiser
( Manendra Mohan , Advertising Management :
Concepts & Cases )
Advertising is any paid form of non personal
presentation and promotion of ideas, goods and
services by an identified sponsors. (American
Marketing Association)
Advertising is controlled, identifiable information
and persuasion by means of mass.
communication media. (John Wright , Wallis Winter ,
Sherilyn Zeigler in Advertising)

FUNCTIONS OF
INDUSTRIAL
ADVERTISING

FUNCTIONS OF INDUSTRIAL ADVERTISING

Informing

Identifying New Customers


Supporting Salesmen
Preparing Prospective Customers
Reaching Personnel who are inaccessible to the
salesman
Overcoming Prejudice(unfairness)
Keeping customers reminded of the product and
the company
Supplementing and reinforcing Personal Selling
Reaching to customers left out by the salesman
Motivating Middlemen
Generating Primary Demand

BENEFITS OF
INDUSTRIAL
ADVERTISING

BENEFITS OF INDUSTRIAL ADVERTISING


Stimulates Demand (thru creating awareness)
Strengthens other promotion mix elements
Develops brand preference (reaching the
buying influencers)
Cuts costs(thru increasing the sales efficiency)
Lowers prices
Competitive weapon
Disseminates Information (by supporting
channel members)
Brand Image building
Innovation

MAJOR DECISIONS
IN INDUSTRIAL
MARKETING
COMMUNICATION

MAJOR DECISIONS IN INDUSTRIAL MARKETING COMMUNICATION

Identifying the Target Audience


Segmentation & Targeting
Decision maker
Determining Communication Objectives
Introduction phase : Customer education & creation of
primary demand
Other phases : objectives will be different : fighting
competition
Determining the Message
Kotler points out that formulating a message will
require solving 4 problems
What it says ( message content )
How to say it logically ( message structure )
How to say it symbolically ( message format )
Who should say it ( message source )

MAJOR DECISIONS IN INDUSTRIAL MARKETING COMMUNICATION

Budget Decisions
The size of the promotional budget and
apportioning the amount of this amount to the
different
elements of the promotional mix are very
important but difficult decisions
Affordable Method
Percentage of sales Method
Objective and Task Method
Competitive parity Method
Communication Mix Decisions
The mix varies based on the effectiveness of a
particular medium in a particular segment

TRADE FAIRS
AND
EXHIBITION

TRADE FAIRS AND EXHIBITION

There are Two types of fairs


GENERAL FAIRS:also known as
horizontal fairs
Indian Trade Fair ( has all
business categories )
SPECIALISED FAIRS: also
known as vertical fairs & solo fairs
IMTEX (Machine Tools), Auto
Expo etc.

TRADE FAIRS AND EXHIBITION

Benefits of Trade Fairs


When media advertising is not permitted
International fairs bring in buyers and
sellers from all over the world at one
location
The sellers get to promote their products
and meet potential customers
They enable participants & visitors to know
about business opportunities, government
policies, assistance packages, the latest
technical trades, competitor moves etc.

FACTORS
INFLUENCING
SALES
PROMOTION

FACTORS INFLUENCING SALES PROMOTION


Increasing competition
Customers have become more choosy / price sensitive
Sales promtions generally create an immediate positive impact
on sales
Products have become more standardised
Consumer acceptance
Expectation of price decrease
Advertising has become more expensive and less effective
Trade has become more powerful
Emphasis on sales volume
Sales Promotions maximise profits
Introducing and elements of interest
Impulsive buying is increasing
Sales promotion specialist are available
Excess stocks
Reach out to more customers

ADVANTAGES AND DISADVANTAGES OF SALES PROMOTION

ADVANTAGES
Customers have become more choosy / price
sensitive
Effect on consumers behaviour
Effect on trade behaviour
DISADVANTAGES
Decrease brand loyalty
Increased price sensitivity
Quality image may be tarnished
Dealers forward buy and divert stocks
Merchandising support from dealers is doubtful

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