BBA 3006

INDUSTRIAL MARKETING

CHUANG WAN YIK

202389

950314-01-5432

DECEMBER 2016
Contents

title page
Definition of industrial marketing 2

Difference and characteristics of industrial and consumer marketing 3-6

CONCLUSION 7

REFERENCE 8

Coursework 9-16

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Definition of industrial marketing
Industrial marketing is a primarily B2B sale which means business to business. It

mostly involves the supply and purchase of raw materials for the manufacture of goods

or service. Industrial marketing is best done with the help of sales representatives as the

needs vary from client to client which should be serviced in a customized way.

Industrial marketing is kind of less complicated as it is easy to identify the client and set

up an appointment with them. Highly professional and trained people are involved in

the purchase of industrial goods. In order to sell to them, the marketing is done in the

form of technical selling where the sales representative makes an appointment with the

prospective buyer, understands their needs and proposes a solution by which they could

offer their service and closes the deal. Most of the industrial goods purchase generally

involves tendering process which is rampant in government and few private institutions

of India. The tender process calls for multiple suppliers and the best bid with low price

and satisfying all the necessary requirements of the contract is awarded the task to

supply industrial goods.

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Difference and characteristics of industrial and consumer marketing

Buyer Behavior.Whereas emotional factors play a large role in B2C purchases, B2B

purchasing decisions tend to be less emotional and more task-oriented than consumer

buyer markets. Business customers often look for specific product attributes such as

economy in cost and use, productivity, and quality. Additionally, B2B purchasers

generally spend more money, as the buying process tends to be more complex and

lengthy. Buyer-Customer Relationship. While consumer marketing is aimed at large

groups through mass media and retailers, the negotiation process between the buyer and

seller is more personal in business marketing. Sales representatives and marketers are

often assigned to market to individuals who act as influencers or decision-makers in the

customer organization. The bulk of a consumer's interaction with a brand typically

happens via an advertisement, promotion, or transaction. In contrast, B2B marketing

can include numerous meetings between the seller and buyer before a transaction

occurs. For example, B2B marketer’s often present products and their benefits in private

presentations to key decision-makers. The B2B organization may also invite prospects

and customers to public or private events to facilitate further conversations. As a result,

confidence and trust are gradually built between the seller and buyer over a period of

time. Significant time and money are spent during the evaluation and selection process,

resulting in strong brand loyalty among B2B customers. Channels. Although on the

surface the differences between business and consumer marketing may seem obvious,

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there are more subtle distinctions between the two, with substantial ramifications. The

evaluation and selling process for B2B purchases are longer and more complex than

consumer purchases. However, business marketing generally entails shorter and more

direct channels of distribution to target audiences. Different aspects of the promotional

mix can be easily personalized due to the relationship between a B2B salesperson and

the individual buyer. Advertising and promotion. Developing a newspaper ad for

impulsive shoe buyers is relatively straightforward, but it is very difficult to even

identify the buying influences of dragline machines or material-handling robots.

Inquiries produced by industrial advertising are only the beginning of a long, expensive

selling process—sometimes lasting years before the sale occur. Product range.

Marketing strategies change drastically with the type of product, length of the sales

cycle, product size, and the number of decision makers. For example, the selling,

promotion, and pricing strategies used to sell low-unit-price, standard motors to known

accounts are fairly straightforward. In contrast, capital equipment designed for

production lines is usually large, complex in design, and has high unit prices that must

be justified in terms of returns to the company and approved by the board of directors.

Market. The place where you find buyers and sellers. Bids and quotations. Consumers

either buy or don’t buy from listed prices. On the other hand, industrial products are

often sold by request for quotes (RFQs) that may require a quotation with elaborate

specifications to define the product. Specifications can be hundreds of pages long and

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can specify a machine right down to the type of fastener and wire colors.Buying

decision making. Besides that, business market made decision differently from

consumer market. In business market, salesperson has to deal with number of

individuals. Buying decision making involved more than one person, whom possesses

different roles either to build or maintain the relationship with the supplier . Those

persons involved in buying decision making are known as the members of buying

centre. In the buying centre, those members include decider, purchaser, influencer,

initiator, gatekeeper and user. For instance, in an automobile manufacturing company, a

production team might be initiator or user for a machine. Then, another team in

purchase department will act as buyer for the machine. Meanwhile, finance team will

act as gatekeeper in decision making process which functions as budget control role.

Lastly, Chief executive officer might act as influencer and decider which he or she will

decide whether to buy or not to buy at the end. Salesperson in business marketing deals

with more than one person in, but salesperson commonly deals with an individual in

consumer market. For instance, materials purchase decision (new task buying) for car

manufactured will only be made when the agreement across different functional

department and vertical management levels have reached. Purchase decision will not be

made when conflict between different departments has not yet solved. However, a

mother (purchaser) will buy a dress for her daughter (user) without the consent of other

family members. Because inventories are absent in services, and because production

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and consumption is at the same time, time is a very important difference between goods

and services. The keyword here is “delay”. There should be no delay in providing the

service. Thus the cab should arrive on time, the food should be prepared by time and the

trains should run on time. Because time is important.

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CONCLUSION

Based on our learning to date it would appear that despite the consultative and learner

focused nature of many of the theories of situated learning, the adoption of such an

approach does not necessarily lend itself to virtual project work relying on

collaboration. As researchers and practitioner working within this field, we have been

keen to learn from the lessons of Essen as we carry out new projects. Particular project

management styles which involve strong facilitation and personal influence seem to be

called for, in the place of more participative approaches which had less impact in the

case of Essene acknowledge that the empirical work conducted on Essen has been

limited in nature. We are currently seeking to extend this on a subsequent project by

deploying a similar interview-based methodology. The new data collection phase will

see us interview all 12 Project Partners at 3 times during the project life cycle. We

believe this will help to test out further the emerging findings on engaging networks for

working in the digital economy.

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REFERENCE

http://www.zabanga.us/industrial-marketing/conclusions-and-limitations.html

http://www.jagsheth.com/buyer-behavior/behavioral-approaches-to-industrial-

marketing-extant-and-emerging-research/

http://www.marketing91.com/difference-between-goods-and-services/

https://merkelijkheid.nl/the-fundamental-difference-between-business-and-consumer-

marketing/

https://answers.yahoo.com/question/index?qid=20070607083616AAp2rzk

http://www.manufacturing.net/article/2011/06/industrial-marketing-not-consumer-

marketing

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Coursework

Name : Chuang Wan Yik

Student ID : 202389

IC : 950314-01-5432

1. Please describe the B2B decision-making process ( DMP ).

It’s better to act too quickly than it is to wait too long.

Preparing period

Problem recognition

Information search procedures

Alternative valuation

Written tender

Negotiation

Preferred buyer status

Trial

Choice

Post-purchase evaluation

Figure 3.3 The decision-asking process

As with consumer buying, most organisational purchases are made in response to a

problem or need of some kind. This will then trigger a decision-making buying process,

taking the buying centre through to product or service purchase and, hopefully, problem

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solution (Figure 3.3). Although the basic structure is the same, there will be differences

in the way companies approach the process. It will also vary across the world. So sellers

will need to work hard at understanding cultural differences in whatever country the

suppliers want to sell their products and services in. It is important for the supplier to

understand the processes and the influences on them, so that this knowledge can be used

in a productive and profitable way. Many B2B decision-making process models exist

(practitioners will even develop their own). The following stages represent one such

model. For some companies the purchasing process would start before the need arises.

This stage could be identified as the preparation period.

A. The preparation period

For some companies and some classes of product it would seem foolish and

unprofessional to start the buying process only when a particular need arises, especially

if time, speed, repeat purchase or product complexity are major issues. If issues like

these are concerns, then it will be profitable for the buyer to install contingency

measures so that the organisation is prepared and can solve the problem easily and

quickly. This will include contacting relevant suppliers to discuss quality, value and

cost needs, as well as how much stock they are prepared to hold and delivery times. It

might be that at this stage prices are negotiated and a contract written up for ordering

throughout the year.

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B. Problem recognition

In other circumstances the buying need arises in response to a particular problem. The

size and difficulty associated with the problem will be determined by the

product/service needed. With simple, inexpensive repeat purchases for goods such as

paint, pins or paper, the process will be straightforward, especially if there is a contract

already negotiated with the supplier. If the purchase is a modified rebuy or new

purchase, then the problem becomes more difficult.

C. Information search procedures

This stage involves searching around for relevant information. It could be argued that

with the introduction and development of the internet the course of action is much

easier. Now almost the first stage in looking for information to solve a problem is to go

onto the web. Other sources of information will be trade associations, existing dealer

contacts, government sources, and so on. Probably the most reliable source, depending

on the problem, would be from suppliers already used and recommendation from trusted

sources. For B2B suppliers it is crucial that they have information readily available in a

customer friendly acceptable form. This might be by inbound or outbound phone call,

fax or e-mail request, or on the company or organisational partner website, by pamphlet,

booklet or video, or by personal contact.

Companies wanting to sell into government departments will usually have to get onto a

preferred supplier list before their products and services will be considered for purchase.

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This may involve quite detailed procedures (e.g. obtaining certain quality standards)

that must be followed if they are to be considered as suppliers.

D. Alternative valuation

Once the source of the product or services needed has been identified, both the seller

and the products on offer will have to be evaluated to measure good value and

correctness of fit against wanted benefits. In the case of the products, the buyer will

have some kind of criteria in terms of usage, value and price. This might be informal

and only exist in the mind of the purchaser or it could be formal, written down and

consisting of strict measurement and comparison criteria. The DMU might consider

competing products or services from information gathered or, depending on the value of

the order, prospective sellers will be invited to demonstrate the goods and be measured

against predetermined benchmarks. This process might well be repeated at a given

period, for example a year, so that complacency doesn't set in.

E. Written tender

Again with some organisations, especially government departments, a selection of

interested suppliers will be invited to send in a written tender (now possible online)

spelling out value and costs. They will then be judged against one another and the best

value chosen (usually on price).

F. Negotiation

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It is at this stage that some form of negotiation may take place. This might be on such

things as added benefits offered, costs and payment period, and so on. Relationships

between buyer and seller may be adversarial or cooperative. Adversarial relationships

occur where in negotiation the seller tries to sell at the highest value (price?) and the

buyer tries to buy at the lowest value (cost?). This tends to happen with low value

products or one-off purchases. Such competition is thought by some to lower the prices

while increasing the level of the service and attention paid to the buyer account. Others

argue that the level and amount of power held by the two participants will mean that

advantage will be taken by one side to the detriment of the other. Cooperative

relationships involve agreements to work together over the long term with both buyer

and seller concerns taken into consideration. We will discuss this further when we talk

about customer relationship management and long-term supplier chain interaction.

G. Preferred buyer status

In some instances the buyer might have to be elected to 'preferred buyer' status before

any order can be given. This will probably mean that certain conditions must be met, for

example, achieving investment in people or industry quality standards awards, as part of

the process. This tends to be obligatory in some sections of the public sector. Buyers

seek to place suppliers on a preferred status basis so as to maximise the benefits that can

come from such collaboration. Preferred status relationships are more likely where the

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products are specialised, high volume and/or of strategic importance or information and

training is needed for the buyer staff because of product or service complexity.

H. Trial

In some cases products or services will be taken on for a trial period to see if they match

the benefits promised. This will especially happen if the product is strategically

important, a long-term contract, and/or is going to cost a great deal of money. Sellers

may not like this arrangement, as it can be costly if the product is not taken up, but they

might have to concur depending on the need for the order. It may well be that the buyer

will instigate trial from different companies at the same time and it can be an expensive

business for organisations whose products and services are not accepted.

I. Choice

The choice will be eventually made and the order placed or the contract signed. The

deal might be for a one-off order, allowing the buyer to measure the level of service

before more orders are given, promises of a series of repeat purchases, or a longer term

contract of some kind. In some cases a probationary period might be demanded so as to

test out the promises of the new supplier.

J. Post-purchase evaluation

All suppliers will be judged on the promised level of service and some type of post-

purchase evaluation will be bound to take place. This might be by comparing actual

benefits to those that were promised or measurement against predetermined standards.

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In the former case salespeople who over-promise on benefits, or benefits that don't

match up to expectations, can cause customer loss of faith and no more purchases, thus

bringing the company into disrepute. In the latter case, not meeting standards can lead

to penalties and fines, depending on the terms and conditions built into the contract.

Whatever the situation, loss of a customer can be disastrous in B2B where buyers might

be few, whereas in B2C, although unfortunate, the customer will be only one among

millions.

DMP in B2B markets

• Complex and intense

• Often a long process

• Detailed multifaceted information needed

• Rational reasons driving the purchase

• Formal benchmarking suppliers

• Trial of the product or service

• Penalties for product malfunction or shortfall

• Product/service contracts

• Negotiations often part of the process

• Formal preferred supply list.

DMP in B2C markets

• Simple and straightforward process

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• Emotional and rational benefits wanted

• Impulsive purchase

• Product trial the exception

• Guarantees but no penalty for breakdown

• Contracts not usual

• Negotiation not usual

• Informal preferred retailer/brand.

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