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MID TERM ASSIGNMENT

Presented by: Adeel Ahmed Khwaja Salman Shakir Madiha Anwar Waqas Mahmood Chaudry

Q1 In the marketing of goods and services information, financial and social exchange takes place in both the consumer and industrial market. Do you see any significant differences in these exchanges between the two markets? Explain your answer. The levels of exchange mentioned play important but uniquely distinct roles in consumer and industrial markets. It is arguable these exchanges play a greater role in the industrial marker due to its oligopolistic nature as opposed to the fragmented consumer market. Unsurprisingly, industrial buyers tend to bulk buy, a fact that makes information, financial and social exchanges more important than a single consumer. Furthermore, information flow is of extreme significance in the industrial market because the goods and services being exchanged are technical and require loads of information before a purchase decision is reached. This is because as opposed to consumers, businesses use these products as components in their operations and thus having complete information about the product becomes a critical factor in business markets. Financial exchange also assumes a more central role in industrial marketing. Since businesses in the industrial markets are co-dependent due to the supply chain linkage, financial exchange, the extension of credit and discounts strengthen and reinforce the buyer/seller relationship. Business is all about trusting each other and forming mutually beneficial long term relationships. Even though elements of social exchange are visible in consumer marketing as well, in the form of CRM, building brand equity and lifetime customer value. Q2 Will a price decrease be an effective marketing strategy if the demand for an industrial product decreased consumer demand? Justify your answer according to the article You can market steel The fundamental principle of the inverse relationship between price and demand goes around for most products in the market yet most is the key word to be noticed. It is a strong enough inclination to follow this relationships teachings and lose out on valuable market share and profitability. Products such as exclusive luxuries enjoy a positive relationship between price and quantity demanded. However for some products who do have the orthodox negative relationship, it still may not be the wisest decision to consider a lowered price as a strategy to induce an increase in demand. In the case study that studies the marketing techniques related to steel, it is shown how falling demands of tin can be augmented by reduced prices. Yet what is to be understood is that the buyers; industrial or mass, would grow in awareness. They would soon realize the importance of moving on to something as advance and reliable as aluminum. For a product lurking around in the last stages of its product life-cycle, reduced pricing strategy would be effective only in the case of milking out the last drops of profits remaining in the market or selling off the last of the remaining stocks that are lying around as scrap in the inventory. From a strict marketing point of view, a seller may want to sustain the business, keep the product in the maturity stage (product life-cycle) and keep the product running as a cash cow (BCG matrix). However he would need to develop a Unique Selling Proposition or a measure of value creation. Creation of value is still one of the strongest tools which sell

products and services which are on the verge of becoming obsolete. This explains why the value oriented advertising campaign of Pakistan Post launched two years ago has still sustained Pakistan Post even after it was becoming obsolete. Q3 Marketing to industrial firms is enhanced through the understanding of value analysis. Do you agree or disagree? Explain why?( hint: you can market steel ) Value analysis is the term coined to denote the mechanism through which value may be added to a product. In the case of steel, which is a homogenous product, value is created through effective segmentation by matching the product offering to the consumer demand and buying decision. For instance, if price is the most significant variable in the consumer buying decision then it is safe to assume that the price factor overrides all other considerations. Contrarily there are other customers that are more sensitive to product quality and reliable delivery and are willing to pay premium prices for it. Therefore, it is in the firms interest to focus its efforts on creating and delivering value, or in other words, simply by giving customers what they demand. Q5 Briefly explain how each purchasing orientation effects a suppliers ability to create and deliver value to the customer as well as gain equitable return? There are 3 types of purchasing orientations:Buying Orientation: Under this orientation purchasers have a short term focus evidenced in the desire to attain the lowest prices from suppliers for a given level of quality. Buyers utilize two tactics to this end, namely commoditization, where they treat the product as a commodity and display sensitivity only to price; and multi-sourcing where several suppliers are made to compete for the company's business. Procurement Orientation: In the second type of purchasing orientation buyers aim for quality improvements and cost reductions by developing two-way relations with major suppliers and looking for cost savings through better management. Supplier involvement is encouraged especially with regards to materials, inventory, and product design. Long-term contracts with major suppliers are preferred to ensure the steady flow of material. Supply Chain Management Orientation: Here the purchasing function is further enhanced to incorporate a more strategic, value-adding operation. Purchasing executives work closely with marketing and other executives to build a seamless supply chain management system that extends from the purchase of raw materials to the timely delivery of finished goods. Q7 How can business market managers define their markets and monitor the competition? Business market managers have the primary role of defining the basic question as to what is the target market is or who are their potential customers. The product would then define what is the basic problem that their business needs to address. A complete idea of the potential customers would consequently lead to segmentation. This segmentation would be based on demographic, psychographic and geographic basis. This would then define the target market of the entire business.

Monitoring competitors would then be based on the organizations objectives, long term strategy and the industries nature. If the industry has high barriers to entry, monitoring competition would only be limited to small numbers and that exclusive image to be the part of an elite niche would be maintained by brand building campaigns and reminding elements. Some businesses can venture into professional competitive intelligence. A specific department is created and CIO is appointed which is Competitive intelligence Officer. Competitors behavior is studied; buying behavior is analyzed, strategies are studied and future actions are predicted. Strategic maneuvers also include measures like the Competitive Profile Matrix in which critical success factors are made the basis of a quantitative comparison of the business with competing firms. This quantitative and qualitative analysis would help a business manager analyze its competitors and help make certain strategies. Q8 How does the government purchasing differ from purchasing by commercial organizations? If you were selling in both the commercial market and government market could you employ a single market strategy? Why? Government purchasing differs from commercial organization purchasing in a lot of ways. The methods employed to make the purchase, relationships with suppliers, preferences (price vs. quality): In order to purchase material under the government set-up, tender notices are given out in newspapers. There is a price-bidding, whosoever presents a proposal that can provide standard quantity at the least price wins the bid. On the other hand, in a commercial organization price is an insignificant factor, relatively. Commercial buyers focus more on quality, in-time delivery etc. In a government deal, the suppliers/vendors might have to wait for months before they are paid for their materials/services reason for that being the great amount of paper work and formalities. Government if more concerned with their project and how they can complete it as soon as possible without keeping any regard of the needs of suppliers. On the contrary, while dealing with a commercial organization the suppliers get quick payments, trade discounts/allowances and other incentives. The commercial organizations work that way because they want to keep their supplies happy and satisfied for them its not just that one project. They focus on establishing life-long relations with their suppliers. Also, commercial buying can be classified into three categories: 1. Industrial Distributors 2. OEMs 3. Users All in all, a single marketing strategy cannot be employed for both the scenarios. They have different preferences and expectations off the seller and work in totally different ways.

Q9 How would the desire for stable relationship in the industrial marketing affect a firms ability to sell its products to a manufacturer currently buying from another source? In B2B markets stable relationships are considered to be of at least as much importance as the product itself because buyers prefer stability and reliability in their supply chains. It is this stability that enables manufacturers to forecast their sales and operations well in advance while at the same time being assured of a steady supply of the required components on preestablished and agreed upon terms and conditions. The competitive, zero-sum nature of business markets makes firms risk averse; thus, seriously curtailing a suppliers chances of replacing a competitor as manufacturers supplier of choice.