Professional Documents
Culture Documents
Production Goods
materials nuts, bolts
Support Services
accessory equipment tools, computers installations
eg. clothing
eg. banking
component parts
eg. newspaper
eg. groceries
eg. travel
eg. buildings
Industrial Market
Consumer Markets
Geographically concentrated Fewer buyers (relatively) Big buyers ( small number of large buyers)
Industrial Market *Evaluated for functionality rational/task motive to buying. *Purchasers are experts & focus is more on performance/service. *Higher interaction with the supplier. * Formal processes.
Consumer Market *Social / psychological factors are important. *Family involvement & focus more on product per se. *Nor personal relationship with the supplier. * Less of formal processes.
Industrial Buyer for AC *Evaluated for functionality ( evaluation by tech committee) *Purchase through tendering Process & brand less important. *Discuss technical details, price negotiation etc. *Formal processes of documentation etc.
Customer for AC Should look good & match the dcor. *Want to buy LG only (because neighbor has) *Go to a shop, select, negotiate pay & forget. * Less of formal processes.
Industrial Market
* Technical complexity and customized. * Service, delivery and availability is very important.
Customer for Samsonite soft Luggage * Standardized product range to select from. *. Service, delivery and availability is somewhat important, can wait for a Specific color / size.
Industrial Market
Consumer Market
Customer
* Need identification, selection, procurement etc. * O.K. from the workers union, agreement by contractor, purchase departments negotiation & placing order.
* Low involvement buying and impulse purchase (the exact choice criteria difficult to identify) & varies from situation to situation.
Industrial Markets * Shorter, more direct & fewer linkages between seller and buyers.
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Understanding Industrial Market Vs Consumer Market Industrial Distribution channel characteristics -Example markets
Hotel buying Cold Drinks * Supplied directly by the distributor, may even be serviced by company employee or a regular basis.
Customer for Cold drinks * Normal distribution style of distributor to retailer to customer. Virtually no interaction with company.
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Industrial Markets * Emphasis on personal selling or one to one dealing. Example : Selling fridges with new technology. You go and deal with Coke or Pepsi H.O.
Consumer Markets * Emphasis on mass market promotion. Example : You plan an adv. campaign to highlight decals and generate customer flow.
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Industrial Markets * Competitive bidding & multistage negotiation. * Sharing of cost data & budgeting of acceptable profits in many cases.
Consumer Markets * Normally MRP & MOP * Concept of list price & its implementation.
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Understanding A big reseller can be treated as a Industrial Buyer Industrial markets Example: Shoppers Stop / Ebony / Kids Kemp for an apparel manufacturer. Purchase : Not for consumption but for business. Market characteristics : Very few of them and they are big in size and have centralized purchasing.
Understanding A big reseller can be treated as a Industrial Buyer Industrial markets Example: Shoppers Stop / Ebony / Kids Kemp for an apparel manufacturer. Channel characteristics : Direct service by the manufacturer. Price characteristics : Very hard on negotiation, if they get better price, it straight goes to profits.
Economics of demand : Based on actual consumer off-take of the products and hence derived. If one design clicks, it is stocked more in anticipation.
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3.Users ( consumers ) They are the final consumers of the product and their total operation depends on you. Example: Eastern Coal Fields for Tisco. No coal => No Steel.
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1. Standard procurement processes Registration, Tender, L1 etc. 2. Public accountability everything by rule books as far as documentation.
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Organizational Customer Type of purchasing organization Institutions ( Private & Public Sector )
1. Tisco giving its workers, watches as Diwali gifts. 2. XIM-B purchasing air-conditioners for faculty offices. 3. DSP cooperative buying suitcases for their members. Characteristics : Normally one time deals, large orders, less of technical evaluation, non specialist buyers.
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Capital Items
1. Installations ( buildings, computers, machinery etc.) 2. Accessories ( PC, Office furniture) Characteristics: Normally major installations, because of extensive interaction required and long negotiation time required, the manufacturers deal directly with the customer & accessories are sold by industrial. distributors.
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1. Large number of buying center : Government departments are everywhere. A lot of them purchase locally. 2. Political interference : 3. Specified govt. contracts : a) Rate contracts b) DRDO / ISRO Dev. Job cost + effort cost c) 131 Orders
Mafg.
Dist. / Dlrs.
Labour Capital R.M. Components Equipment
Manufacturer rep Dist / Dlrs Transporters Warehousing firms Mktg. Research firms Compt. Bankers & insurers
Suppliers Buyers
Facilitators
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1. Financial publics FI / Stockbrokers / Individual Stock Holder ( Stock prices, confidence in company ) 2. Independent press Impact on reputation of company ( Dhabol power corporation ) 3. Public interest groups Environmentalists ( Euro II , CNG vehicles, Narmada bachao)
1. Economics - Increased demand for oil led to increase in prices of oil in the world markets. Changes the cost base of most oil based companies. Also changed the demand pattern of automobile ( petrol to diesel ).
3. Physical environmental Influences Steel plants need iron ore, water & lime stone deposits for setting up. MP, Bihar and Orissa have the concentration of steel plants. . 4. Politico / Cultural influences Hire and fire policy of west Vs militant trade unionism & job protection in India. 5. Technological influences Typewriters manufacturers had to shift market focus, change products etc after PCs and word processors became common.
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Anticipating governments action: WTO treaty signing and IMF loans linkages for govt. The govt. needs the loan so it is likely to sign the treaty. Influencing Govt. actions: Lobby for reduction in excise duty (to create level playing field).
1. Competitive aggression a. Create Product differentiator (Bonding power of cement Gujrat Ambuja Cement compressive strength)
b. Aggressive pricing (coal based power plants Vs Gas based power plants)
c. Comparative advertising - Dhabol Power Corporation came up with the very good adv telling the good the plant has brought about in the area, water supply, school, employment, plus electricity generation cost (compared with other plants etc.) 33
2. Competitive pacification a. Improved competitive relations - (Auto companies do not fight on discount to trade @4%, they do not spoil the trade, focus on end users ). b. Industry promotion Doodh, Egg & LPG campaign. ( Increase the pie rather than fight for the same pie). c. Price Umbrellas The transporters union finalizing rates for each destination ex- Mohali.
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3. Building Public Opinion a. Corporate Image advertising ISO 9000 Accreditation. b. Voluntary environmental control ISO 14000 Accreditation Making green products & advertising it. c. Commitment to interest groups Archies cards giving part of institutional revenue to fund the NGOs. This help them charge higher & get business.
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4. Political / Legal a. Directly lobbying with the govt. & law enforcers. Steel Industries lobbying for more development work, reduction in excise etc. b. Issue advertising through the direct paid media or even influencing the media to highlight the issue ( may or may not be funded directly ).
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a. Domain Selection : Focusing on areas of strong competitive advantage. Cray Supercomputers ICI Worldwide Light chemicals with high margins.
b. Diversification : Reliance into telecom sector. May be the idea is to be part of a high growth industry which has good future potential.
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THANKS