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Industrial marketing

  1. 1. IM/1-1/5 THE NATURE OF INDUSTRIAL MARKETING Learning Objectives • Understand What is industrial (or Business to Business) Marketing? • Know What are the differences in the characteristics of industrial and consumer marketing? • Find out Why the demand for industrial goods and services are called “Derived demand” ? By Prof. Havaldar
  2. 2. IM/1-2/5 (A)     What is Industrial (Business) marketing?  It is marketing of products / Services to  business firms.  In contrast consumer marketing is  marketing products / services to individuals  & households. (B)     What is the difference between industrial  marketing, B2B marketing, Business  marketing & Organizational Marketing? No Difference! (C)    What are the differences between       Industrial                  & Consumer  Marketing? By Prof. Havaldar
  3. 3. IM/1-3/5 AREAS / CHARCTERISTICS IND MARKETS CONSUMER MATKETS Market GEO Concentrated GEO Disbursed Few Buyers Large no. Of Buyers (Mass Markets Products Technically Complex Non – Technical Customized Standardized Service Very Important Somewhat important Buyer Behavior Various Functional Family members involved specialists involved Physiological / Mainly Rational buying Psychological Social need decisions. based buying decisions Interpersonal Non – Personal relationship between Relationship. buyers and sellers. Channel More direct Indirect Multi Channel Few Channels with many layers Promotional Importance to personal Importance to Advertising. selling Pricing Competitive bidding / MRP Negotiated prices By Prof. Havaldar
  4. 4. IM/1-4/5 (D) Why Industrial Demand is called  “Derived Demand” ?  Because Industrial demand is derived from (or  depends on) demand for consumer goods /  services.  E.G. Steel is demanded for production of  consumer durable products like Cars &  Refrigerators, which are demanded by  household consumers. Hence, Demand for  Steel is derived from forecast of consumer By Prof. Havaldar
  5. 5. SUMMARY OF CHAPTER-1 IM/1-5/5  Industrial / Business Marketing is  marketing of products / services to  business firms.  Differences between Industrial &  Consumer marketing are seen in areas /  Characteristics like Market, Product,  Buyer Behavior, Channel, Promotion &  Price.  Industrial Demand is derived from By Prof. Havaldar
  6. 6. CHAPTER 2 IM/2-1/10 UNDERSTANDING INDUSTRIAL MARKETS AND ENVIRONMENT LEARNING OBJECTIVES  Understand the types of industrial customers  as well as industrial goods and services.  Know the marketing implications for different  types of customers and products.  Understand the purchasing orientations and  practices of industrial customers.    Know types of environment and strategies to  manage external environment. By Prof. Havaldar
  7. 7. IM/2-2/10 (A)  What are the types/classifications of  Industrial/Business customers?EDRL M M DE INA R( DI EI SST /R I B U T O R S ) IN T M ID E E C O M M E R C IA L E N T E R P R IS E S OEM S USERS P U B L IC S E C T O R U N IT S (B H E L ) GO VER NM ENT CUSTOM ER S G O V T . U N D E R T A K IN G S ( R A IL W A Y S , D E F E N C E U N IT S ) IN D U S T R IA L / B U S IN E S S CUSTOM ER S P U B L IC IN S T IT U T IO N S (G O V T . H O S P IT A L S ) IN S T IT U T IO N A L CUSTOM ER S P R IV A T E IN S T IT U T IO N S (S C H O O L S , C O L L E G E S ) M A N U F A C T U R IN G U N IT S ( S U G A R , M IL K ) C O -O P E R A T IV E S O C IE T IE S N O N -M A N U F A C T U R IN G U N IT S ( B A N K S , H O U S IN G ) F IG . T Y P E S O F IN D U S T R IA L / B U S IN E S S C U S T O M E R S By Prof. Havaldar
  8. 8. IM/2-3/10 (B)  How are Industrial Products / Services  Classified? Classification into 3 Groups shown below.  U D E R A W M A T E R IA L S (IR O N O R E , C R O IL ) M A T E R IA L S M A N U F A C T U R E D M A T E R IA L S & PARTS ( S T E E L , F U E L O IL ) (E N T E R P R O D U C T C O M P O N E N T P A R T S (B E A R IN G S , T Y R E S ) D IR E C T L Y ) S U B A S S E M B L IE S ( E X H A U S T P IP E IN M .C .) IN D U S T R IA L C A P IT A L IT E M S L IG H T E Q P T (C O M P U T E R S , H A N D T O O L S ) PRODUCTS / (U S E D IN H E A V Y E Q P T (M A C H IN E S , T U R B IN E S ) S E R V IC E S P R O D U C T IO N / O P E R A T IO N S ) P L A N T /B U IL D IN G (F A C T O R IE S , O F F IC E S ) S U P P L IE S / S U P P L IE S (L U B R IC A N T S , E L E C T R IC A L IT E M S ) S E R V IC E S (T O S U P P O R T O P E R A T IO N S ) S E R V IC E S (L E G A L , C O U R IE R ) F IG . C L A S S IF IC A T IO N / T Y P E S O F IN D U S T R IA L P R O D U C T S / S E R V IC E S By Prof. Havaldar
  9. 9. IM/2-4/10 (C) Marketing Implications for different types of products & customers? i. For Materials & Parts, Direct selling is  done to large OEMs (Original Equipment  Manufacturers) and users, but indirect  selling through industrial distributors /  dealers becomes cost effective for smaller  volume OEMs and users.  ii. For Capital items, Direct selling through  company sales force is common, with  extensive interactions on technical &  commercial factors. iii. For Supplies Industrial distributors /  dealers are mostly used but for marketing  of services, word-of-mouth plays an By Prof. Havaldar
  10. 10. IM/2-5/10 (D)  Purchasing Orientations of Business Buyers  Business buyers/ Industrial customers follow one  of the three purchasing orientations: (i)  Buying,   (ii) Procurement, or   (iii) Supply chain  Management. (i) Buying Orientation : The firm with buying  orientation follows the practice of  (a) selecting  lowest price supplier, (b) gaining power over  suppliers and (c) avoiding risk of buying from new  suppliers. It has a Short-term focus. (ii) Procurement Orientation : The purchasing  firm with procurement orientation has a long-term  focus. It achieves the objectives of quality  improvement and cost reductions by following the  practices of (a) collaborative relationship with  major suppliers and (b) working closely with other  functional areas in the company. By Prof. Havaldar
  11. 11. IM/2-6/10 (E)  Purchasing Practices of Different Types of Industrial / Business Customers (i) Purchasing in commercial enterprises  Involve Technical & Commercial depts.  Major Tasks / Procedure: identifying, negotiating,  selecting suppliers, building relationship.  Purchasing to improve operational efficiency &  contribute to firm’s competitive advantage.  (ii) Purchasing in Govt. units  DGS&D agency finalizes rate contracts for standard  products for Govt. units.  Main Tasks / Procedure : Registration of the firm &  its Products, Tender Advertisements, no negotiation  in “ Open” tenders, negotiations done in closed /  limited tenders. By Prof. Havaldar
  12. 12. IM/2-7/10 (iii) Purchasing in Institutions  If the Institute is a Govt. Hospital Purchasing  practices of Govt. units Followed   Similarly a private School / College follows  practices of commercial enterprises  However, better to study each major  institution. (iv) Purchasing in cooperative societies   Similar to Institutional purchase. By Prof. Havaldar
  13. 13. IM/2-8/10 (E) Types & Analysis of Environment A IR & W A T E R P O L L U T IO N E C O L O G IC A L S O L ID W A S T E D IS P O S A L C O N S E R V IN G N A T U R A L R E S O U R C E S W A T E R , P O W E R , T R A N S P O R T A T IO N P H Y S IC A L L O W -C O S T , S K IL L E D M A N P O W E R C O M P A N Y L O C A T IO N , IM A G E / R E P U T A T IO N E N V IR O N M E N T IN T E R N A L R & D & P R O D U C T IO N F A C IL IT IE S (S & W A N A L Y S IS ) H R & F IN A N C IA L R E S O U R C E S M A R K E T IN G E F F E C T IV E N E S S M IC R O C U S T O M E R S & C O M P E T IT O R S (A F F E C T S A P A R T IC U L A R F IR M ) S U P P L IE R S EXTERNAL ( O & T A N A L Y S IS ) E C O N O M IC M ACRO T E C H N O L O G IC A L (A F F E C T S G O V T ., P O L IT IC A L , L E G A L A L L F IR M S ) C U L T U R A L & S O C IA L P U B L IC - P R E S S , S H A R E H O L D E R S , IN V E S T O R S & P U B L IC IN T E R E S T G R O U P S By Prof. Havaldar
  14. 14. IM/2-9/10 (F)  Strategies for Managing Changing External Environment. (i)   Independent Strategies. (ii)   Cooperative Strategies. (iii)  Strategic Planning. It Aims at keeping  the firm consistently successful in changing  marketing  environment by market  oriented strategic  management. By Prof. Havaldar
  15. 15. IM/2-10/10 SUMMARY OF CHAPTER - 2 Types /Classifications of Industrial/ Business Customers are (i)  Commercial Enterprises,  (ii) Government (iii) Institutional,  (iv) Cooperative societies. Industrial Products/Services are classified into  (i) Materials & Parts, (ii) Capital Items, (iii) Suppliers &  Services.  Marketing strategies differ for different product &   Customer types.  Industrial / business Buyers follow one of the three  purchasing orientations : buying, procurement, or  supply chain management. By Prof. Havaldar
  16. 16. CHAPTER – 3 IM/3-1/16 THE NATURE OF INDUSTRIAL BUYING AND BUYING BEHAVIOUR Learning Objectives  Understand Organizational buying objectives.  Gain knowledge of buying activities, including  different phases in buying decision process,  types of buying situations; buygrid framework  & its analysis.  Identify members of buying centers.  Understand organizational buying behavior. By Prof. Havaldar
  17. 17. IM/3-2/16 PURCHASING OBJECTIVES OF FIRMS  Reliability in delivery.  Consistent product Quality.  Lowest price (If delivery & Quality objectives  are met)  Excellent pre & post – sales services.  Long – Term collaborative relationship. Industrial buyers try to achieve organizational  purchasing objectives & personal objectives  like higher status, job security, salary By Prof. Havaldar
  18. 18. IM/3-3/16 Industrial Buying Decision Process  Marketers must study this for developing  effective marketing strategy.  In Consumer Marketing, Household /  Individual consumer / Buyer makes buying  decisions based on certain mental stages like  (i) Problem (Need) Recognition,  (ii) Information Search       (iii) Evaluation  (iv) Purchase decision        (v) Post Purchase  Behavior  In Industrial Marketing, Buying Decision By Prof. Havaldar
  19. 19. IM/3-4/16 (A) PHASES IN INDUSTRIAL BUYING DECISION MAKING PROCESS / BUYPHASES  PHASE –1  :- Recognising A problem / need.  PHASE – 2 :- Determining Characteristics &                           Quantity of needed product /  Service*.  PHASE – 3 :- Developing specifications of the  product*.  PHASE – 4 :- Searching & Qualifying  Suppliers.  PHASE – 5 :- Obtaining & Analyzing  suppliers’ offers*  PHASE – 6 :- Evaluating & Selecting  Suppliers. By Prof. Havaldar
  21. 21. IM/3-6/16 (B) Buying Situations / Buyclasses 3 Common types of purchases / buying situations i. New Task / New Purchase :  Here, buyers have limited knowledge and  experience of the new product/service.  Hence,  more information is obtained, more people are  involved, risks are more, and decisions take  longer time. ii. Modified Rebuy / Change in supplier : This situation occurs when the firm is not  satisfied with the performance of existing  suppliers, or there is a change in product specs.   Hence, the need for searching alternate  suppliers. iii. Straight Rebuy / Repeat purchase : Here, the buying firm places repeat orders on By Prof. Havaldar
  22. 22. IM/3-7/16 (C) Buygrid Framework BUYPHASES BUYCLASSES New Task Modified Straight Rebuy Rebuy 1. Problem Recognition Yes May Be No 2. Characteristics of Product Yes May Be No 3. Product Specification Yes May Be No 4. Supplier Search Yes Yes No 5. Analyzing Supplier Offers Yes Yes May Be 6. Supplier Selection Yes Yes No 7. Order – Routine Selection Yes Yes May Be 8. Post Purchase Review Yes Yes Yes By Prof. Havaldar
  23. 23. IM/3-8/16 BUYGRID FRAMEWORK ANALYSIS  All Phases are Applicable for a New Task.  Some Phases are Applicable for modified /   Straight Rebury.  New task situation is most difficult since  buyers have less knowledge, no experience &  more people involved.  Modified Rebury is not difficult situation since  it has few activities.  Straight rebury situation is handled routinely, By Prof. Havaldar
  24. 24. IM/3-9/16 (D) Buying Center roles & key members. Roles of Buying center members are  Initiators. First recognize problem / need. Any  individual in buying firm – often, users.  Buyers. Carry out purchase activities. They are  purchase officers / executives.  User. Any person who uses the product / service.  Influencers. Influence buying decision. Technical  people are often key influencers.  Deciders. Make buying decisions. Senior  executives are deciders for high value & complex  products. For straight rebuy / routine purchase,  junior purchase officer can decide.  Gatekeepers. They control / filter information & By Prof. Havaldar
  25. 25. IM/3-10/16 (E) Identifying key members of buying centre  Sales / Marketing persons must identify  important members of buying centre.  Buying centre consists of individuals and groups  who take part in buying decision making process,  have common objectives & share common risks.  It is also called purchase committee, buying  committee or decision making unit.  Members of buying centre are (i)  Technical persons. Represent  design,production/operations,          maintenance, Q.C.,  Industrial Engg. Depts. (ii)  Purchasers / Buyers. Purchase / Materials  dept. persons. By Prof. Havaldar
  26. 26. IM/3-11/16 (F)  Organizational buying behavior  Industrial / business buyers are influenced by  many factors. Two most important factors are  (i) Organizational factors / task – oriented objectives, like best product quality, lowest  price, dependable delivery. (i) Personal factors / Non-task oriented   objectives, such as good increments,  promotion, Job security, personal favors.   When suppliers’ offers are similar, buyers can  satisfy organizational objectives from any  supplier. Hence, personal factors become important.  However, when suppliers’ offers differ By Prof. Havaldar
  27. 27. IM/3-12/16  Many models have been developed to explain  organizational buying behavior. One of the  comprehensive models is the Sheth model,  described below.  The Sheth model of industrial buyer behavior, shown below , focuses on (i)  Psychological aspects of individual buyers  (Component 1), (ii) Conditions causing joint  decision making (Component 2), (iii) Conflict  among those involved in decision process &  resolution of conflict By Prof. Havaldar
  28. 28. IM/3-13/16 C o m p o n e n t (1 ) C o m p o n e n t (2 ) C o m p o n e n t (3 ) S it u a t io n a l F a c t o r s D iffe r e n c e s  a m o n g V a r ia b le s  th a t D e te r m in e M e th o d s  u s e d  fo r in d iv id u a l b u y e r s if b u y in g  d e c is io n  is c o n flic t  r e s o lu tio n c a u s e d  b y  fa c to r s  : a u to n o m o u s   o r  jo in t : in  jo in t- d e c is io n  B a c k g r o u n d  o f A )  P r o d u c t  S p e c ific m a k in g  p r o c e s s  : in d iv id u a ls  ( E d u c a tio n , F a c to r s  : r o le  &  life  s ty le ) .  T im e  P r e s s u r e  P r o b le m  S o lv in g  T h e ir  in fo r m a tio n  P e r c e iv e d  R is k  P e r s u a s io n S u p p lie r  o r s o u rc e s .  T y p e  o f P u r c h a s e  B a r g a in in g B r a n d  C h o ic e  A c tiv e  S e a r c h B )  C o m p a n y  S p e c ific  P o litic k in g  P e r c e p tu a l D is to r tio n F a c to r s  :  S a tis fa c tio n  w it h  C o m p a n y  S iz e p a s t p u r c h a s e s  C o m p a n y  O r ie n ta tio n    D e g r e e  o f  C e n tr a lis a tio n F ig . : T H E S H E T H M O D E L O F IN D U S T R IA L B U Y E R B E H A V IO U R By Prof. Havaldar
  29. 29. W E B S T E R A N D W IN D M O D E L IM/3-14/16 E n v ir o n m e n ta l V a r ia b le s  P h y s ic a l,  T e c h n o lo g ic a l  E c o n o m ic , C u ltu r a l  P o lit ic a l  a n d   L e g a l  L a b o u r  u n io n s  C u s to m e r d e m a n d s  C o m p e t it iv e   p r a c tic e s  S u p p lie r   in f o r m a t io n O r g a n is a tio n V a r ia b le s  O b je c t iv e s   a n d  g o a ls  O r g a n is a tio n  S tr u c tu r e  P u r c h a s in g  P o lic ie s   /  P r o c e d u r e s  E v a lu a tio n  &  r e w a r d  s y s te m s  D e g r e e   o f  d e c e n t r a lis a t io n B u y in g C e n tr e V a r ia b le s O r g a n is a tio n B u y in g D e c is io n s  A u th o r ity ,   S iz e  C h o ic e   o f  S u p p lie r s  K e y   in f lu e n c e r s  D e la y   d e c is io n   &   g e t   m o r e   in f o r m a t io n  I n t e r p e r s o n a l  r e la t io n s h ip  M a k e , L e a s e  o r b u y  C o m m u n ic a tio n  D o  n o t b u y In d iv id u a l V a r ia b le s  P e r s o n a l G o a ls , V a lu e s  E d u c a t io n ,   E x p e r ie n c e  E x p e r tis e , J o b  P o s itio n  L ife s ty le , In c o m e By Prof. Havaldar
  30. 30. IM/3-15/16 CUSTOMER SERVICE  Important Customer Service Elements. Carry  out market survey to understand which of the  following elements of customer service are  important to customers, what service levels are  expected by customers, the service levels  offered by the firm and its competitors.   (i) Pre – Sales Service : Advising,  Informing,        Problem solving (ii) During – Sales Service : Product  availability,         on–time delivery, order cycle time, and  information. By Prof. Havaldar
  31. 31. IM/3-16/16 SUMMARY OF CHAPTER - 3  Industrial  marketers should understand that  business buyers try to achieve both  organizational & personal objectives.  Industrial buying decision process consists of  eight steps / stages (buyphases) & three types of  buying situations (buyclasses).  Buygrid model combines buyphases &  buyclasses.  Marketers must understand roles & key members  of buying centre, including key buying  influencers.  Many factors influence organizational buying  behavior, but major factors are organizational ( or By Prof. Havaldar
  32. 32. IM/4-01/11 CHAPTER - 4   BUYER SELLER RELATIONSHIP LEARNING OBJECTIVES :  Understand buyer sales rep. interactions.  Types/range of relationships between  buyer & seller firms.  Customer relationship management  (CRM) / relationship marketing.  Methods used to influence industrial  customers. By Prof. Havaldar 
  33. 33. IM/4-02/11 INDUSTRIAL BUYER-SALES REP. INTERACTIONS  Depend on their perceptions, behavior &  roles.  Buyers have two major perceptions of sales  reps. (i)  Stereotype – talkative, manipulative,  excitable (ii) Reputation of sales rep’s company.  Buyer Behavior towards sales rep depends on  organizational needs / objectives, buying  centre interactions and personal needs. By Prof. Havaldar
  34. 34. IM/4-03/11 BUYER-SELLER DYADIC INTERACTION FRAMEWORK A Conceptual Framework by Dr. Sheth  C o m p a t ib le S ty le In c o m p a t ib le S ty le C o m p a tib le Id e a l/S u c c e s s f u l In e ffic ie n t C o n te n t T r a n s a c tio n T r a n s a c t io n In c o m p a tib le In e ffic ie n t No C o n te n t T r a n s a c tio n T r a n s a c t io n • A buyer and a seller interaction is called “Dyadic” – two persons’ interactions’, with above types of transactions. • Content includes organizational and personal needs of a buyer and a seller. • Style includes manner and format of communication – task oriented, self oriented, or social / personal oriented. By Prof. Havaldar
  35. 35. IM/4-04/11 TYPES / RANGE OF RELATIONSHIP BETWEEN BUYER & SELLER FIRMS  When buyer (or customer) and seller (or  supplier) firms do business, they have the  following types and range of business /  working relationships / exchanges.  r i n g / P a rtn e T r a n s a c tio n a l V a lu e -A d d e d C o lla b o r a tiv e R e la tio n s h ip R e la tio n s h ip R e la tio n s h ip  Each business relationship is an exchange  process of obtaining a desired product /  service by offering something of value is By Prof. Havaldar
  36. 36. IM/4-05/11  TRANSACTIONAL RELATIONSHIP  is  typically one time exchange of a product /  service, with lowest price / economy and  necessity as main factors. Some customers  prefer it when many suppliers are available in  a stable market. They switch purchases from  one supplier to another. Marketers also  choose least profitable customers for  transactional relationships.  VALUE – ADDED RELATIONSHIPS / EXCHANGES.   Here the focus is to understand customer By Prof. Havaldar
  37. 37. IM/4-06/11 COLLABORATIVE/ PARTNERING RELATIONSHIPS.  The focus is to build strong social, economic,  service and technical ties between customer  and supplier firms in order to achieve mutual  benefits.  The criteria used for selecting business  customers for partnering relationships are  technological contributions, mutual  dependence, “supply chain management”  orientations, and high sales & profit By Prof. Havaldar
  38. 38. IM/4-07/11 CUSTOMER RELATIONSHIP MANAGEMENT (CRM) / RELATIONSHIP  Conceptually  same,  methods  /  techniques  to  MARKETING (RM) achieve objectives are different.  Both  CRM  &  RM  aim  at  partnering  /  collaborative  long-term  relationships  for  mutual benefits of both parties.  CRM’S  objectives  are  to  improve  customer  loyalty  and  there  by,  company’s  profitability.  For this, marketing strategy is first developed,  then  investment  is  made  in  software  system  to  gather  data  /  information  on  each  valued  customer, and the same is made available to  all  employees  to  give  superior  customer  service. By Prof. Havaldar 
  39. 39. IM/4-08/11 METHODS USED TO INFLUENCE INDUSTRIAL CUSTOMERS  Major methods :  Sales presentation and  Negotiation  Sales Presentations: For effective sales  presentation, a sales person should follow some  guidelines :  i.  Plan and collect information before sales  presentation. ii. Identify customer needs and satisfy them  better than  competitors. iii.Use “AIDAS” theory or any other theory of  selling (Attention, Interest, Desire, Action, By Prof. Havaldar
  40. 40. IM/4-9/11  NEGOTIATION :  For negotiation with  customers use “I win, you win” or “win win” style, with  following guidelines : a. Build an environment of trust &  understanding.   b. Identify the problem areas. c. Both sides work together, pooling ideas,  information,                                                       and resources. d. Regular frequency of concessions are  important and not               the size of concessions. By Prof. Havaldar
  41. 41. SPECIAL DEALINGS BETWEEN IM/4-10/11 BUYER & SELLER  RECIPROCITY. It means buying a product /  service from a customer and selling a   product / service to a supplier. It occurs when  products are similar and price competition is  less. Generally, both purchase managers and  sales managers dislike. In  practice, the  procedure becomes complex. It  should be  kept at minimum level.   DEALING WITH CUSTOMERS’ CUSTOMERS  With coordination and planning, a business  marketer can promote its products to  customers’ customer, if a need arises. By Prof. Havaldar
  42. 42. IM/4-11/11 SUMMARY OF SELLER- RELATIONSHIP BUYER – CHAPTER 4  Industrial buyer and sales rep.’s interactions  depend on their perceptions, behavior, & roles.  Interaction between two persons (buyer  & seller) is  called Dyadic, with various types of transactions, as  per Dr. Sheth’s framework.  Buyer and seller firms have various types and  range of relationships: transactional, value added  and partnering / collaborative.  Customer relationship management (CRM) and  relationship management (RM) are conceptually  same. Both aim at collaborative / partnering long –  term relationship for mutual benefits of both parties.  Sales promotion and negotiation are the major  methods used to influence industrial buyers. By Prof. Havaldar
  43. 43. CHAPTER 5 IM/5-1/6 INDUSTRIAL MARKETING INTELLIGENCE AND MARKETING RESEARCH LEARNING OBJECTIVES : 1. Know Nature and Scope of Industrial Marketing research. 2. Examine the Marketing Research Process. 3. Understand Industrial Marketing Intelligence System. By Prof. Havaldar
  44. 44. IM/5-3/6 SCOPE OF INDUSTRIAL MARKETING RESEARCH Scope is vast. Some of the areas are : i. Market share analysis . ii. National and Geographical area- wise market potential. iii. Competitors’ analysis. By Prof. Havaldar
  45. 45. IM/5-4/6 MARKETING RESEARCH PROCESS STEPS INVOLVED ARE : 1. Identify the problem / opportunity and state research objectives . 2. Develop research design / methodology. 3. Collect data / information. 4. Process and analyze the data. 5. Prepare research report. There is no major difference in the By Prof. Havaldar
  46. 46. INDUSTRIAL MARKEING INTELLIGENCE SYSTEM IM/5-5/6 M a r k e t in g R esea rch s t u d ie s I n d u s t r ia l S econ d ary D e c is io n M a r k e t in g M ark et D a ta Support I n t e llig e n c e R esp on ce S ou rce S y ste m MarketRs ingch studie s Industr ial SecoD atndry MarketInlig ingce DecisonSuprt MarkRespo etnc So urce System System S y ste m Industrial marketing intelligence system is developed to meet the needs of industrial marketers for timely and continuous information for effective decision making . By Prof. Havaldar
  47. 47. SUMMARY OF CHAPTER-5 IM/5-6/6  Industrial marketing research rely more on exploratory and descriptive (i.e. survey) methods .  The scope of industrial / business marketing research is vast .  There is no major difference in the process or steps involved in marketing research for consumer and industrial marketing.  Industrial marketing intelligence system is By Prof. Havaldar
  48. 48. IM/5-2/6 NATURE OF INDUSTRIAL MARKETING RESEARCH 1. Business Marketers rely more on Secondary data, and exploratory research (Through expert opinion). 2. Descriptive (or Survey) method is used more often than experimental and Observation methods, for collecting primary data. 3. Sample size is small due to small population. 4. Difficult to define sampling unit (or respondents), since buying decisions By Prof. Havaldar
  49. 49. IM/6-1/9 CHAPTER – 6 INDUSTRIAL MARKET SEGMENTATION, TARGET MARKETING AND POSITIONING LEARNING OBJECTIVES : 1. Know the Procedure followed for segmenting industrial markets. 2. Identify the Variables (bases) used for segmenting business markets. 3. Evaluate and select the target market segments and strategies. 4. Develop effective positioning By Prof. Havaldar
  50. 50. IM/6-2/9 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 By Prof. Havaldar
  51. 51. IM/6-3/9 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 By Prof. Havaldar
  52. 52. IM/6-4/9  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 By Prof. Havaldar
  53. 53. IM/6-5/9 EVALUATING MARKET SEGMENTS Criteria / factors used for evaluating each market segment are : (i) Size and Growth . (ii) Profitability Analysis . (iii) Competitive Analysis . (iv) Company Objectives and Resources TARGET – MARKET STRATEGIES Based on above criteria, business marketer selects one or more market segments as target segments. Next , the marketers should decide which of the following broad target market strategies the company should adopt By Prof. Havaldar
  54. 54. IM/6-6/9 PROCEDURE FOR DEVELOPING A POSITIONING STRATEGY Following steps are involved : (i) Identify which attributes / benefits target customers consider important while buying a product / service. This information is obtained through a market research study . The variables considered for differentiating a company’s product from competing products are. (a) Product variables, (b) Service variables, (c) Personal variables, (d) Image variables, By Prof. Havaldar
  55. 55. IM/6-7/9 (iii) Use Perceptual Mapping Technique. To decide on positioning strategy, this technique is used, after getting customers’ perceptions through marketing research. (iv) Communicate Positioning Strategy. The firm should decide and communicate its positioning strategy to target customers, through sales force, advertising in journals, internet, and By Prof. Havaldar
  56. 56. Excellent Product Quality IM/6-8/9 1.0 .A1 0.8 0.6 .D .C 0.4 Strong 1.0 0.8 0.6 0.4 0.2 0.2 - 0.2 - 0.4 - 0.6 - 0.8 - 1.0 Weak Customer Customer Service Service - 0.2 .B - 0.4 - 0.6 . - 0.8 A - 1.0 Perceptual Mapping Low Technique Product Quality By Prof. Havaldar
  57. 57. SUMMARY OF CHAPTER 6 IM/6-9/9 1. Procedure used in market segmentation includes (i) Marketing research, (ii) Data analysis (iii) Profiling each segment. 2. Variables used for segmenting industrial markets include macro variables and if needed, micro variables. Sequential segmentation process is often used. 3. Criteria used for evaluating market segments are (i) size and growth , (ii) Profitability (iii) Competitive analysis (iv) Company Objectives and Resources. 4. Target market strategies are (a) Concentrated or Niche marketing, (b) Differentiated marketing, (c) Undifferentiated marketing strategy By Prof. Havaldar
  58. 58. IM/7-1/20 CHAPTER – 7 PRODUCT STRATEGY & NEW PRODUCT DEVELOPMENT Learning Objectives 1. Define an Industrial Product. 2. Understand Changes in the product strategy. 3. Know Product Life cycle (PLC) Theory and its application. 4. Develop Product strategies for existing products. 5. Understand new product development. 6. Know impact of technology and high-tech By Prof. Havaldar
  59. 59. IM/7-2/20 DEFINITION AND MEANING OF AN INDUSTRIAL PRODUCT  Definition : Its is a physical thing as well as a Complex set of economic, technical, legal and personal relationship between a buyer and a seller.  Meaning of a Total Product Package : It includes basic properties (with fundamental benefits), enhanced properties (with tangible benefits), and augmented properties (with intangible benefits).  In a competitive market, business By Prof. Havaldar
  60. 60. IM/7-3/20 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. By Prof. Havaldar
  61. 61. A General Model of Product Life – Cycle (PLC) IM/7-4/20 In d u s tr y S a le s R upees In d u s tr y P r o fits M a tu r ity D e c lin e By Prof. Havaldar
  62. 62. IM/7-5/20 APPLICATION OF PRODUCT LIFE – CYCLE THEORY TO MARKETING STRATEGY Introduction Stage : Marketing Strategy should focus on market development for slowly accepted products. For rapidly accepted products, a competitive strategy (Competitive pricing or Superior quality product ) should be evolved. Growth Stage :To take advantage of high growth of sales and profits, the marketing strategy should concentrate on (i) Improving product design or Prof. Havaldar product features (ii) By adding
  63. 63. IM/7-6/20  Maturity Stage As competition increases and profits decline, marketing strategy should concentrate on (i) cutting costs, (ii) keeping existing customers satisfied (iii) entering new markets.  Decline Stage Since both sales and profits decline, marketing strategy should focus on (i) substantial reduction in costs, (ii) develop a substitute product, (iii) withdraw the By Prof. Havaldar
  64. 64. IM/7-7/20 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 company’s products by using “ perceptual mapping” technique. By Prof. Havaldar
  65. 65. IM/7-8/20 PERFORMANCE EVALUATION OF EXISTING PRODUCTS Example : A material handling Co. (i) Product = P (Pallet Truck) Last 3 year’s average performance figures are  Industry sales growth = 25%, Company sales growth = 30%  Market Share = 30% (Dominant) , Profitability = As per Target. (ii) Product = S (Stackers)  Industry Sales growth = 16% (Stable) ; Company Sales Growth = 15% (Stakers) By Prof. Havaldar 
  66. 66. Product Evaluation Matrix IM/7-9/20 C o m p a n y S a le s D e c lin e S ta b le G ro w th P r o f ita b ility B e lo w B e lo w B e lo w In d u s tr y M a rk e t Ta rg e t Above Ta rg e t Above Ta rg e t Above S a le s Ta rg e t Ta rg e t Ta rg e t Ta rg e t Ta rg e t Ta rg e t S h a re D o m in a n t P G ro w th A v era g e M a rg in a l D o m in a n t S ta b le A v era g e M a rg in a l S D o m in a n t D e c lin e A v era g e M a rg in a l By Prof. Havaldar
  67. 67. IM/7-10/20 PERCEPTUAL MAPPING TECHNIQUE H ig h P r ic e B H ig h Low Q u a lity Q u a lity * A 1 *A C L o w P r ic e By Prof. Havaldar
  68. 68. IM/7-11/20 Firm A’s product quality is perceived to be “average” by customers, compared to its competitors B & C. Firm A should try to move to a new position of superior quality at a reasonable (average) price to improve its profitability. DECIDE PRODUCT STRATEGIES (i) Maintain / Continue the product and its marketing strategy. (ii) Modify the product & change marketing By Prof. Havaldar
  69. 69. IM/7-12/20 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. By Prof. Havaldar
  70. 70. IMPACT OF TECHNOLOGY IM/7-13/20 Technological innovations create new products / services that are new to the world. Examples of these innovations, called break through technology are : (i) Technological inventions of 1940s of vacuum tube and amplifier circuit created new products / services like radio, wireless telegraphy, and telephone service. (ii) Technological inventions of 1950s & 70s of transistor, integrated circuit (IC), microprocessors have applications in new products like TV sets, movie By Prof. Havaldar Cameras,
  71. 71. IM/7-14/20 TYPES OF MARKETING SITUATIONS. B e tte r H ig h - t e c h H ig h M o u s e tra p M a r k e tin g T e c h n o lo g ic a l M a r k e tin g U n c e r ta in t y L o w -te c h H ig h - f a s h io n Low M a r k e tin g M a r k e tin g Low H ig h M a r k e t U n c e r ta in t y By Prof. Havaldar
  72. 72. IM/7-15/20 MODIFIED TECHNOLOGY ADOPTION LIFE CYCLE This is suited to high–tech marketing D eep G ap 34% In n o v a to rs 13½ % 34% E a r ly 16% 2½ % A d o p te rs L a g g a rd s T im e o f A d o p t i o n o f I n n o v a t i o n s By Prof. Havaldar
  73. 73. IM/7-16/20 HIGH – TECH MARKETING STRATEGY 1. Target a niche market. 2. Plan whole product properties. 3. Develop partnerships. 4. Unique positioning strategy. 5. Effective Communication Strategy 6. Multi – Channel distribution strategy. 7. Skimming pricing strategy. By Prof. Havaldar
  74. 74. IM/7-17/20 Marketing of Industrial Services Classifications of Industrial Services M a t e r ia l s P e rso n al H o t e ls C o m p o n e n ts fo r G ood C o m p u te rs T r a n s p o r ta t i o n ( S t e e l, B a ll B e a r in g s ) C o n fe re n c e s P u re P u re T a n g ib le i n t a n g ib l e P ro d u c t s e r v ic e M a jo r Equal M a jo r P ro d u c t, P ro d u ct S e r v ic e , M in o r & M in o r S e r v ic e S e r v ic e P ro d u ct By Prof. Havaldar
  75. 75. IM/7-18/20 Unique Characteristics of services and marketing Implications.   C h a r a c te r is tic s M a r k e t in g Im p lic a tio n s E x a m p le s 1 . In ta n g ib ility  B u y e r s s e e e v id e n c e o f s e r v ic e q u a lity  M an age m en t (c a n n o t b e s e e n / f e lt , b e f o r e b u y in g )  S e lle r s t a n g ib ilis e t h e in ta n g ib le C o n s u lta n c y & E D P s . 2 . In s e p a r a b ility  E f fe c t iv e in t e r a c t io n d e p e n d o n s e r v ic e  R e p a ir s to m a c h in e s ( P r o d u c t io n & c o n s u m p tio n a t th e p r o v id e r s . & C o u r ie r s e r v ic e . s a m e t im e )  R e q u ir e s e ff e c t iv e r e c r u it in g a n d t r a in in g o f s e r v ic e p r o v id e r s . 3 . V a r ia b ility  U n if o r m q u a lity is d iff ic u lt  M an age m en t ( S e r v ic e q u a lit y  F o c u s o n q u a lit y & a u t o m a t io n e d u c a t io n & m a r k e tin g v a r ie s ) re s e a rc h . 4 . P e r is h a b ilit y  D e m a n d flu c tu a te s . A ir lin e s s e a ts & (C a n n o t b e s to re d )  U s e m e th o d s to m a tc h d e m a n d & W a re h o u s e s p a c e . c a p a c ity . 5 . N o n -o w n e r s h ip  A d v a n ta g e s o f n o n - o w n e r s h ip :  H o te l a n d c a r r e n ta l (B u y e r u s e s a s e r v ic e , b u t c a n n o t r e d u c t io n in c o s ts & f le x ib ilit y s e r v ic e s . o w n it ) By Prof. Havaldar
  76. 76. SUMMARY OF CHAPTER 7 IM/7-19/20   PRODUCT STRATEGYS & NEW PRODUCTS DEVELOPMENT.  Industrial Product is a physical thing and also a complex set of economic, technical, legal and personal relationship between a buyer and a Seller.  Product Strategies are changed due to changes in customers needs, technology, government policies or laws, and product life – cycle  Product life cycle (PLC) concept is used to develop marketing strategies at different stages of PLC.  Product strategies Prof. Havaldar By for existing products are
  77. 77. IM/7-20/20 It means, deciding if a product should be continued, modified, dropped, or replaced. • New products are classified into six groups and consist of seven stages of development process :- idea generation, idea screening, concept development & testing, business analysis, product development, market testing, and commercialization. • In High –tech marketing situation, technology application and market needs are difficult to predict . The “technology adoption life cycle” is modified to suit high-tech marketing. • Unique high – tech marketing strategies include targeting a niche market, planning whole product, developing partnership, unique positioning, effective communication , multi – channel By Prof. Havaldar
  78. 78. IM/8-1/14 CHAPTER – 8 INDUSTRIAL DISTRIBUTION CHANNELS & MARKETING LOGISTICS Learning objectives 1. Understand alternative channel structures. 2. Know types of industrial intermediaries. 3. Understand steps involved in designing a channel. 4. Learn how to manage channel members. 5. Understand concepts of supply chain management, Logistics, and business logistics By Prof. Havaldar system.
  79. 79. Alternative Channel Structures IM/8-2/14  Industrial channel structures include both direct and indirect channels. Direct Channels.  Examples are direct selling through company sales force and direct marketing through on-line marketing, telemarketing and direct mail. Direct channels are used typically when (i) Transaction value is large, (ii) Technical & commercial negotiations are held at various levels (iii) Buying process takes a long time (iv) Buyers want to buy directly from manufacturers. Indirect Channels.  Consists of intermediaries like distributors / dealers, manufacturer’s reps / agents, value-added resellers (VARs), brokers andBy Prof. Havaldar commission merchants.
  80. 80. Types of Intermediaries IM/8-3/14 1. Industrial Distributors / Dealers.  They perform many functions like buying, storing, promoting, financing, selling, transporting and servicing certain geographic market, & are given discounts.  Major categories are (i) General – line distributors, (ii) Specialized distributors, and (iii) Combination house. 2. Manufactures’ Representatives / Agents.  They perform functions like promoting manufacturers’ products / services, getting orders, and colleting market information. They are independent business Havaldar representing various By Prof. firms,
  81. 81. IM/8-4/14 3. Value-added Resellers (VARs) They are new type of intermediaries from computer industry. They deal with computer hardware and software companies, customize the same to solve specific problems of buying firms. They are paid discounts. 4. Brokers They bring together buyers and sellers, when information is not available completely. They represent either a buyer or a seller, and their relationship is short term. They do not buy products & services and are paid on commission basis. 5. Commission Merchants. By Prof. Havaldar
  82. 82. CHANNEL DESIGN IM/8-5/14  It includes developing new channels and modifying the existing channels.  The procedure / steps are as follows; (i) Developing channel objectives; (ii) Analyzing channel constraints; (iii) Analyzing channel tasks; (iv) Identifying channel alternatives. These include the following issues : (a) Types of intermediaries. (b) Number of intermediaries. (c) Number of channels. (v) Evaluating the channel alternatives. The criteria used are: (a) Economic factor (b) Control factor By Prof. Havaldar (c) Adaptive factor
  83. 83. IM/8-6/14 MANAGING CHANNEL MEMBERS It includes : 1. Selecting Intermediaries. 2. Motivating Intermediaries. (a) Partnering relationships. (b) Reasonable discounts and commission. (c) Distributor councils. (d) Other motivational tools. 3. Controlling Channel Conflicts (a) Sources of channel conflicts. (b) Controlling conflicts by (i) Effective communication network; (ii) Joint goal – setting; (iii) Diplomacy; Mediation; Arbitration. (iv) Vertical marketing system (VMS). By Prof. Havaldar
  84. 84. IM/8-7/14 Concept of Supply Chain Management (SCM) SCM includes activities of moving goods from raw material through operations to final consumers, as shown in “SCM Framework” below. By Prof. Havaldar
  85. 85. IM/8-8/14  Main aims of SCM are (i) Reduce cost per unit, (ii) Reduce waste & duplication, (iii) Minimize order to delivery cycle, and (iv) Ensure superior delivery service. Firms adopting SCM gain competitive advantage.  The aims are achieved by a network of interdependent firms working together with partnering relationships to manage and control various activities, in order to improve flow of materials and information from suppliers to end users.  Firms involved in SCM are suppliers of raw By Prof. Havaldar
  86. 86. IM/8-9/14 Logistics Management (LM) LM plans and coordinates activities to achieve superior customer service levels at lowest costs. LM optimizes material flow within the firm, but SCM extends integration of material flow to suppliers’ suppliers and customers’ customers. For better understanding, see figure on “ business logistics system”, which has two product By Prof. Havaldar
  87. 87. IM/8-10/14 Business Logistics System P h y s ic a l S u p p ly In d u s tr ia l M a n u fa c tu e r P h y s ic a l D is tr ib u tio n (o r M a r k e tin g L o g is tic s ) Marketing Logistics (or Physical distribution) consists of delivering finished products to intermediaries and customers. By Prof. Havaldar
  88. 88. IM/8-11/14 TASKS OF PHYSICAL DISTRIBUTION (PD) PD tasks are : (i) Transportation, (ii) Warehousing, (iii) Inventory Control, (iv) Customer Service, (v) Packaging, (vi) Material Handling, (vii) Order Processing, (viii) Communication, (ix) Locations of factory & Warehouses.  Total Distribution cost and customer service are balanced by (i) Minimizing total distribution cost, or (ii) Total systems approach through maximizing profits.  Total Distribution Cost = Transportation cost By Prof. Havaldar
  89. 89. IM/8-12/14  A firm must minimize “total distribution cost”, instead of minimizing individual cost elements, to balance customer service and total distribution cost.  Another approach, called “total systems approach or channel integration” focuses on “return on investment” (ROI). Here, a firm’s channel members work together to improve “customer service”, in order to get higher sales l revenueu. e - T o t a l P h y s i c a l D i s t r i b u t o r C o s t Sa es R even = C a p ita l In v e s tm e n t By Prof. Havaldar
  90. 90. IM/8-13/14 SUMMARY OF CHAPTER – 8 INDUSTRIAL DISTRIBUTION CHANNELS & MARKETING LOGISTICS. 1. Industrial channel structures include direct and indirect channels. 2. Types of industrial intermediaries are: industrial distributors / dealers, manufacturers’ representatives (or agents), value – added resellers (VARs), brokers, and commission merchants. 3. Procedure of channel design includes: developing channel objectives, analyzing By Prof. Havaldar
  91. 91. IM/8-13A/ CUSTOMER SERVICE  Service Quality Gap : Gap between perceived service and expected service. A firm may have a strategy of giving superior quality service than competitors and exceeding customer’s expectations.  Factors that determine service quality by customers are : (i) Reliability (ii) Responsiveness (iii) Assurance By Prof. Havaldar
  92. 92. IM/8-13B/  Strategies followed by successful customer service firms (a) Top management commitment. (b) Setting high-standards of service quality. (c) Monitoring system. (d) Systematic approach to resolving customer complaints. (e) Satisfy both employees and customers . By Prof. Havaldar
  93. 93. IM/8-13C/  Developing customer service levels/ standards Neither all customers nor all products need the same level of service. Steps involved : (i) Conduct marketing research study to find which elements of customer service are important to customers. (ii) Find needs / expectations of customers in quantitative standards for the service elements. (iii) Get information on actual performance of the company and it’s competitors from customers. (iv) Analyse variance of actual performance By Prof. Havaldar
  94. 94. IM/8-14/14 4. Managing channel members consist of selecting and motivating intermediaries, controlling channel conflicts, and evaluating channel members. 5. Supply chain management (SCM) includes activities of moving goods from raw material through operations to final consumers. Logistics management optimizes material flow within the firm, but SCM extends integration of material flow to suppliers’ suppliers and customers’ customers. 6. Business logistics system includes physical supply and physical distribution (or marketing logistics). By Prof. Havaldar
  95. 95. IM/9-1/12 CHAPTER 9 MANAGING THE PERSONAL SELLING FUNCTION Learning Objectives : 1. Understand the role of personal selling in business marketing. 2. Know the business selling process. 3. Know characteristics of B2B selling , Team selling approach, solution-oriented effort, Entrepreneurial Philosophy. 4. Understand management of major and national accounts. By Prof. Havaldar
  96. 96. IM/9-2/12 Role of Personal Selling in Business Marketing • Personal selling or direct selling through company sales force plays greater role in business marketing than consumer marketing • Major roles of personal selling (i) A part of problems – solving capabilities of the company. (ii) A part of the company’s communication or promotion mix . (iii) Gives an effective customer service . By Prof. Havaldar
  97. 97. IM/9-3/12 Business Selling Process • No magic formula for making a sale. But chances of making a sale improves, if the following “sales process” is followed. • The major steps in selling process are : (i) Prospecting. It is searching or identifying prospective or likely customers from various sources. (ii) Qualifying . Prospective customers are screened by qualifying criteria like expected volume, location & financial strength. (iii) Preparation / Pre-approach. Sales person should prepare plan before making sales presentation by obtaining all relevant information about the customer and competitors through personal visits and websites. By Prof. Havaldar
  98. 98. IM/9-4/12 (iv) Sales Presentation / Approach . Different methods are used like “(AIDAS Approach – Attention, Interest, Desire, Action, Satisfaction), or “need –satisfaction method’’. (v) Overcoming Objections . Often prospects raise objections, which are real or practical and psychological or hidden. These should be answered satisfactorily by the sales person. (vi) Closing. Asking for an order or closing the sale is important. Sales person can use some of the closing techniques. (vi) Post - Sales service and Follow-up This includes delivery, installation, training, payment collection, warranty service, and rejections /returns. By Prof. Havaldar
  99. 99. IM/9-5/12 Characteristics of B2B Selling 1. Promotional strategy focuses more on “ personal selling’’ through company’s sales force. Hence, salespersons are active in getting orders. 2. Adverting is used as a support to personal selling. 3. The sales person sells technical and non-technical products, and uses “problem solving’’ approach 4. Typically, it takes a long time to know outcome of sales efforts. 5. “System selling” approach is used by some business marketers, as it is preferred in some large industrial projects or contracts. 6. “Team selling” approach is used for major customers and large value orders. By Prof. Havaldar
  100. 100. IM/9-6/12 Team Selling Approach • More companies are using team selling approach for selling to major and national accounts (customers) and technically complex products and services. • Sales team consists of sales representative, technical support person, inside sales person, and a senior sales/marketing manager. • Coordination is done by a sales rep, for a major customer and a national accounts manager for a national customer. By Prof. Havaldar
  101. 101. IM/9-7/12 Solution – Oriented Effort • Two major roles of personal selling : (1) A part of problem-solving capabilities, (2) A part of communication ( or promotional) mix. • A sales person is a part of selling firm’s problem- solving abilities. He should identify and analyse the buying firm’s problem. He should then show how his company’s products and services can solve the buyer’s problems, better than competitors. This is called solution-oriented effort or approach. By Prof. Havaldar
  102. 102. IM/9-8/12 Intrapreneurial Philosophy • Intrapreneurship means entrepreneur within a company. • When sales and marketing persons, who are employees, behave and act like owners of the company, they have adopted entrepreneurial philosophy. Such persons take initiative, are proactive and creative, and give superior value to customers. • Firms that follow Intrapreneurial philosophy show consistently good performance. By Prof. Havaldar
  103. 103. IM/9-9/12 MANAGEMENT OF MAJOR AND NATIONAL ACCOUNTS • Both major and National accounts (or customers) have large (sales and profit potentials). But there is a difference. S a le s L a rg e M a jo r N a tio n a l P o t e n t ia l A ccount A ccount of D y a d ic M in o r C u s to m e r S m a ll In te r a c tio n A ccount S im p le C o m p le x Complexity of customer By Prof. Havaldar
  104. 104. IM/9-10/12 • A major account has a large sales (and profit) potential and is simple to serve or manage, as the customer has only one unit . • A national account has also a large sales (and profit Potential), and is complex or difficult to serve, because operating units re geographically dispersed. In addition, for small value items operating units are autonomous, but for large value items, buying is centralized. By Prof. Havaldar
  105. 105. IM/9-11/12 How to Manager Major & National Accounts Objective. To become the preferred or sole supplier with adequate profits. Strategy / plan. • Team selling. For a major customer, the team should include branch / regional managers, sales representative and technical support person. For a national account, the team consists of a national accounts manager, branch sales representatives, logistics executive, and technical person. • Relationship marketing. The teams build long-term collaborative or partnering relationships by using approaches like financial and social benefits, and structural ties. • Support from top management and functional executives should be assured. By Prof. Havaldar
  106. 106. IM/9-12/12 SUMMARY OF CHAPTER-9 • Personal selling has a greater role in business marketing than consumer marketing. • Business selling process consists of prospecting, qualifying, preparation (or pre-approach), sales presentation (or approach), overcoming objections, closing, post-sales service and follow-up. • B 2 B selling characteristics include problem solving, systems selling and team selling approaches. • Intrepreneurial philosophy results in consistently good performance. • Management of major and national accounts is done by team selling, relationship marketing and support from top management and functional managers. By Prof. Havaldar
  107. 107. IM/10-1/10 CHAPTER –10 BUSINESS (INDUSTRIAL) COMMUNICATION Learning Objectives : 1. Develop an effective communication (or promotional) program. 2. Understand the role of advertising 3. Understand the importance of sales promotion, publicity, public relation (PR), and direct marketing. By Prof. Havaldar
  108. 108. IM/10-2/10 DEVELOPING AN EFFECTIVE COMMUNICATION / PROMOTIOAL PROGRAMME FOR BUSINESS MARKETS The steps involved are : (i) Decide communication objectives. (ii) Identify the target audience. (iii) Decide the promotional budget. (iv) Develop the message strategy. (v) Select the media. (vi) Evaluate the promotion’s results. (vii) Integrate the promotion’s programme. By Prof. Havaldar
  109. 109. IM/10-3/10 Promotional Tools and Media in Business Markets P r o m o tio n a l A d v e r tis in g S a le s P. R . and D ir e c t P erso n a l T o o ls P r o m o tio n P u b lic ity M a r k e tin g S e llin g P r o m o tio n a l  P r i n t M e d ia  T rad e sh ow s  C h a r ita b le  D ir e c t m a il  S a le s c a lls M e d ia  B u s in e s s  E x h ib itio n s d o n a tio n s  T e le m a r -  S a le s & P u b lic a tio n s  C a ta lo g u e s  A d o p tin g k e tin g p r e s e n ta tio n s S u p p o r ts  Trade  S a le s C o n s e n t s v illa g e s  O n - l in e  T e a m s e l li n g J o u r n a ls  P r o m o tio n a l  C o m m u n ity m a r k e tin g  R e la t io n s h ip  In d u s tr ia ls n o v e ltie s ( g ifts ) r e la t i o n s m a r k e tin g d ir e c t o r ie s  S e m in a r s  N e w s ite m in  D e m o n s tr a tio n p ress  P r o m o tio n a l  T e c h n ic a l le tte r s a r tic le s in  E n te r ta in m e n t j o u r n a ls By Prof. Havaldar
  110. 110. IM/10-4/10 ROLE OF ADVERTISING IN BUSINESS MARKETING While advertising is relatively less important than personal selling in business marketing, it is used as support to personal selling. The functions performed by advertising are (i) Creating awareness. (ii) Reaching members of buying center. (iii) Increasing sales efficiency and effectiveness. (iv) Efficient reminder media. (v) Sales – lead generation. (vi) Support channel members. By Prof. Havaldar
  111. 111. IM/10-5/10 ADVERTIING MEDIA USED AND SELECTION CRITERIA • The media generally used for industrial advertising are: (i) Business Publications. (ii) Trade journals/ publications – Horizontal and Vertical publications. (iii) Industrial directories – published by government and private publishers (e.g. Tata Yellow pages). • Criteria used for selection of advertising media are: (a) Target audience and their media habits. (b) Promotional objectives and goals. (c) Expenditure budget, by using the following formula: C ost per page = C ir c u la t io n in t h o u s a n d By Prof. Havaldar
  112. 112. IM/10-6/10 IMPORTANCE OF SALES PROMOTION • Sales promotion consists of short-term incentive tools to stimulate greater or faster purchase of a product / service by business customers. • Some of the business promotion tools are : Trade shows (or exhibitions), sales contests, promotional novelties (or specialty advertising, or gifts), seminars, catalogues, promotional letters, demonstration, and entertainment. Some of the frequently used tools are trade shows, sales contests, catalogues, demonstrations, and promotional novelties (gifts). By Prof. Havaldar
  113. 113. IM/10-7/10 IMPORTANCE / ROLE OF DIRECT MARKETING (DM) • Definition Direct marketing is an interactive marketing system that seeks a measurable response and /or transaction. Direct marketing is also referred to as direct response marketing. • Benefits For business marketers, benefits of DM are many : Can personalise / customise communication messages, builds a continues relationship with each customer, can measure responses from alternative media, and direct relationship marketing company strategy less visible to competitors. • Main Channels or tools of DM. Direct mail, telemarketing and on- line marketing. In addition, kiosk marketing and catalog marketing are also DM channels, but are less popular in India. • Direct mail is not only paper based postal service or courier service, but can be fax mail, e-mail, or voice mail. Direct marketers send not only letters, but also audio and videotapes, CDs, and diskettes. Response rate is about 2%. By Prof. Havaldar
  114. 114. IM/10-8/11 • Telemarketing uses telephone to contact existing customers, to attract new customers, or to take orders. Telemarketing gives immediate feedback, identifies and qualifies prospects, and reduces sales force travel costs. Both inbound (incoming calls from prospects / customers) and outbound (out going calls) are important. Practice, training, pleasant voices and right timing (late morning to afternoon) are needed for effective telemarketing. • On-Line Marketing can be done by establishing an electronic presence (by opening own website or buying space on a commercial on-line service), placing ads on- line, and using e-mail. A web site should be attractive on first view and interesting enough to encourage repeat visits. Marketers use on-line marketing to find, reach, communicate and sell to business customers. By Prof. Havaldar
  115. 115. IM/10-9/11 • Major Benefits to marketers are: Lower costs, relationship building and quick adjustments to changing market conditions. Major Benefits for buyers are: convenience, information availability, and less hassle. Although small & medium size marketers can reach global markets at affordable costs, there is chaos and clutter as the internet offers millions of web sites, and also as concerns on security and privacy By Prof. Havaldar
  116. 116. IM/10-10/11 ROLE OF PUBLICITY & PUBLIC RELATIONS (PR) Public Relations (PR) performs certain tasks to promote or protect a company’s image or its products. The tasks / functions performed by PR are: press relations, corporate communication, lobbying, and counseling. PR department deals with various categories of people like press, legislators, Govt. officials, public, employees, suppliers, customers, and hence it tends to neglect marketing objectives. Publicity or Marketing Public Relations (MPR) has more credibility and lower cost compared to advertising, MPR includes placing technical articles from the company’s technical persons in trade journals, business magazines, and / or news papers. MPR should be planned with advertising and should be given larger budget allocation By Prof. Havaldar
  117. 117. IM/10-11/11 Summary of Chapter – 10 • Steps involved in developing an effective communication programme for business markets are (i) decide communication objectives, (ii) identify the target audience, (iii) decide the promotional budget, (iv) develop the message strategy, (v) select the media, (vi)evaluate the promotions results, (vii) integrate the promotional Programme. • Advertising is used in business marketing mainly as a support to personal selling. • Media used for industrial advertising are: business publications, trade journals / Publications, and industrial directories. • Sales promotion consists of short – term incentive tools to stimulate greater or faster purchase of a product / service by business customers. • Direct marketing and publicity ( also called as marketing public relations – MPR) have important roles. However, public relations (PR) tends to neglect marketing objectives, since it has to deal with several category of people. By Prof. Havaldar
  118. 118. IM/11-1/29 CHAPTER 11 INDUSTRIAL (BUSINESS) PRICING STRATEGIES & POLICIES Learning Objectives 1. Understand the special meaning of price. 2. Know the factors that influence pricing decisions, i.e. price determinants. 3. Understand pricing strategies for different product/market situations. 4. Examine the pricing policies for various types of customers. By Prof. Havaldar
  119. 119. IM/11-2/ 29 SPECIAL MEANING OF PRICE  Some business customers follow “Value- based pricing” by evaluating, suppliers’ offerings based on the concept of the suppliers offering equal to the difference between the perception of value (or benefits) and the cost to the buying firm. These are “value buyers”, and marketers should attempt to have value added relationship, if suppliers have “purchasing orientations”.  Perception of value in value-based pricing is made up of several elements like customers perceptions of product quality / By Prof. Havaldar
  120. 120. IM/11-3/ 29  Cost to the buying firm includes basic Price, freight, transit insurance, installation, risks of product failure, delayed delivery, etc,  Some customers are “price buyers”. Marketers, should follow transactional relationships & offer “basic properties”.  Some other buyers are “loyal buyers”, for whom marketers should follow “relationship marketing” with partnering / collaborative approach and By Prof. Havaldar
  121. 121. IM/11-4/ 29 F R A M E W O R K O F P R IC IN G D E C IS IO N S B e fo re ta k in g p ric in g (i) P ric in g o b je c tiv e s d e c is io n s , a b u y in g firm m u s t ( ii) C u s to m e r a n a ly s is fin d " p ric e d e te rm in a n ts " . (iii) C o s t a n a ly s is ( i.e . f a c to r s th a t in f lu e n c e (iv ) C o m p e tito rs ' a n a ly s is p ric in g d e c is io n s ) ( v ) G o v t. r e g u la tio n / p o lic ie s By Prof. Havaldar
  122. 122. T w o ty p e s o f p ric in g d e c is io n s . IM/11-5/ 29 P ric in g s tra te g ie s P ric in g p o lic ie s D is c o u n ts G e o g ra p h ic a l p ric in g S e ttin g a p ric e (p ro d u c t / m a rk e t s itu a tio n s ) In itia tin g a p ric e c h a n g e R e s p o n d i n g t o a c o m p e t i t o r 's p ric e c h a n g e L e a s in g By Prof. Havaldar
  123. 123. IM/11-6/ 29 PRICE DETERMINANTS OR FACTORS INFLUENCING PRICING DECISIONS (i) Pricing objectives, (ii) customer analysis, (iii) cost analysis, (iv) competitive analysis, (v) Govt. policies. 1. Pricing Objectives  Are derived from corporate and marketing objectives.  Some of the pricing objectives are survival, maximum short – term profits, maximum short – term sales, maximum By Prof. Havaldar
  124. 124. IM/11-7/ 29 2. Customer (Demand) analysis It includes demand analysis & cost - Benefit analysis (i) Demand analysis. Using experimental research, it measures relationship between price and demand (or sales volume). It sums up how sensitive customersg are qto nthe dpriced e d % c h a n e in u a tity e m a n = changes. The formula is: % C h a n g e i n p r i c e If PED is > 1, demand is elastic, & customers are price sensitive If PED is < 1, demand is inelastic, customers are less sensitive to prices. By Prof. Havaldar
  125. 125. IM/11-8/ 29 (ii) Cost – Benefit Analysis  Necessary to know target customers’ perceptions of benefits (or value) and costs.  Benefits are categorized into hard (or tangible) benefits like quality, production rate, performance, etc. and soft (or intangible) benefits like customer service, company reputation, warranty period, etc.  Cost includes price, duties and taxes, freight, installation, maintenance. 3. Cost Analysis.  A firm’s total cost of a product is the lowest point on the price range. Hence, for pricing decisions, the marketer must know the various types of costs like fixed, variable, total, direct, etc. for a By Prof. Havaldar
  126. 126. IM/11-9/ 29 C o st E c o n o m ie s o f S c a le p er U n it Q u a n tity P r o d u c e d p e r y e a r C o st E x p e r ie n c e / p er L e a r n in g U n it C u rv e. A v . C o s t R e d u c tio n = 1 0 -3 0 % A c c u m u la te d P r o d u c tio n By Prof. Havaldar
  127. 127. IM/11-10/ 29 B r e a k - E v e n A n a ly s is is u s e fu l to c o n s id e r d iffe r e n t p ric e s (P 1 , P 2 , P 3 ), a n d its e ffe c t o n s a le s re v e n u e a n d p ro fits . S a le s R e v e n u e a t P 3 S a le s & C o s ts S a le s R e v e n u e a t P 2 S a le s R e v e n u e a t P 1 T o ta l C o s t F ix e d C o s t S a le s V o lu m e By Prof. Havaldar