9. Industrial Market Vs Consumer Market Distribution channel characteristics Industrial Markets * Shorter, more direct & fewer linkages between seller and buyers. Consumer Markets * Indirect and multiple linkages Understanding Industrial markets
10. Industrial Market Vs Consumer Market Distribution channel characteristics -Example 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. Understanding Industrial markets
11. Industrial Market Vs Consumer Market Promotion Industrial Markets * Emphasis on personal selling or one to one dealing. Example : Selling fridges with decals . 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. Understanding Industrial markets
12. Industrial Market Vs Consumer Market Pricing 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. Understanding Industrial markets
13. Industrial Market Vs Consumer Market Pricing - Example Industrial (CSD purchase Of Rum ) * Competitive bidding & selection on basis of L1. * Sharing of production and overhead cost data with CSD and price based on cost + margin. Consumer Markets for Rum * Normally MRP & MOP * Concept of list price & its implementation in the trade. Understanding Industrial markets
14. A big reseller can be treated as a Industrial Buyer 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. Product characteristics : Specific private labels. Buyer characteristics : Technical evaluation / rational process / multiple buying influencers. Understanding Industrial markets
15. A big reseller can be treated as a Industrial Buyer 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. Understanding Industrial markets
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18. 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. Understanding Industrial markets
33. Environment Management Strategies Independent Strategies 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 Umbrella’s – The transporter’s union finalizing rates for each destination ex- Mohali. Understanding Industrial markets
34. Environment Management Strategies Independent Strategies 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 NGO’s. This help them charge higher & get business. Understanding Industrial markets
35. Environment Management Strategies Independent Strategies 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 ). Understanding Industrial markets
36. Environment Management Strategies Co-operative strategies a. Contracting : Allwyn is part of Electrolux, but supplies refrigerators to LG. b. Co-optation : Absorption of relevant Publics on board of directors. IIMC & XLRI directors in the board of directors of XIM. c. Coalition : Industry association ( Specially used to lobby with the government ) FMA decision to have max 7 years warrantee on fans. Understanding Industrial markets
37. Environment Management Strategies Strategic Maneuvering 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. Understanding Industrial markets