Industrial Marketing - Hawaldar 1

C H A PTER 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 ?
www.a2zmba.com By Prof. Havaldar
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!
What are the differences between Industrial & Consumer Marketing? Basic tasks of marketing are same difference Exists in the characteristics shown next.
(C)
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IND MARKETS GEO Concentrated Few Buyers Technically Complex Customized Very Important Various Functional specialists involved Mainly Rational buying decisions. Interpersonal relationship between buyers and sellers. More direct Multi Channel Importance to personal selling Competitive bidding / Negotiated prices
AREAS / CHARCTERISTICS Market
Products Service Buyer Behavior
CONSUMER MATKETS GEO Disbursed Large no. Of Buyers (Mass Markets Non Technical Standardized Somewhat important Family members involved Physiological / Psychological Social need based buying decisions Non Personal Relationship. Indirect Few Channels with many layers Importance to Advertising. MRP
Channel Promotional Pricing
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 demand for Cars, Refrigerators, Washing Machines, Etc.,
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 demand for consumer goods / services.
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.

CHAPTER 2
IM/2-1/10
(A) What are the types/classifications of Industrial/Business customers?N T E R M E D I A I

M ID D L E M E N C O M M E R C IA L E N T E R P R IS E S O E M S U S E R S
IM/2-2/10
R IE S / ( D IS T R IB U T O R
G O V E R N M E N T C U S T O M E R S IN D U S T R IA L / B U S IN E S S C U S T O M E R S IN S T IT U T IO N A L C U S T O M E R S
P U B L IC S E C T O R U N IT S (B H E L ) 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 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 ) 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 I G
T Y
I N
I A
I N
IM/2-3/10 (B) How are Industrial Products / Services Classified? Classification into 3 Groups shown below.
I A
( I R
M A T E R I A LM S A N U F A C T U R E D M A & P A R T S ( S T E E L , F U E L O I L ) ( 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 D I R E C T L Y ) S U B A S S E M B L I E S ( E I N D U S T R P R O D U C S E R V I C E C I A T ( SU S P O I T A L I S/ E D I N R O D U C T P E R A T I O LA P LT IE G M H S T Y T L I C E E / B I E E S S Q Q U P P I L ( L ( L T T D U E ( C ( M I N B G R A G I C L , O A M C ( F A C P H A U
H E A V I O N / P N L SA ) N
S U P S E R ( T O O P E
F I G . C L A S
P L I E S S / U P P V I C E S S U P P O R T R A T I O S N E SR ) V
S I F I C A T I O N /
I N
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 important marketing role, with quality & www.a2zmba.com By Prof. Havaldar
(D) Purchasing Orientations of Business IM/2-5/10 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. (iii)Supply chain Management Orientation : Here, the firm focuses on improving the value chain from raw materials to end users. This is achieved by www.a2zmba.com By value to (a) delivering superiorProf. Havaldar end users, (b)
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 firms 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. Orders Finalised on lowest bidders (suppliers offering Lowest prices / Landed Costs)
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.
IM/2-8/10
A I R & W A T E R (E) Types & Analysis of EnvironmentP E C O L O G I C A SL O C W P H Y S I C A L L C E N V I R O N M E I NN ( S TT E R & W N A L A N A L R Y H S M A O O & I RS R W M D )& K - C P A & F E O N P I N T S Y R A I N T , L O N G C T S U L A A S E T R U C E P O C V L B L B T H T U P N N . , R L O O P A I E M L O L R I C O L G I T & I C I C S O A S U S O D C E S K C U I A F T I L A C L F O E M L T T R C E E I O I O E T D N N S O I V R S E M , F U N & A I M A R E N A C O A L N T I D S E E R W R , A V P S I N O W T G E E D N R O I S A , T T L L P U R U O R A T S A N I O A L S L R P N
E X T E ( O & T
R A
N N
A A
L L
M I C R O ( A F F E C P A R T I C F I R M ) Y S I S )
M A C R O ( A F F E C A L L F I R
T S G O M S ) C U P H P U O U
L I C - P R E S S D E R S , I N V E L I C I N T E R E S
(F) Strategies for Managing Changing External Environment.

(i) (ii) (iii) the
IM/2-9/10
Independent Strategies. Cooperative Strategies. Strategic Planning. It Aims at keeping firm consistently successful in changing marketing environment by market oriented strategic management.
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 Services.
(i)Materials & Parts, (ii) Capital Items, (iii) Suppliers & Marketing strategies differ for different product &
Customer types.
Industrial / business Buyers follow one of the three
purchasing orientations : buying, procurement, or supply chain management.

Purchasing practices vary for different types of
customers. It is important to understand it for each www.a2zmba.com By Prof. Havaldar major customer.
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. Know how industrial buyers choose and
PURCHASING OBJECTIVES OF FIRMS

Reliability in delivery. Consistent product Quality.
IM/3-2/16
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 increments, promotions & social relationships. Prof. Havaldar www.a2zmba.com By
IM/3-3/16
Industrial Buying Decision Process must study this for developing Marketers
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
making process is observable, involving many people in buying firm & includes www.a2zmba.com By Prof. Havaldar
IM/3-4/16 (A) PHASES IN INDUSTRIAL BUYING DECISION MAKING PROCESS / BUYPHASES

PHASE 1 :- Recognising A problem / need. PHASE 2 :- Determining Characteristics &
Service*. PHASE 3 :product*. PHASE 4 :PHASE 5 :offers* PHASE 6 :-
Quantity of needed product /
Developing specifications of the Searching & Qualifying Suppliers. Obtaining & Analyzing suppliers
Evaluating & Selecting Suppliers. (shown on next slide) PHASE 7 :- Selecting an order routine PHASE 8 :- Post By Prof. Havaldar evaluation Purchase www.a2zmba.com
IM/3-5/16
ATTRIBUTE/ FACTOR PRICE QUALITY DELIVERY SERVICE FLEXIBILIY TOTAL
A SUPPLIER EVALUATION SYSTEM.

WEIGHT/ IMPORTANCE 15 30 25 20 10 100
SUPPLIERS PERFORMANCE 0.5 0.7 0.6 0.7 0.4
SUPPLIERS RATING SCORE 07.5 21.0 15.0 14.0 04.0 61.5
(B) Buying Situations / Buyclasses
IM/3-6/16
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 suppliers who are currently supplying certain products/services. Such decisions are routine, with less risks and less information needs, and can be taken by junior executives. www.a2zmba.com By Prof. Havaldar
IM/3-7/16
(C) Buygrid Framework

BUYPHASES New Task 1. Problem Recognition 2. Characteristics of Product 3. Product Specification 4. Supplier Search 5. Analyzing Supplier Offers 6. Supplier Selection 7. Order Routine Selection 8. Post Purchase Review Yes Yes Yes Yes Yes Yes Yes Yes
BUYCLASSES Modified Rebuy May Be May Be May Be Yes Yes Yes Yes Yes Straight Rebuy No No No No May Be No May Be Yes
BUYGRID FRAMEWORK ANALYSIS
IM/3-8/16
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,
as repeat purchases are made.

(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 & meetings with buying center members. Often, P.A. / Junior person attached to purchase head is the gatekeeper.
IM/3-9/16
(E) Identifying key members of buying centre / Marketing persons must identify Sales
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. (iii) Accounts / Finance persons. (iv) Marketing persons www.a2zmba.com By Prof. Havaldar
IM/3-10/16
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 substantially, buyers give importance to www.a2zmba.com By Prof. Havaldar
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 (Component 3).
Situational factors include economic
www.a2zmba.com disputes, conditions, labour By Prof. Havaldar mergers &
IM/3-13/16
C o m p o Cn eo n m t p ( 1o )Cn eo nm t p ( 2o S) n ie t un ta t( i3 o )
D i f f e r e n Vc ea sr i a a b m l e o Ms n etg h t ha ot dD s e tu e s r e m d i n f oe i n d i v i d u ai f l b b u u y y i ne gr sc od en fc l i cs ti o r n e s i s o l u t i o c a u s e d ab uy t of a n c o t om i r n os u j : o s i n o t r - d j o e i c n i t s :i o n B a c k g r oA u ) n P d r o o d f u m c a t k S i pn ge c p i f r i oc c e s s i n d i v i d u F a a l s c t ( o E r ds u : c a t i o n , r o l e & l i f T e i m s t e y l Pe ) r . Pe s r os bu lr e e m S o l v i n g T h e i r i n f P o er m r c a e t i i v o e Pn d e rR s i u s a k Ss i uo pn p l i e r C s o u r c e s T. y p e o f B P a u r r g c ah i a n B s i n er ag n d A c t i v e S B e ) a C r co h m p P a o n l y i t i Sc kp i e n c g i f i c P e r c e p t Fu a l c Dt o i r s s t o : r t i o n S a t i s f a c C t i o o n m w p a i t nh y S i z e p a s t p u r C c ho am s p e a s n y O r i e n t a t i o n D e g r e e o f C e n t r a l i s a t i o n
i g
E B S T E R
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A N D
IN D
D E L
IM/3-14/16
e n ta l V a r ia b le s
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r g a n is a t io 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 t io n S t r u c t u 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 t io n & r e w a r d s y s t e m s D e g r e e o f d e c e n t r a lis a t io n
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h o ic e o f S u p p lie r s e la y d e c is io n & g e t a k e , L e a s e o r b u y o n o t b u y
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o a ls , V a lu e s E x p e r ie n c e o b P o s it io n c o m e
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, ontime delivery, order cycle time, and information. (iii) Post Sales Service :Warranty, AMC, Repair, Installation & Training. www.a2zmba.com By Prof. Havaldar Develop superior service package.
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 task oriented ) objectives and personal (non task oriented ) objectives. The Sheth model of industrial buyer behavior is comprehensive, focusingHavaldar of psychological & joint www.a2zmba.com By Prof.
CHAPTER - 4
IM/4-01/11
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. Special dealings between buyer & seller.
IM/4-02/11
INDUSTRIAL BUYER-SALES REP. INTERACTIONS

reps.
Depend on their perceptions, behavior & roles. Buyers have two major perceptions of sales
(i) Stereotype talkative, manipulative, excitable (ii) Reputation of sales reps company. organizational needs / objectives, buying centre interactions and personal needs.
Buyer Behavior towards sales rep depends on
Buyers are not always rational / logical in
buying decisions.
www.a2zmba.com By Prof. Havaldar Role / behavior of sales rep. depends on his
IM/4-03/11
BUYER-SELLER DYADIC INTERACTION FRAMEWORK A Conceptual Framework by Dr. Sheth
C C C
p a t i b l eI n Sc to y m l e p a t i b l e
o m p a t Ii db el e a l / S u c c e s I s n f eu f l f i c i e n t o n t e n t T r a n s a c t i o nT r a n s a c t i o n
N o I n c o m p a t Ii n e e f f i c i e n t b l C o n t e n t T r a n s a c t i o nT r a n s a c t i o
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.
IM/4-04/11
TYPES / RANGE OF RELATIONSHIP BETWEEN BUYER & SELLER FIRMS

When buyer (or customer) and seller (or
P a r t n e r i n g / T r a n s a c t i V an l a u l e - A d d C e od l l a b o r a t i v e o R e l a t i o n s Rh ei p l a t i o n s hR i ep l a t i o n s h i p Each business relationship is an exchange
supplier) firms do business, they have the following types and range of business / working relationships / exchanges.
process of obtaining a desired product / service by offering something of value is return.

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 needs and meet those needs better than competitors, to get maximum business share. These customers have medium sales and profit www.a2zmba.com By Prof. Havaldar
COLLABORATIVE/ PARTNERING RELATIONSHIPS.
IM/4-06/11
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 potentials.
IM/4-07/11 CUSTOMER RELATIONSHIP MANAGEMENT (CRM) / RELATIONSHIP MARKETING (RM) to Conceptually same, methods / techniques achieve objectives are different. Both CRM & RM aim at partnering / collaborative long-term relationships for mutual benefits of both parties. CRMS objectives are to improve customer loyalty and there by, companys 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. RM aims at building relationships with key customers, distributors, and suppliers. This is done through financial and social benefits, www.a2zmba.com By Prof. Havaldar
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, Satisfaction)
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. e. Be responsive to corrections, if needed. f. Avoid legalistic approach. www.a2zmba.com humble. g. Be polite and By Prof. Havaldar
SPECIAL DEALINGS BETWEEN BUYER & SELLER
IM/4-10/11
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. E.G. Aircraft engine manufactures promote their engines to Air lines (aircraft buyers), in www.a2zmba.com By Prof. Havaldar
IM/4-11/11
SUMMARY OF CHAPTER - 4 BUYER SELLER RELATIONSHIP
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. Sheths 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. Reciprocity and dealing with customers customers are the special dealings between a buyer & a seller.
INDUSTRIAL MARKETING IM/5-1/6 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.
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 areawise market potential. iii. Competitors analysis. iv. New product acceptance and
MARKETING RESEARCH PROCESS
IM/5-4/6
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 process or steps involved in marketing research for www.a2zmba.com By Prof. Havaldar
INDUSTRIAL MARKEING INTELLIGENCE SYSTEM IM/5-5/6
M R
r k e t i n e s e a r c h s t u d i e s
I n d e c o n d M a D a t a I n t S o u r c e S y
s r Dy r k S e l l i S s t e
t r i a e c i e t i n u p g e n y s t m
MarkRes stu InduMark IntelSys etingarch dies Seco DSo Deci Supyst Mark Respon ndary strialeng aturce igenctm sion portem et ce
l s g p c e
i o n M o r t e R m
r k e t e s p o n c e
Industrial marketing intelligence system is developed to meet the needs of industrial marketers for timely and continuous information for effective decision making .
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 developed to meet the needs of businesswww.a2zmba.com By Prof. for timely and marketing Havaldar
NATURE OF INDUSTRIAL MARKETING RESEARCH
IM/5-2/6
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 are made by many members of buying centre. www.a2zmba.com By Prof. Havaldar
1.Business Marketers rely more on
CHAPTER 6
INDUSTRIAL MARKET SEGMENTATION, TARGET MARKETING AND POSITIONING
IM/6-1/9
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 strategies.
PROCEDURE USED IN MARKET IM/6-2/9 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 characteristics like application
VARIABLES (BASES) USED IN IM/6-3/9 SEGMENTING INDUSTRIAL (BUSINESS) MARKETS

Industrial market segmentation is done first
based on Macro Variables , and then subdivided into Micro Variables, if necessary.
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 product.
Macro Variables. These segmentation

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 than one variable to subdivide the market. www.a2zmba.com By Prof. Havaldar
EVALUATING MARKET SEGMENTS
IM/6-5/9
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 (a) Concentrated or Niche marketing strategy, (b) Differentiated marketing strategy
PROCEDURE FOR DEVELOPING A POSITIONING STRATEGY
IM/6-6/9
Following steps are involved :

Identify which attributes / benefitstarget customers consider important while buying a product / service. This information is obtained through a market research study . The variables considered for differentiating a companys product from competing products are. (a) Product variables, (b) Service variables, (c) Personal variables, (d) Image variables,
www.a2zmba.com By Prof. major benefits (or Select one or more Havaldar
(i)
(ii)
IM/6-7/9
3Use Perceptual Mapping Technique.To decide on positioning strategy, this technique is used, after getting customers perceptions through marketing research. 4 (iv) Communicate Positioning Strategy. The firm should decide and communicate its positioning strategy to target customers, through sales force, advertising in journals, internet, and trade shows
Excellent Product Quality

1.0
IM/6-8/9
.A 1 .C
Strong Customer Service
1.0 0.8 0.6 0.4 0.2
0.8 0.6 0.4
.D
0.2 - 0.2 - 0.4 - 0.6 - 0.8 - 1.0
Weak Customer Service
- 0.2 - 0.4 - 0.6
.B
. A
Perceptual Mapping Technique
- 0.8 - 1.0
Low Product Quality
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 5.Steps used for developing positioning strategy include : (i) Identifying attributes / benefits, (ii) Selecting www.a2zmba.com By Prof. Havaldar one / more major benefits, (iii) Using perceptual
CHAPTER 7
PRODUCT STRATEGY & NEW PRODUCT DEVELOPMENT
IM/7-1/20
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 marketing. www.a2zmba.com By Prof. Havaldar 7.Learn Marketing of industrial services.
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
marketers must understand target www.a2zmba.com By Prof. Havaldar customers perceptions of a total product
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.
A General Model of Product Life IM/7-4/20 Cycle (PLC)

I n d u s t r y S a l e s
e e s I n d u s t r y P r o f i t s
M
a t u
r i D y e c l i n t
APPLICATION OF PRODUCT LIFE IM/7-5/20 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 adding product features (ii) Improving distribution and (iii) Reducing price, as increased sales and production reduce the www.a2zmba.com By Prof. Havaldar
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 StageSince both sales and
profits decline, marketing strategy should focus on (i) substantial reduction in costs, (ii) develop a substitute product, (iii) withdraw the product slowly from the market.
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 companys products by using perceptual mapping technique. 3.Decide the product strategies, based on www.a2zmba.com above analysis. By Prof. Havaldar
PERFORMANCE EVALUATION OF IM/7-8/20 EXISTING PRODUCTS

Example : A material handling Co. (i) Product = P (Pallet Truck) Last 3 years 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) Market Share = 12% (Average) ; Profitability = Below Target. www.a2zmba.com By Prof. Havaldar
Product Evaluation Matrix

C o m p a n y S D a e l ec sl i n e S t a b l e
IM/7-9/20
G r o w t h
P r o f i t a b i l i t y B e l o T w a r g eA t b o v B e e l o T w a r g eA t b o Bv e l o T w a r g eA t b o v e I n d u s M t r ay r k e t T a r g e t T a r g eT ta r g e t T a r g Tea t r g e t T a r g e t S a l e s S h a r e
o m
i n
a n
r o
w A t hv e r a g e
M D a r g o m i n i n a l a n t
t a b
l Ae v e r a g e
M D a r g o m i n i n a l a n t
e c l i An ve e r a g e
M a r g i n a l
PERCEPTUAL MAPPING TECHNIQUE

H i g h P r i c e
IM/7-10/20
B H Q i g h u a l i t y
*A
C
L o w Q u a l i t y
L o w
r i c e
IM/7-11/20
Firm As 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 strategy. (iii) Drop / eliminate the product. (iv)Add www.a2zmba.com By Prof. Havaldar new product.
(iii)Improvements / Revision to the existing products. (iv)Addition to the existing products. IM/7-12/20 (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.
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 & 70sof transistor, integrated circuit (IC), microprocessors have applications in new products like TV sets, movie Cameras, Computers, Calculators, Mobile phones, Printers etc., www.a2zmba.com By Prof. Havaldar (iii) Digital revolution of information
IM/7-14/20
TYPES OF MARKETING SITUATIONS.
B e t t e r H i g h - t e c h H i g hM o u s e t r M a pa r k e t i n g T e c h n o l o g i cMa a r k e t i n g l U n c e r t a in t y L o w
L o w - t e c Hh i g h - f a s h i o M a r k e t i nM g a r k e t i n g L o M w H i g h in t y
a r U k en tc e r t a
IM/7-15/20 MODIFIED TECHNOLOGY ADOPTION LIFE CYCLE
This is suited to hightech marketing

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t e r s
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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.
Marketing of Industrial Services IM/7-17/20 Classifications of Industrial Services

a t e r i a l Ps e r s o n H a o l t e l s G o o d C o m p o n C e on m s p u t f e o r r s t ( S t e e l , B a l l B e a rC i no gn s f e ) Tr e r an n c se ps r e T a n g i b l e P r o d u c t P u M
r t a
t i o P u
a j o r E q u a l M P r o d u cP t r , o d u cS t e M i n o r & M S e r v i c S e e r v i c Pe r
a j o r r v i c e , i n o r o d u c t
r e i n t a n g s e r v i c
marketing Implications.
C 1 . h a r a c t e r i s t ic s M a r k e t in g Im p li c a t i o n s I n ta n g i b i l i t y B u ( c a n n o t b e s e e n f e lt , b e f o r e b u Sy e n i I n s ( P c o s a e r o n m p a r a b d u c t i s u m p e t im y e r s / l lg e ) r s s e e e v id e n c e t a n g ib ilis e t h e
IM/7-18/20
E x a m
p l e s
o f s eM r va i nc a g q e u m a e i tn y t e l i n t a nC g o i bn ls e u l t a n c y &
2 .
i l i t y E f f e c o n & t io n a p t r to h v e i R e q u e ) o f s e
t iv e in t e r a c t io n d e p e nR d e p a i rs s e tr ov i c e a c h i n o n m d e r s . & C o u r ie r s e r v ic e ir e s e f f e c t iv e r e c r u it in g a n d t r a in in g r v ic e p r o v id e r s .
3 .
U n if o r m q u a l i t y i s d i f f i c u l t M a n a g e m e n t V a r i a b il i t y ( S e r v ic e q u a l i t Fy o c u s o n q u a lit y & a u t o m e ad t ui o c n a t i o n & m a r k e v a r ie s ) r e s e a r c h .
4 .
P e r i s h a b i l it y D e m a n d f lu c t u a t e s . ( C a n n o t b e s t o r e d ) U s e m e t h o d s t o m a t c h c a p a c it y . N o n ( B u s e r o w - o y e v i n n e r s h i pA d v a n t a g e s u s e s a r in c e , b u t c a en dn uo ct t i o n it ) w r
A i r lin e s s e a t s & d eW m a ar en hd o & u s e s p a c e .
5 .
o f n o n - o w n e r H h o i tp e l : a n d s c o s t s & f l e x i b i sl i e y r v i c e s . t
c a r
r e n
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 for existing products are developed by (i) evaluating the performance of existing products, using product evaluation matrix ,Prof. Havaldar (ii) Studying the www.a2zmba.com By
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 distribution and Skimming pricing. Industrial services are classified into various groups, andwww.a2zmba.com By Prof. Havaldar include unique characteristics like
CHAPTER 8
IM/8-1/14
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 system. 6.Learn the tasks of physical distribution and
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, manufacturers reps / agents, value-added resellers (VARs), brokers and commission merchants. Indirect channels are generally used when (i) Value of transaction / sales is low, (ii) The manufacturers www.a2zmba.com By Prof. Havaldar
Types of Intermediaries
1.Industrial Distributors / Dealers.
IM/8-3/14
They perform many functions like buying, storing,
promoting, financing, selling, transporting and servicing certain geographic market, & are given discounts. Specialized distributors, and (iii) Combination house.
Major categories are (i) General line distributors, (ii)
2.Manufactures Representatives / Agents.

They perform functions like promoting manufacturers
products / services, getting orders, and colleting market information. They are independent business firms, representing various manufacturers whose products complement one another but are not competitive.
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.
They represent sellers / manufactures, mostly with bulk commodities like raw materials, to perform functions like arranging inspection, transporting, negotiating and selling.Prof. Havaldar paid commission on They are www.a2zmba.com By
CHANNEL DESIGN
existing channels.
IM/8-5/14
It includes developing new channels and modifying the
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 (c) Adaptive factor www.a2zmba.com By Prof. Havaldar
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). 4. Evaluating Channel Members
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.
IM/8-8/14
Main aims of SCMare (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 materials & components, transporters, distributors, material handling & www.a2zmba.com By Prof. Havaldar information processing firms.
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 movement; physical supply and physical
Business Logistics System IM/8-10/14

P h y s i c I an ld Su us p t r p i P a l y hl ( o r My s a i nc ua M a r k
Marketing Logistics (or Physical distribution) consists of delivering finished products to intermediaries and customers.
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 (Freight) + Warehouse cost + Inventory cost + Cost of lost sales due to delayed delivery.
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 firms channel members work together to improve customer service, in order to get higher sales revenue.
le
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t a e
P n t
s t m
IM/8-13/14
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 channel constraints and tasks, identifying channel alternatives, evaluating www.a2zmba.com By Prof. Havaldar
CUSTOMER SERVICE
IM/8-13A/
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 customers expectations. Factors that determine service quality by customers are : (i)Reliability (ii)Responsiveness (iii)Assurance (iv)Empathy (v)TangiblesBy Prof. Havaldar www.a2zmba.com
Strategies followed by successful

IM/8-13B/
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 .
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 its competitors from customers. (iv)Analyse variance of actual performance with standards. (v) Take corrective actions to minimise the variance. www.a2zmba.com By Prof. Havaldar
IM/8-14/14 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). 7. To balance total distribution cost and customer service, a firm can use any of the approaches: (i) Minimize total distribution www.a2zmba.com By Prof. Havaldar
4.
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.
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 solvingcapabilities of the company. (ii) A part of the companys communicationor promotion mix . (iii) Gives an effective customer service .
Business Selling Process
IM/9-3/12
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.
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.
Characteristics of B2B Selling

1.
IM/9-5/12
Promotional strategy focuses more on personal selling through companys 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.
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.
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 firms problemsolving abilities. He should identify and analyse the buying firms problem. He should then show how his companys products and services can solve the buyers problems, better than competitors. This is called solution-oriented effort or approach.
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.
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 l e s L a r g e M a j o A c c o P o t e n t i a l o f D y a d S e mr a l l C u s t o m I n t e r a
S i m p u r N n tA
IM/9-9/12
a t i o n a l c c o u n t
M i n o r i c c t i oA n c c o u n t l e C o m p l e x
Complexity of customer
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.
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.
IM/9-12/12
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.
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.
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 promotions results. (vii) Integrate the promotions programme.
IM/10-3/10 Promotional Tools and Media in Business Markets
P
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. D a i n r d e P c et r s o m A o d t v i o e nrS ta a i l sl e i P ns . g R l o l s P r o m P o u t b i o M i n c ai t r y k S e e t l i l n i n g
m e d P p p J d Po tr i i o n n t T a M r l a e d d e C i a s h h a o r w iD t s a i r b e l ce S t a m l Bi a u s i n E e x s hs i d b o i t n i oa nt i Ts o e n l s e m S a a r l u b l i c C a a t i t o a n l A o s gd u o ep k s t e i tn i gn p g r e s T o r r at s d Se a l e s v i C l l oa ng es O es n n t - s l i T n e e a o u r n P a rl s o m C o t o i mo n m m a a lu r n k i e tR yt i e n l I n d u n s o t vr ie a l rtl sie e l sa t ( i g o i n f t s s ) m a r i r e c t So er m e s i n N a e r w s s i t e m i i n D e m p o rn e s s t sr a t i o n P r o m T o e t c i ho n ia c l a l l e t t e r as r t i c l e s i n E n t e j r o t u a ri n n m a l e s n t
e as i c e- s e n m ag t i k e
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.
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 C o s t l a p t i o e n r p i n a g t h e o u s
i r c u
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). www.a2zmba.com By Prof. Havaldar
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 mailis 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%.
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 online, 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.
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
IM/10-10/11
ROLE OF PUBLICITY & PUBLIC RELATIONS (PR)

Public Relations (PR) performs certain tasks to promote or protect a companys 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 companys technical persons in trade journals, business magazines, and / or news papers. MPR should be planned with advertising and should be given larger budget allocation
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.
CHAPTER 11
INDUSTRIAL (BUSINESS) PRICING STRATEGIES & POLICIES
IM/11-1/29
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. 5.Understand the role Havaldar www.a2zmba.com By Prof. of leasing.
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 / performance, reliable delivery, warranty / after-sales service, reputation www.a2zmba.com By Prof. Havaldar
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 mutually acceptable prices. www.a2zmba.com By Prof. Havaldar
IM/11-4/ 29
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PRICE DETERMINANTS OR FACTORS 29 IM/11-6/ 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 sales growth, product www.a2zmba.com By Prof. Havaldar quality leadership, etc.
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 customers are to the price changes. The formula is: % c h a n g e i n q u a n
= % C h a n g e in p
If PED is > 1, demand is elastic, & customers are price sensitive If PED is < 1, demand is inelastic, customers are less sensitive to prices.
(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.

IM/11-8/ 29
3.Cost Analysis.
A firms 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 product / service. Costs vary based on production capacity (i.e. www.a2zmba.com By Prof. accumulated experience economies of scale), andHavaldar
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IM/11-9/ 29
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Q
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IM/11-10/ 29 E vi s e nu s Ae f nu al lt yo s c i os n 1 , P 2 , P 3 ) , a n d i t s
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S S S T F S a l e s V o l u m
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4. Analyzing Competition Many marketers have competitive level Pricing as a pricing objective. Marketers should get Competitors prices, discounts, costs, product quality, service, etc for cost/benefit analysis, pricing and positioning strategy. Competitors information can be obtained from various sources. 5. Government Regulation/Policies Govt. regulations are necessary to ensure fair play and to protect consumers and small scale suppliers. Price-fixing / price cartels, price discrimination (e.g. different discounts to distributors/dealers), and predatory pricing www.a2zmba.com By Prof. Havaldar
IM/11-11/ 29
IM/11-12/ 29
PRICING STRATEGIES
Pricing strategies vary as per product-market situations such as (i) Competitive bidding in competitive markets, (ii) New product pricing, (iii) Pricing across product life-cycle.
(i)Competitive Bidding
purchasing is done through competitive bidding, using either closed (or sealed) bidding or open (or negotiated) bidding Havaldar www.a2zmba.com By Prof. method.
In business markets, large volume of
IM/11-13/ 29
In closed bidding, often used by the
Govt. buyer, sealed bids are invited through newspaper tender notices. Sealed bids are opened in presences of suppliers and orders are placed on the lowest price bidder(s). In open bidding, after receiving bids (quotations), the buyer negotiates technical and commercial parts with suppliers, and then places orders. This method is often followed by commercial enterprises in private sector .
IM/11-14/ 29
Strategy / Model Used for Competitive Bidding One of the often used strategies is Probabilistic Bidding, which makes two assumptions : (i) Pricing objective is profit maximizations, (ii) Lowest price bidder will get the order. Equation used : E (A) = P (A) x T(A), where A=Bid price, E(A) = Expected profit at bid price A, P(A) = Probability of winning (or getting order ) at the bid price A, T(A) = profit, if bid price A is accepted.
An Application (example) of probabilistic IM/11-15/ 29 Bidding Strategy

C o m p e t i t o r ' s i d T o t a l C o s t L a s t T e n d e r P r i c e P e r U n i t P r i c e ( R s ) ( A ( )R s ) ( C ) ( R s ) ( B ) B 4 5 0 4 3 0 4 1 0 4 0 0 3 8 0 3 6 0 3 4 0 3 3 0 3 5 0 3 5 0 3 5 0 3 5 0 3 5 0 3 5 0 3 5 0 3 5 0 3 6 0 3 6 0 3 6 0 3 6 0 3 6 0 3 6 0 3 6 0 3 6 0 0 . 0 0 0 . 1 5 0 . 4 0 0 . 5 0 0 . 7 2 0 . 9 0 0 . 9 5 1 . 0 0 P r o f i t ( R s ) T ( A= ) ( A ) - ( C ) 1 0 0 8 0 6 0 5 0 3 0 1 0 ( 1 0 ) ( 2 0 ) 0 1 2 . 0 0 2 4 . 0 0 2 5 . 0 0 2 1 . 6 0 0 9 . 0 0 ( 9 . 5 0 ) ( 2 0 . 0 0 )
Rs.60 corers tender from Dept. of Telecomm. (DOT) for underground cable jointing kits. The company ghosted Rs.400/per kit (expected maximum profit). Tender opening revealed, it was L4.L1 was Rs. 330/-, L2=350, L3=Rs 380/- The company www.a2zmba.com By Prof. Havaldar estimates of B and P(A) were incorrect.
IM/11-16/ 29
(ii) New Product Pricing Strategy

In the introduction stage of a new product, two alternative pricing strategies are available (i) Skimming (high initial price) strategy, and (ii) Penetration (low initial price) strategy.
Skimming Strategy is appropriate for a new product that is distinct, hightech, or capital intensive, and purchased by a market segment that is not sensitive to the initial high price. The advantage is faster recovery of investment by generating larger profits. The disadvantage is that it attracts competitorsProf. Havaldar high profits. www.a2zmba.com By due to
IM/11-17/ 29 Penetration strategy is appropriate when (i) buyers are highly price sensitive, (ii) strong threat exists from potential competitors (due to low entry barrier). The selling firms objective is to achieve long term profits through high market share. The firm can also achieve cost leadership thru economies of scale and experience curve, which gives competitive advantage.
(iii) Pricing Across Product Life Cycle (PLC)

Marketing and pricing strategies vary as the product moves across 4 stages of PLC. (a)Introduction stage. We have discussed pricing strategy in this stage earlier in pricing a new product. www.a2zmba.com By Prof. Havaldar (b) Growth stage. The firm lowers the
IM/11-18/ 29 (c)Maturity stage. The firm may cut the prices to match aggressive competitors prices by giving volume discounts, absorbing freight costs, or more credit. If industrial customers do cost - benefit analysis, a selling firm may increase prices or not make any change in prices due to its superior product quality. (d)Decline stage. Pricing strategy varies depending on conditions. (i) If buyers perceptions about the firms quality of product / service is good, then the price need not be lowered, but costs should be reduced to earn profits, (ii) if the quality of product / service is equal of lower than competitors, a firm may cut prices, to increase sales volume above break even volume, (iii) if some competitors have withdrawn, a firm may selectivelywww.a2zmba.com By Prof. Havaldar less price increase prices to
Initiating price changes
IM/11-19/ 29
If a firm is a market leader and wants to
change the price, it must anticipate reactions from customers and competitors. The firm must study major competitors objectives, financial situations, production capacity utilizations, sales, costs, and profits. It must also understand competitors mindset, by studying their business philosophy (or concepts), culture, beliefs and past behaviors. Based on above analysis the firm should predict competitors response. The firm must also understand that customers generally prefer small price increases several times, rather than one sharp increase. Of course, customers would generally welcome www.a2zmba.com By Prof. Havaldar price cuts.
Responding to competitors price changes IM/11-20/ 29
A marketer should respond after answering the following questions. (i) Why the competitor has changed the price? (ii) Is the price change temporary or permanent? (iii)What will happen to the companys sales and profits, if it does not respond. (iv)What would be the reactions of other competitors. The responses can be in several ways: (a) maintain price and value (benefits), (b) match competitors price, (c) develop and launch low-price product item, (d) maintain www.a2zmba.com By Prof. Havaldar
PRICING POLICIES
IM/11-21/ 29
Purpose. A firm evolves pricing policies to adjust basic prices (or price list) for different types of customers (like OEMs, users, and dealers) who buy various quantities and are located at different locations. The price list is adjusted with different types of discounts and allowances. Price list is a statement of basic prices of a product, having various sizes/specifications. Net price = price list (or list-price) less discount (or allowances). Business buyers are more interested in net price Types of discounts : Trade, quantity (or volume), and cash. Trade discounts. It is offered to traders or intermediaries (dealers / distributors / stockiest ) www.a2zmba.com By and sufficient (as per and it should be equalProf. Havaldar
IM/11-22/ 29 Volume / Quantity discounts. Here, the objective is to encourage customers to buy larger quantities, which would reduce the costs of selling, inventory carrying and transportation. The quantity (or volume) discounts are given either on single orders over a period, usually one year (cumulative basis). S Forz example, e a Y c e h a r l y i e o f T % t a Ql u o P u r c h a s o er o P r u d r e c r h a s e D i s c o

a u
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Above discounts are applicable for all types of customers OEMs, users, and dealers / distributors.
IM/11-23/ 29
Cash Discounts. The objective is to get prompt payments. If a credit customer pays the bill before dispatch or within 7-days of dispatch, the customer is given cash discount on the gross amount of bill. The extent of cash discount depends on the bank rate of interest. Give cash discounts thru credit notes and the cheques, instead of including it in the bills.
Geographical Pricing
It includes decisions on how to price the companys products to customers located in different geographic areas. There are two alternatives : www.a2zmba.com By Prof. Havaldar
IM/11-24/ 29 (i)Ex Factory Pricing. It means prices quoted are based on the prices at the factory gate, i.e. freight ( transportation costs) and transit insurance costs are to the customers accounts. Hence, the landed price (or costs) to customers vary depending on their geographic locations. (ii)F.O.R. Destination Pricing. Here, the quoted prices include freight costs. Transit insurance is a small amount to be covered by the customers open insurance policy. Hence, all customers get the product almost at the same price, despite different geographic locations. Marketer adds the average freight cost to the basic prices and then prepares the price list, or absorbs the freight cost, if competition demands. Havaldar www.a2zmba.com By Prof.
IM/11-25/ 29
ROLE OF LEASING.
Business buyers have options of either leasing or buying capital items like machinery. The advantagesfor the lessee (asset user) are : (i) conserving capital, (ii) gaining tax advantages, (iii) getting the latest products. The lessor (asset owner) often earns good income from buying firms who can not afford outright purchase. A lease is a contract (or an agreement) by which the asset owner (lessor) gives the right to use the asset to another party (lessee) in return for payment, over a specified period.
IM/11-26/ 29

Types of Leases : (i) Financial (or full payment) leases, and (ii) operating (service or rental) leases Financial leases. These are full payment, non - cancellable, long - term contracts and fully amortised (sum of lease payments purchase price of capital item)
>
IM/11-27/ 29
Operating Leases are service/rental leases, that are cancellable, short-term contracts or agreements, and are not fully amortised. The rates are higher than those of financial leases, because risk of obsolescence are of the lessor Pricing Strategy It is based on the firms marketing and pricing objectives. Three possible alternatives are : (i) Decide lease rate to favor leasing (ii) Decide lease rate to favor outright purchase (iii)Achieve balance between lease rate & sale rate. Some business marketing firms have representativesProf. Havaldar www.a2zmba.com By for giving financial
IM/11-28/ 29
In business marketing, price has a
special meaning. For value buyers, value based pricing is appropriate. Factors that influence pricing decisions (or price determinants) are: (i) pricing objectives, (ii) customer analysis, (iii) competition analysis, (iv) cost analysis (v) government regulations/policies Pricing strategies for different productmarket situations are: (a) competitive bidding in competitive markets, (b) www.a2zmba.com By Prof. Havaldar new product pricing (c) pricing across
IM/11-29/ 29
Initiating price changes and responding
to competitors price changes are also parts of pricing strategies Pricing policies include adjustment of basic prices (or price list) with different types of discounts like volume, trade, and cash, as well as geographical pricing. Leasing or buying options are available to business buyers for capital items like machinery. Financial and operating are two types of leases. Pricing strategies are made either to favour leasing or outright purchase, or balancewww.a2zmba.com By Prof. Havaldar and buying . between leasing
CHAPTER 12
IM/12-1/19
STRATEGIC PLANNING, IMPLEMENTING, AND CONTROLLING IN INDUSRIAL MARKETING Learning Objectives Understand the characteristics of market oriented organization. Know the role of marketing in strategic planning Examine the strategic planning process at business unit level. Understand preparation implementation and control of industrial (or business ) www.a2zmba.com By Prof. Havaldar
IM/12-2/19
CHARACTERISTICS OF MARKET ORIENTED ORGANISATIONS

Firms achieve market orientation by managing the following factors. (i) Shared values. (ii) Organization structure, policies and culture. (iii)Strategic Planning. (iv)Needs or expectations of stakeholders.
i e r a r c h
IM/12-3/19
t r a t e g
g t h e r i e r a r c h
B e f o r e u n s h a l l f i r s t
O
d e r s t a n d i n e x a m i n e h
r g a n i s a t i o On a r l g a n i s a t i o S n t ar la t e g y h L e v e l s S t r u c t u r e ( T y p e o f M C D o r p o r a t e C o r p o r a t e f f i c e i v i s i o n B u s i n e s s ( S t r a t e g i M a n a g e m F u n D
i v i s i o n a l u s i n e s s U S B / S B U I u n c t i o P n a l r o d
/ n i t U S
B I I
I I I
u M c ta i r o k n F e it ni n a g n
c t i o n S t r a t e g y ( O p e r a t i o cM e a n a g e m
IM/12-4/19
The earlier figure shows hierarchy of strategies and organization structure of a large company. Strategic management gives a direction to the firm and focuses on developing strategies to achieve long term objectives & goals A Strategic business unit (SBU)consists of an independent business or related business that has its own competitors and specific markets. In some large companies there are (product ) divisions and each division has a divisional plan. Each SBU is headed by a manager who is responsible for strategic planning and performance of the SBU. www.a2zmba.com By Prof. Havaldar Operational Management maintains
IM/12-5/19
ROLE OF MARKETING IN STRATEGIC PLANNING IN A FIRM

C L o e v r p m p a F n oy r m e l N a m e a lR o l e o f M a r k e t i n g g i v e i n f o r m a t i o n C o r p o r T t eo o r t e c u s t o m e r o M a r k e t t i on g e n s u r e c o r p o r a t e s t r a t e g y d e
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d e v e l o p s h o r t - t e a n a n d s t r a t e g y , c o e n t s o u r c e a l l o c a t i o n .
IM/12-6/19
STRATEGIC PLANNING PROCESS AT CORPORATE LEVEL The major steps involved are 1.Deciding corporate mission and objectives. 2.Establishing strategic business units ( SBUs.) 3.Allocation of resources to SBUs. 4.Developing corporate strategies.
ALLOCATION OF RESOURCES TO SBUs. Two widely used models /tools are : www.a2zmba.com By Prof. Havaldar (i) Boston Consulting group (BCG)
IM/12-7/19 BCG Model : Growth Share Matrix

S R a p id t a r s Q u e s t i o n m a r k s
M a rk e t G ro w th R a te
5 3
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GE Model : Business Screen Matrix B u s i n e s s S t r e n

5
H i g h M e d i u m L o w
IM/12-8/19
g t h
S
H i g h
e l e c t i v E a r n i n g
e d i u m
L o w
IM/12-9/19
Major Business Strength factors :
Market share, product quality, unit costs, R&D performance, brand reputation, share growth. Major Market Attractiveness factors : Overall market size, annual market growth rate, historic profit margin, competitive intensity, technological requirements.
IM/12-10/19
DEVELOPING CORPORATE STRATEGIES

Strategic planning gap. It is the gap
between future (5 years) desired sales and the projected sales (of all SBUs ) of a company.
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A S a le s B C
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S P
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IM/12-11/19 The strategic planning gap can be filled by three alternative strategies : (A) Diversification growth, (B) Integrative growth, (C) Intensive growth (C) Intensive Growth Strategy. Corporate management should first review existing business, using Ansoffs productC u r r e n t P u market expansion grid, shownr N o de w c : tP s r o hereafter
C M N M
r r eM n ta r k e t P Pe nr o e dt r u a c t it o d n e v a r k S e t tr s a t e g y S t r a t e g y e ( v D e l i ov pe m s ie f n i c t a r S t r a t e g y )
a r k e t d e w M a r kS e t r t as t e g y
IM/12-12/19
( B) Integrative Growth Strategy includes increase in a firms sales and profits by integrating backward, forward, or horizontally within that industry. (A) Diversification growth strategy is considered when (B) & (C) strategies are inadequate to achieve desired growth and also good opportunities are found outside the present businesses.
IM/12-13/19
STRATEGIC PLANNING PROCESS AT BUSINESS UNIT LEVEL The following steps are followed by the business unit head. 1.Defining the business units mission. 2.Scanning the external environment (O.T. Analysis) 3.Analyzing the internal environment (S.W. Analysis) 4.Developing objectives and goals. 5.Formulating strategies (See hereafter) 6.Preparing programme or action plan. 7.Implementing strategies and action plan. www.a2zmba.com By Prof. Havaldar
IM/12-14/19
* PORTERS Generic Strategies Framework for Business unit
L I n w P d i d u e s t r y D i f f e r e n l y F o
c o
O v e r a l l c t il ae ta i do en r s h i c u s
a r t i c u l a r s e g m e n t o n
IM/12-15/19
Marketing Planning Process
The head of marketing prepares the marketing plan (short-term up to one year) after going through Marketing Planning Process, which includes the following steps : (i)Analyzing marketing opportunities. (ii)Segmenting and selecting target market segments. (iii)Developing marketing strategies. (iv)Implementing and controlling the marketing plan. The head of marketing now prepares www.a2zmba.com By Prof. Havaldar the writhen document, called marketing
Business ( Industrial ) Marketing Plan
IM/12-16/19
1.Situational analysis. Market, competitive, product, and macro environmental analysis. 2.SWOT and Issues analysis 3.Marketing Objectives and goals 4.Marketing Strategy. Selection of target market segments, positioning, marketing mix, customer service and marketing research. 5.Action plans / Tactics 6.Marketing Budget 7.Implementation and control. Building marketing organization and control process. www.a2zmba.com By Prof. 8. Contingency plan. Havaldar
IMPLEMENTATION OF MARKETING PLAN
IM/12-17/19
It is a process that turns marketing plans into action plans and ensures that the tasks or activities of action plan are executed in as manner that achieves the marketing objectives and goals. For this the necessary organization structure and people are selected. Marketing resource management (MRM) software will help marketers to improve their decisions, and also in implementation and controls. Control Process includes (a) setting goals, (b) measuring actual performance, (c) comparing goals and actual performance, (d) analyzing causes of deviations, if any (e) taking corrective actions, if needed. Typeswww.a2zmba.com By Prof.:Havaldar of controls (i) Strategic control ,
IM/12-18/19
Marketing orientation is achieved by firms
by managing shared values, organization structure, policies and cultures, strategic planning, needs and expectations of stakeholders. Before understanding the role of marketing in strategic planning, it is necessary to examine hierarchy of strategies. Major role of marketing is at business unit and functional levels, and less at corporate level. Strategic planning process at corporate level includes corporate mission & objectives, establishing and allocation of www.a2zmba.com By Prof. Havaldar
IM/12-19/19
Strategic planning process at SBUs level
includes mission, SWOT analysis, objectives and goals, strategies, action plan, implementation and control. The marketing head should go through marketing planning process, before preparing the marketing plan. Implementation and control of marketing plan are important for achievement of marketing objectives and goals.

Industrial Marketing - Hawaldar 1

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C H A PTER 1 IM/1-1/5

THE NATURE OF INDUSTRIAL MARKETING

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AREAS / CHARCTERISTICS Market

Products Service Buyer Behavior

Channel Promotional Pricing

(D) Why Industrial Demand is called Derived Demand ?

UNDERSTANDING INDUSTRIAL MARKETS AND ENVIRONMENT

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(A) What are the types/classifications of Industrial/Business customers?N T E R M E D I A I

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(C) Marketing Implications for different types of products & customers?

(D) Purchasing Orientations of Business IM/2-5/10 Buyers

IM/2-6/10 (E) Purchasing Practices of Different Types of Industrial / Business Customers

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(F) Strategies for Managing Changing External Environment.

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Industrial Products/Services are classified into Services.

purchasing orientations : buying, procurement, or supply chain management.

THE NATURE OF INDUSTRIAL BUYING AND BUYING BEHAVIOUR

Understand Organizational buying objectives. Gain knowledge of buying activities, including

PURCHASING OBJECTIVES OF FIRMS

Lowest price (If delivery & Quality objectives

IM/3-4/16 (A) PHASES IN INDUSTRIAL BUYING DECISION MAKING PROCESS / BUYPHASES

Service*. PHASE 3 :product*. PHASE 4 :PHASE 5 :offers* PHASE 6 :-

Quantity of needed product /

ATTRIBUTE/ FACTOR PRICE QUALITY DELIVERY SERVICE FLEXIBILIY TOTAL

A SUPPLIER EVALUATION SYSTEM.

SUPPLIERS PERFORMANCE 0.5 0.7 0.6 0.7 0.4

SUPPLIERS RATING SCORE 07.5 21.0 15.0 14.0 04.0 61.5

(B) Buying Situations / Buyclasses

3 Common types of purchases / buying situations

(C) Buygrid Framework

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BUYGRID FRAMEWORK ANALYSIS

have less knowledge, no experience & more people involved.

has few activities.

as repeat purchases are made.

(D) Buying Center roles & key members.

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IM/3-11/16 (F) Organizational buying behavior

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O b je c t iv e s a n d g o a ls O r g a n is a t io n S t r u c t u 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 t io n & r e w a r d s y s t e m s D e g r e e o f d e c e n t r a lis a t io n

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Important Customer Service Elements. Carry

BUYER SELLER RELATIONSHIP

Understand buyer sales rep. interactions. Types/range of relationships between buyer

INDUSTRIAL BUYER-SALES REP. INTERACTIONS

Buyer Behavior towards sales rep depends on

Buyers are not always rational / logical in

BUYER-SELLER DYADIC INTERACTION FRAMEWORK A Conceptual Framework by Dr. Sheth

TYPES / RANGE OF RELATIONSHIP BETWEEN BUYER & SELLER FIRMS

P a r t n e r i n g / T r a n s a c t i V an l a u l e - A d d C e od l l a b o r a t i v e o R e l a t i o n s Rh ei p l a t i o n s hR i ep l a t i o n s h i p Each business relationship is an exchange

process of obtaining a desired product / service by offering something of value is return.

COLLABORATIVE/ PARTNERING RELATIONSHIPS.

The focus is to build strong social, economic,

METHODS USED TO INFLUENCE INDUSTRIAL CUSTOMERS

SPECIAL DEALINGS BETWEEN BUYER & SELLER

RECIPROCITY. It means buying a product /

SUMMARY OF CHAPTER - 4 BUYER SELLER RELATIONSHIP

Service. PHASE 3 :product. PHASE 4 :PHASE 5 :offers* PHASE 6 :-