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Industrial marketing Industrial marketing Presentation Transcript

  • 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!(C)    What are the differences between       Industrial                  & Consumer  Marketing? www.a2zmba.com By Prof. Havaldar
  • IM/1-3/5AREAS / CHARCTERISTICS IND MARKETS CONSUMER MATKETSMarket GEO Concentrated GEO Disbursed Few Buyers Large no. Of Buyers (Mass MarketsProducts Technically Complex Non – Technical Customized StandardizedService Very Important Somewhat importantBuyer Behavior Various Functional Family members involved specialists involved Physiological / Mainly Rational buying Psychological Social need decisions. based buying decisions Interpersonal Non – Personal relationship between Relationship. buyers and sellers.Channel More direct Indirect Multi Channel Few Channels with many layersPromotional Importance to personal Importance to Advertising. sellingPricing Competitive bidding / MRP Negotiated prices www.a2zmba.com By Prof. Havaldar
  • 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  www.a2zmba.com By Prof. Havaldar
  • 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  www.a2zmba.com By Prof. Havaldar
  • CHAPTER 2 IM/2-1/10 UNDERSTANDING INDUSTRIAL MARKETS AND ENVIRONMENTLEARNING 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. www.a2zmba.com By Prof. Havaldar
  • IM/2-2/10 (A)  What are the types/classifications of  Industrial/Business customers?EDRL M M DE INA R( DI EI SST /R I B U T O R S ) IN T M ID E E C O M M E R C IA L E N T E R P R IS E S OEM S USERS P U B L IC S E C T O R U N IT S (B H E L ) GO VER NM ENT CUSTOM ER S G O V T . U N D E R T A K IN G S ( R A IL W A Y S , D E F E N C E U N IT S )IN D U S T R IA L /B U S IN E S SCUSTOM ER S P U B L IC IN S T IT U T IO N S (G O V T . H O S P IT A L S ) IN S T IT U T IO N A L CUSTOM ER S P R IV A T E IN S T IT U T IO N S (S C H O O L S , C O L L E G E S ) M A N U F A C T U R IN G U N IT S ( S U G A R , M IL K ) C O -O P E R A T IV E S O C IE T IE S N O N -M A N U F A C T U R IN G U N IT S ( B A N K S , H O U S IN G ) F IG . T Y P E S O F IN D U S T R IA L / B U S IN E S S C U S T O M E R S www.a2zmba.com By Prof. Havaldar
  • IM/2-3/10 (B)  How are Industrial Products / Services  Classified? Classification into 3 Groups shown below.  U D E R A W M A T E R IA L S (IR O N O R E , C R O IL ) M A T E R IA L S M A N U F A C T U R E D M A T E R IA L S & PARTS ( S T E E L , F U E L O IL ) (E N T E R P R O D U C T C O M P O N E N T P A R T S (B E A R IN G S , T Y R E S ) D IR E C T L Y ) S U B A S S E M B L IE S ( E X H A U S T P IP E IN M .C .)IN D U S T R IA L C A P IT A L IT E M S L IG H T E Q P T (C O M P U T E R S , H A N D T O O L S )PRODUCTS / (U S E D IN H E A V Y E Q P T (M A C H IN E S , T U R B IN E S )S E R V IC E S P R O D U C T IO N / O P E R A T IO N S ) P L A N T /B U IL D IN G (F A C T O R IE S , O F F IC E S ) S U P P L IE S / S U P P L IE S (L U B R IC A N T S , E L E C T R IC A L IT E M S ) S E R V IC E S (T O S U P P O R T O P E R A T IO N S ) S E R V IC E S (L E G A L , C O U R IE R ) F IG . C L A S S IF IC A T IO N / T Y P E S O F IN D U S T R IA L P R O D U C T S / S E R V IC E S www.a2zmba.com By Prof. Havaldar
  • 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  www.a2zmba.com By Prof. Havaldar
  • IM/2-5/10(D)  Purchasing Orientations of Business Buyers  Business buyers/ Industrial customers follow one  of the three purchasing orientations: (i)  Buying,   (ii) Procurement, or   (iii) Supply chain  Management. (i) Buying Orientation : The firm with buying  orientation follows the practice of  (a) selecting  lowest price supplier, (b) gaining power over  suppliers and (c) avoiding risk of buying from new  suppliers. It has a Short-term focus. (ii) Procurement Orientation : The purchasing  firm with procurement orientation has a long-term  focus. It achieves the objectives of quality  improvement and cost reductions by following the  practices of (a) collaborative relationship with  major suppliers and (b) working closely with other  functional areas in the company. www.a2zmba.com By Prof. Havaldar
  • IM/2-6/10(E)  Purchasing Practices of Different Types of Industrial /Business Customers (i) Purchasing in commercial enterprises  Involve Technical & Commercial depts.  Major Tasks / Procedure: identifying, negotiating,  selecting suppliers, building relationship.  Purchasing to improve operational efficiency &  contribute to firm’s competitive advantage.  (ii) Purchasing in Govt. units  DGS&D agency finalizes rate contracts for standard  products for Govt. units.  Main Tasks / Procedure : Registration of the firm &  its Products, Tender Advertisements, no negotiation  in “ Open” tenders, negotiations done in closed /  limited tenders. By Prof. Havaldar www.a2zmba.com
  • 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. www.a2zmba.com By Prof. Havaldar
  • IM/2-8/10 (E) Types & Analysis of Environment A IR & W A T E R P O L L U T IO N E C O L O G IC A L S O L ID W A S T E D IS P O S A L C O N S E R V IN G N A T U R A L R E S O U R C E S W A T E R , P O W E R , T R A N S P O R T A T IO N P H Y S IC A L L O W -C O S T , S K IL L E D M A N P O W E R C O M P A N Y L O C A T IO N , IM A G E / R E P U T A T IO NE N V IR O N M E N T IN T E R N A L R & D & P R O D U C T IO N F A C IL IT IE S (S & W A N A L Y S IS ) H R & F IN A N C IA L R E S O U R C E S M A R K E T IN G E F F E C T IV E N E S S M IC R O C U S T O M E R S & C O M P E T IT O R S (A F F E C T S A P A R T IC U L A R F IR M ) S U P P L IE R S EXTERNAL ( O & T A N A L Y S IS ) E C O N O M IC M ACRO T E C H N O L O G IC A L (A F F E C T S G O V T ., P O L IT IC A L , L E G A L A L L F IR M S ) C U L T U R A L & S O C IA L P U B L IC - P R E S S , S H A R E H O L D E R S , IN V E S T O R S & P U B L IC IN T E R E S T G R O U P S www.a2zmba.com By Prof. Havaldar
  • IM/2-9/10(F)  Strategies for Managing Changing External Environment. (i)   Independent Strategies. (ii)   Cooperative Strategies. (iii)  Strategic Planning. It Aims at keeping  the firm consistently successful in changing  marketing  environment by market  oriented strategic  management. www.a2zmba.com By Prof. Havaldar
  • IM/2-10/10SUMMARY OF CHAPTER - 2Types /Classifications of Industrial/ Business Customers are (i)  Commercial Enterprises,  (ii) Government (iii) Institutional,  (iv) Cooperative societies.Industrial Products/Services are classified into (i) Materials & Parts, (ii) Capital Items, (iii) Suppliers &  Services. Marketing strategies differ for different product &   Customer types. Industrial / business Buyers follow one of the three  purchasing orientations : buying, procurement, or  supply chain management. www.a2zmba.com By Prof. Havaldar
  • CHAPTER – 3 IM/3-1/16THE NATURE OF INDUSTRIAL BUYING AND BUYINGBEHAVIOURLearning 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. www.a2zmba.com By Prof. Havaldar
  • IM/3-2/16PURCHASING OBJECTIVES OF FIRMS  Reliability in delivery.  Consistent product Quality.  Lowest price (If delivery & Quality objectives  are met)  Excellent pre & post – sales services.  Long – Term collaborative relationship. Industrial buyers try to achieve organizational  purchasing objectives & personal objectives  like higher status, job security, salary  www.a2zmba.com By Prof. Havaldar
  • IM/3-3/16Industrial Buying Decision Process  Marketers must study this for developing  effective marketing strategy.  In Consumer Marketing, Household /  Individual consumer / Buyer makes buying  decisions based on certain mental stages like  (i) Problem (Need) Recognition,  (ii) Information Search       (iii) Evaluation  (iv) Purchase decision        (v) Post Purchase  Behavior  In Industrial Marketing, Buying Decision  www.a2zmba.com By Prof. Havaldar
  • IM/3-4/16(A) PHASES IN INDUSTRIAL BUYING DECISION MAKINGPROCESS / BUYPHASES  PHASE –1  :- Recognising A problem / need.  PHASE – 2 :- Determining Characteristics &                           Quantity of needed product /  Service*.  PHASE – 3 :- Developing specifications of the  product*.  PHASE – 4 :- Searching & Qualifying  Suppliers.  PHASE – 5 :- Obtaining & Analyzing  suppliers’ offers*  PHASE – 6 :- Evaluating & Selecting  Suppliers. www.a2zmba.com By Prof. Havaldar
  • IM/3-5/16A SUPPLIER EVALUATION SYSTEM.ATTRIBUTE/ WEIGHT/ SUPPLIER’S SUPPLIER’SFACTOR IMPORTANCE PERFORMANCE RATING SCOREPRICE 15 0.5 07.5QUALITY 30 0.7 21.0DELIVERY 25 0.6 15.0SERVICE 20 0.7 14.0FLEXIBILIY 10 0.4 04.0TOTAL 100 61.5 www.a2zmba.com By Prof. Havaldar
  • IM/3-6/16(B) Buying Situations / Buyclasses 3 Common types of purchases / buying situations i. New Task / New Purchase :  Here, buyers have limited knowledge and  experience of the new product/service.  Hence,  more information is obtained, more people are  involved, risks are more, and decisions take  longer time. ii. Modified Rebuy / Change in supplier : This situation occurs when the firm is not  satisfied with the performance of existing  suppliers, or there is a change in product specs.   Hence, the need for searching alternate  suppliers. iii. Straight Rebuy / Repeat purchase : Here, the buying firm places repeat orders on  www.a2zmba.com By Prof. Havaldar
  • IM/3-7/16(C) Buygrid Framework BUYPHASES BUYCLASSES New Task Modified Straight Rebuy Rebuy1. Problem Recognition Yes May Be No2. Characteristics of Product Yes May Be No3. Product Specification Yes May Be No4. Supplier Search Yes Yes No5. Analyzing Supplier Offers Yes Yes May Be6. Supplier Selection Yes Yes No7. Order – Routine Selection Yes Yes May Be8. Post Purchase Review Yes Yes Yes www.a2zmba.com By Prof. Havaldar
  • IM/3-8/16BUYGRID FRAMEWORK ANALYSIS  All Phases are Applicable for a New Task.  Some Phases are Applicable for modified /   Straight Rebury.  New task situation is most difficult since  buyers have less knowledge, no experience &  more people involved.  Modified Rebury is not difficult situation since  it has few activities.  Straight rebury situation is handled routinely,  www.a2zmba.com By Prof. Havaldar
  • IM/3-9/16(D) Buying Center roles & key members. Roles of Buying center members are  Initiators. First recognize problem / need. Any  individual in buying firm – often, users.  Buyers. Carry out purchase activities. They are  purchase officers / executives.  User. Any person who uses the product / service.  Influencers. Influence buying decision. Technical  people are often key influencers.  Deciders. Make buying decisions. Senior  executives are deciders for high value & complex  products. For straight rebuy / routine purchase,  junior purchase officer can decide.  Gatekeepers. They control / filter information &  www.a2zmba.com By Prof. Havaldar
  • IM/3-10/16(E) Identifying key members of buying centre Sales / Marketing persons must identify  important members of buying centre. Buying centre consists of individuals and groups  who take part in buying decision making process,  have common objectives & share common risks.  It is also called purchase committee, buying  committee or decision making unit. Members of buying centre are (i)  Technical persons. Represent  design,production/operations,          maintenance, Q.C.,  Industrial Engg. Depts. (ii)  Purchasers / Buyers. Purchase / Materials  dept. persons. www.a2zmba.com By Prof. Havaldar
  • 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  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  www.a2zmba.com By Prof. Havaldar
  • IM/3-13/16 C o m p o n e n t (1 ) C o m p o n e n t (2 ) C o m p o n e n t (3 ) S it u a t io n a l F a c t o r sD iffe r e n c e s  a m o n g V a r ia b le s  th a t D e te r m in e M e th o d s  u s e d  fo rin d iv id u a l b u y e r s if b u y in g  d e c is io n  is c o n flic t  r e s o lu tio nc a u s e d  b y  fa c to r s  : a u to n o m o u s   o r  jo in t : in  jo in t- d e c is io n B a c k g r o u n d  o f A )  P r o d u c t  S p e c ific m a k in g  p r o c e s s  : in d iv id u a ls  ( E d u c a tio n , F a c to r s  : r o le  &  life  s ty le ) .  T im e  P r e s s u r e  P r o b le m  S o lv in g T h e ir  in fo r m a tio n  P e r c e iv e d  R is k  P e r s u a s io n S u p p lie r  o r s o u rc e s .  T y p e  o f P u r c h a s e  B a r g a in in g B r a n d  C h o ic e A c tiv e  S e a r c h B )  C o m p a n y  S p e c ific  P o litic k in g P e r c e p tu a l D is to r tio n F a c to r s  : S a tis fa c tio n  w it h  C o m p a n y  S iz e p a s t p u r c h a s e s  C o m p a n y  O r ie n ta tio n    D e g r e e  o f  C e n tr a lis a tio n F ig . : T H E S H E T H M O D E L O F IN D U S T R IA L B U Y E R B E H A V IO U R www.a2zmba.com By Prof. Havaldar
  • W E B S T E R A N D W IN D M O D E L IM/3-14/16 E n v ir o n m e n ta l V a r ia b le s  P h y s ic a l,  T e c h n o lo g ic a l  E c o n o m ic , C u ltu r a l  P o lit ic a l  a n d   L e g a l  L a b o u r  u n io n s  C u s to m e r d e m a n d s  C o m p e t it iv e   p r a c tic e s  S u p p lie r   in f o r m a t io n O r g a n is a tio n V a r ia b le s  O b je c t iv e s   a n d  g o a ls  O r g a n is a tio n  S tr u c tu r e  P u r c h a s in g  P o lic ie s   /  P r o c e d u r e s  E v a lu a tio n  &  r e w a r d  s y s te m s  D e g r e e   o f  d e c e n t r a lis a t io n B u y in g C e n tr e V a r ia b le s O r g a n is a tio n B u y in g D e c is io n s  A u th o r ity ,   S iz e  C h o ic e   o f  S u p p lie r s  K e y   in f lu e n c e r s  D e la y   d e c is io n   &   g e t   m o r e   in f o r m a t io n  I n t e r p e r s o n a l  r e la t io n s h ip  M a k e , L e a s e  o r b u y  C o m m u n ic a tio n  D o  n o t b u y In d iv id u a l V a r ia b le s  P e r s o n a l G o a ls , V a lu e s  E d u c a t io n ,   E x p e r ie n c e  E x p e r tis e , J o b  P o s itio n  L ife s ty le , In c o m e www.a2zmba.com By Prof. Havaldar
  • IM/3-15/16CUSTOMER SERVICE Important Customer Service Elements. Carry  out market survey to understand which of the  following elements of customer service are  important to customers, what service levels are  expected by customers, the service levels  offered by the firm and its competitors.   (i) Pre – Sales Service : Advising,  Informing,        Problem solving (ii) During – Sales Service : Product  availability,         on–time delivery, order cycle time, and  information. www.a2zmba.com By Prof. Havaldar
  • IM/3-16/16SUMMARY 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  www.a2zmba.com By Prof. Havaldar
  • IM/4-01/11CHAPTER - 4 BUYER SELLER RELATIONSHIPLEARNING 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. www.a2zmba.com By Prof. Havaldar
  • IM/4-02/11INDUSTRIAL BUYER-SALES REP. INTERACTIONS Depend on their perceptions, behavior &  roles. Buyers have two major perceptions of sales  reps. (i)  Stereotype – talkative, manipulative,  excitable (ii) Reputation of sales rep’s company. Buyer Behavior towards sales rep depends on  organizational needs / objectives, buying  centre interactions and personal needs. www.a2zmba.com By Prof. Havaldar
  • IM/4-03/11BUYER-SELLER DYADIC INTERACTION FRAMEWORK A Conceptual Framework by Dr. Sheth  C o m p a t ib le S ty le In c o m p a t ib le S ty le C o m p a tib le Id e a l/S u c c e s s f u l In e ffic ie n t C o n te n t T r a n s a c tio n T r a n s a c t io n In c o m p a tib le In e ffic ie n t No C o n te n t T r a n s a c tio n T r a n s a c t io n • A buyer and a seller interaction is called “Dyadic” – two persons’ interactions’, with above types of transactions. • Content includes organizational and personal needs of a buyer and a seller. • Style includes manner and format of communication – task oriented, self oriented, or social / personal oriented. www.a2zmba.com By Prof. Havaldar
  • IM/4-04/11TYPES / RANGE OF RELATIONSHIP BETWEEN BUYER & SELLERFIRMS  When buyer (or customer) and seller (or  supplier) firms do business, they have the  following types and range of business /  working relationships / exchanges.  r i n g / P a rtn e T r a n s a c tio n a l V a lu e -A d d e d C o lla b o r a tiv e R e la tio n s h ip R e la tio n s h ip R e la tio n s h ip  Each business relationship is an exchange  process of obtaining a desired product /  service by offering something of value is  www.a2zmba.com By Prof. Havaldar
  • 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  www.a2zmba.com By Prof. Havaldar
  • IM/4-06/11COLLABORATIVE/ PARTNERING RELATIONSHIPS.  The focus is to build strong social, economic,  service and technical ties between customer  and supplier firms in order to achieve mutual  benefits.  The criteria used for selecting business  customers for partnering relationships are  technological contributions, mutual  dependence, “supply chain management”  orientations, and high sales & profit  www.a2zmba.com By Prof. Havaldar
  • IM/4-07/11CUSTOMER RELATIONSHIP MANAGEMENT (CRM) / RELATIONSHIP  Conceptually  same,  methods  /  techniques  to MARKETING (RM) achieve objectives are different. Both  CRM  &  RM  aim  at  partnering  /  collaborative  long-term  relationships  for  mutual benefits of both parties. CRM’S  objectives  are  to  improve  customer  loyalty  and  there  by,  company’s  profitability.  For this, marketing strategy is first developed,  then  investment  is  made  in  software  system  to  gather  data  /  information  on  each  valued  customer, and the same is made available to  all  employees  to  give  superior  customer  service. www.a2zmba.com By Prof. Havaldar
  • IM/4-08/11METHODS 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,  www.a2zmba.com By Prof. Havaldar
  • 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. www.a2zmba.com By Prof. Havaldar
  • SPECIAL DEALINGS BETWEEN IM/4-10/11BUYER & SELLER  RECIPROCITY. It means buying a product /  service from a customer and selling a   product / service to a supplier. It occurs when  products are similar and price competition is  less. Generally, both purchase managers and  sales managers dislike. In  practice, the  procedure becomes complex. It  should be  kept at minimum level.   DEALING WITH CUSTOMERS’ CUSTOMERS  With coordination and planning, a business  marketer can promote its products to  customers’ customer, if a need arises. www.a2zmba.com By Prof. Havaldar
  • IM/4-11/11SUMMARY OF SELLER- RELATIONSHIP BUYER – CHAPTER 4 Industrial buyer and sales rep.’s interactions  depend on their perceptions, behavior, & roles. Interaction between two persons (buyer  & seller) is  called Dyadic, with various types of transactions, as  per Dr. Sheth’s framework. Buyer and seller firms have various types and  range of relationships: transactional, value added  and partnering / collaborative. Customer relationship management (CRM) and  relationship management (RM) are conceptually  same. Both aim at collaborative / partnering long –  term relationship for mutual benefits of both parties. Sales promotion and negotiation are the major  methods used to influence industrial buyers. www.a2zmba.com By Prof. Havaldar
  • CHAPTER 5 IM/5-1/6INDUSTRIAL MARKETING INTELLIGENCE ANDMARKETING RESEARCHLEARNING OBJECTIVES :1. Know Nature and Scope of Industrial Marketing research.2. Examine the Marketing Research Process.3. Understand Industrial Marketing Intelligence System. www.a2zmba.com By Prof. Havaldar
  • IM/5-3/6SCOPE OF INDUSTRIAL MARKETING RESEARCHScope is vast. Some of the areas are :i. Market share analysis .ii. National and Geographical area- wise market potential.iii. Competitors’ analysis. www.a2zmba.com By Prof. Havaldar
  • IM/5-4/6MARKETING RESEARCH PROCESS STEPS INVOLVED ARE : 1. Identify the problem / opportunity and state research objectives . 2. Develop research design / methodology. 3. Collect data / information. 4. Process and analyze the data. 5. Prepare research report. There is no major difference in the www.a2zmba.com By Prof. Havaldar
  • INDUSTRIAL MARKEING INTELLIGENCE SYSTEM IM/5-5/6 M a r k e t in g R esea rch s t u d ie s I n d u s t r ia l S econ d ary D e c is io n M a r k e t in g M ark et D a ta Support I n t e llig e n c e R esp on ce S ou rce S y ste m MarketRs ingch studie s Industr ial SecoD atndry MarketInlig ingce DecisonSuprt MarkRespo etnc So urce System System S y ste mIndustrial marketing intelligence system is developed to meet theneeds of industrial marketers for timely and continuous informationfor effective decision making . www.a2zmba.com By Prof. Havaldar
  • SUMMARY OF CHAPTER-5 IM/5-6/6 Industrial marketing research rely more on exploratory and descriptive (i.e. survey) methods . The scope of industrial / business marketing research is vast . There is no major difference in the process or steps involved in marketing research for consumer and industrial marketing. Industrial marketing intelligence system is www.a2zmba.com By Prof. Havaldar
  • IM/5-2/6NATURE OF INDUSTRIAL MARKETINGRESEARCH1. Business Marketers rely more on Secondary data, and exploratory research (Through expert opinion).2. Descriptive (or Survey) method is used more often than experimental and Observation methods, for collecting primary data.3. Sample size is small due to small population.4. Difficult to define sampling unit (or respondents), since buying decisions www.a2zmba.com By Prof. Havaldar
  • IM/6-1/9CHAPTER – 6INDUSTRIAL MARKET SEGMENTATION, TARGETMARKETING AND POSITIONING LEARNING OBJECTIVES : 1. Know the Procedure followed for segmenting industrial markets. 2. Identify the Variables (bases) used for segmenting business markets. 3. Evaluate and select the target market segments and strategies. 4. Develop effective positioning www.a2zmba.com By Prof. Havaldar
  • IM/6-2/9PROCEDURE USED IN MARKET SEGMENTATIONThe 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 www.a2zmba.com By Prof. Havaldar
  • IM/6-3/9VARIABLES (BASES) USED IN SEGMENTINGINDUSTRIAL (BUSINESS) MARKETS Industrial market segmentation is done first based on “Macro Variables” , and then subdivided into “Micro Variables”, if necessary. Macro Variables. These segmentation variables are identified based on industry/organizational characteristics like. (i) Type of industry / Type of customer. (ii) Company size / Usage rate. (iii) Customer location / Geographical area. (iv) End-use / Application / Benefits of a www.a2zmba.com By Prof. Havaldar
  • 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 www.a2zmba.com By Prof. Havaldar
  • IM/6-5/9EVALUATING MARKET SEGMENTSCriteria / factors used for evaluating each market segment are : (i) Size and Growth . (ii) Profitability Analysis . (iii) Competitive Analysis . (iv) Company Objectives and ResourcesTARGET – MARKET STRATEGIESBased 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 www.a2zmba.com By Prof. Havaldar
  • IM/6-6/9PROCEDURE FOR DEVELOPING A POSITIONINGSTRATEGYFollowing steps are involved :(i) Identify which attributes / benefits target customers consider important while buying a product / service. This information is obtained through a market research study . The variables considered for differentiating a company’s product from competing products are. (a) Product variables, (b) Service variables, (c) Personal variables, (d) Image variables, www.a2zmba.com By Prof. Havaldar
  • IM/6-7/9(iii) Use Perceptual Mapping Technique. To decide on positioning strategy, this technique is used, after getting customers’ perceptions through marketing research.(iv) Communicate Positioning Strategy. The firm should decide and communicate its positioning strategy to target customers, through sales force, advertising in journals, internet, and www.a2zmba.com By Prof. Havaldar
  • Excellent Product Quality IM/6-8/9 1.0 .A1 0.8 0.6 .D .C 0.4 Strong 1.0 0.8 0.6 0.4 0.2 0.2 - 0.2 - 0.4 - 0.6 - 0.8 - 1.0 Weak Customer Customer Service Service - 0.2 .B - 0.4 - 0.6 . - 0.8 A - 1.0Perceptual Mapping LowTechnique Product Quality www.a2zmba.com By Prof. Havaldar
  • SUMMARY OF CHAPTER 6 IM/6-9/91. 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 www.a2zmba.com By Prof. Havaldar
  • IM/7-1/20CHAPTER – 7PRODUCT STRATEGY &NEW PRODUCT DEVELOPMENT Learning Objectives 1. Define an Industrial Product. 2. Understand Changes in the product strategy. 3. Know Product Life cycle (PLC) Theory and its application. 4. Develop Product strategies for existing products. 5. Understand new product development. 6. Know impact of technology and high-tech marketing.www.a2zmba.com By Prof. Havaldar
  • IM/7-2/20DEFINITION 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 www.a2zmba.com By Prof. Havaldar
  • IM/7-3/20CHANGES 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. www.a2zmba.com By Prof. Havaldar
  • A General Model of Product Life – Cycle (PLC) IM/7-4/20 In d u s tr y S a le sR upees In d u s tr y P r o fits M a tu r ity D e c lin e www.a2zmba.com By Prof. Havaldar
  • IM/7-5/20APPLICATION OF PRODUCT LIFE – CYCLE THEORYTO MARKETING STRATEGY Introduction Stage : Marketing Strategy should focus on market development for slowly accepted products. For rapidly accepted products, a competitive strategy (Competitive pricing or Superior quality product ) should be evolved. Growth Stage :To take advantage of high growth of sales and profits, the marketing strategy should concentrate on (i) Improving product design or Prof. Havaldar product features (ii) www.a2zmba.com By adding
  • IM/7-6/20 Maturity Stage As competition increases and profits decline, marketing strategy should concentrate on (i) cutting costs, (ii) keeping existing customers satisfied (iii) entering new markets. Decline Stage Since both sales and profits decline, marketing strategy should focus on (i) substantial reduction in costs, (ii) develop a substitute product, (iii) withdraw the www.a2zmba.com By Prof. Havaldar
  • IM/7-7/20PRODUCT STRATEGIES FOR EXISTING PRODUCTSBusiness marketers should take the following steps :1. Evaluate the performance of existing products by using “product evaluation matrix”.2. Examine the relative strengths and weaknesses of the company’s products by using “ perceptual mapping” technique. www.a2zmba.com By Prof. Havaldar
  • IM/7-8/20PERFORMANCE EVALUATION OF EXISTINGPRODUCTSExample : A material handling Co. (i) Product = P (Pallet Truck)Last 3 year’s average performance figures are Industry sales growth = 25%, Company sales growth = 30% Market Share = 30% (Dominant) , Profitability = As per Target.(ii) Product = S (Stackers) Industry Sales growth = 16% (Stable) ; Company Sales Growth = 15% (Stakers) www.a2zmba.com By Prof. Havaldar
  • Product Evaluation Matrix IM/7-9/20 C o m p a n y S a le s D e c lin e S ta b le G ro w th P r o f ita b ility B e lo w B e lo w B e lo wIn d u s tr y M a rk e t Ta rg e t Above Ta rg e t Above Ta rg e t AboveS a le s Ta rg e t Ta rg e t Ta rg e t Ta rg e t Ta rg e t Ta rg e t S h a re D o m in a n t PG ro w th A v era g e M a rg in a l D o m in a n tS ta b le A v era g e M a rg in a l S D o m in a n tD e c lin e A v era g e M a rg in a l www.a2zmba.com By Prof. Havaldar
  • IM/7-10/20PERCEPTUAL MAPPING TECHNIQUE H ig h P r ic e BH ig h LowQ u a lity Q u a lity * A 1 *A C L o w P r ic e www.a2zmba.com By Prof. Havaldar
  • IM/7-11/20 Firm A’s product quality is perceived to be“average” by customers, compared to itscompetitors B & C. Firm A should try to moveto a new position of superior quality at areasonable (average) price to improve itsprofitability.DECIDE PRODUCT STRATEGIES(i) Maintain / Continue the product and itsmarketing strategy.(ii) Modify the product & change marketing www.a2zmba.com By Prof. Havaldar
  • IM/7-12/20CLASSIFICATION OF NEW PRODUCTS(i)   Products that are new to the world & innovative.(ii)  Products that are new to the company, but not new to the world.(iii) Improvements / Revision to the existing products.(iv) Addition to the existing products.(v)  Repositioning existing products to new market segments(vi) Products with substantial cost reductions without reduction in performance. NEW PRODUCT DEVELOPMENT PROCESSIt 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. www.a2zmba.com By Prof. Havaldar
  • IMPACT OF TECHNOLOGY IM/7-13/20Technological innovations create new products / services that are new to the world. Examples of these innovations, called break through technology are : (i) Technological inventions of 1940s of vacuum tube and amplifier circuit created new products / services like radio, wireless telegraphy, and telephone service. (ii) Technological inventions of 1950s & 70s of transistor, integrated circuit (IC), microprocessors have applications in new products like TV sets, movie www.a2zmba.com By Prof. Havaldar Cameras,
  • IM/7-14/20TYPES OF MARKETING SITUATIONS. B e tte r H ig h - t e c h H ig h M o u s e tra p M a r k e tin g T e c h n o lo g ic a l M a r k e tin g U n c e r ta in t y L o w -te c h H ig h - f a s h io n Low M a r k e tin g M a r k e tin g Low H ig h M a r k e t U n c e r ta in t y www.a2zmba.com By Prof. Havaldar
  • IM/7-15/20 MODIFIED TECHNOLOGY ADOPTION LIFE CYCLE This is suited to high–tech marketing D eep G ap 34%In n o v a to rs 13½ % 34% E a r ly 16% 2½ % A d o p te rs L a g g a rd s T im e o f A d o p t i o n o f I n n o v a t i o n s www.a2zmba.com By Prof. Havaldar
  • IM/7-16/20HIGH – 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. www.a2zmba.com By Prof. Havaldar
  • IM/7-17/20 Marketing of Industrial Services Classifications of Industrial Services M a t e r ia l s P e rso n al H o t e ls C o m p o n e n ts fo r G ood C o m p u te rs T r a n s p o r ta t i o n ( S t e e l, B a ll B e a r in g s ) C o n fe re n c e s P u re P u reT a n g ib le i n t a n g ib l eP ro d u c t s e r v ic e M a jo r Equal M a jo r P ro d u c t, P ro d u ct S e r v ic e , M in o r & M in o r S e r v ic e S e r v ic e P ro d u ct www.a2zmba.com By Prof. Havaldar
  • IM/7-18/20 Unique Characteristics of services and marketing Implications.   C h a r a c te r is tic s M a r k e t in g Im p lic a tio n s E x a m p le s1 . In ta n g ib ility  B u y e r s s e e e v id e n c e o f s e r v ic e q u a lity  M an age m en t (c a n n o t b e s e e n / f e lt , b e f o r e b u y in g )  S e lle r s t a n g ib ilis e t h e in ta n g ib le C o n s u lta n c y & E D P s .2 . In s e p a r a b ility  E f fe c t iv e in t e r a c t io n d e p e n d o n s e r v ic e  R e p a ir s to m a c h in e s ( P r o d u c t io n & c o n s u m p tio n a t th e p r o v id e r s . & C o u r ie r s e r v ic e . s a m e t im e )  R e q u ir e s e ff e c t iv e r e c r u it in g a n d t r a in in g o f s e r v ic e p r o v id e r s .3 . V a r ia b ility  U n if o r m q u a lity is d iff ic u lt  M an age m en t ( S e r v ic e q u a lit y  F o c u s o n q u a lit y & a u t o m a t io n e d u c a t io n & m a r k e tin g v a r ie s ) re s e a rc h .4 . P e r is h a b ilit y  D e m a n d flu c tu a te s . A ir lin e s s e a ts & (C a n n o t b e s to re d )  U s e m e th o d s to m a tc h d e m a n d & W a re h o u s e s p a c e . c a p a c ity .5 . N o n -o w n e r s h ip  A d v a n ta g e s o f n o n - o w n e r s h ip :  H o te l a n d c a r r e n ta l (B u y e r u s e s a s e r v ic e , b u t c a n n o t r e d u c t io n in c o s ts & f le x ib ilit y s e r v ic e s . o w n it ) www.a2zmba.com By Prof. Havaldar
  • SUMMARY OF CHAPTER 7 IM/7-19/20  PRODUCT STRATEGYS & NEW PRODUCTS DEVELOPMENT. Industrial Product is a physical thing and also a complex set of economic, technical, legal and personal relationship between a buyer and a Seller. Product Strategies are changed due to changes in customers needs, technology, government policies or laws, and product life – cycle Product life cycle (PLC) concept is used to develop marketing strategies at different stages of PLC. Product strategies Prof. Havaldar www.a2zmba.com By for existing products are
  • 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 www.a2zmba.com By Prof. Havaldar
  • IM/8-1/14CHAPTER – 8INDUSTRIAL DISTRIBUTION CHANNELS & MARKETINGLOGISTICSLearning objectives1. 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 www.a2zmba.com By Prof. Havaldar system.
  • Alternative Channel Structures IM/8-2/14 Industrial channel structures include both direct and indirect channels. Direct Channels. Examples are direct selling through company sales force and direct marketing through on-line marketing, telemarketing and direct mail. Direct channels are used typically when (i) Transaction value is large, (ii) Technical & commercial negotiations are held at various levels (iii) Buying process takes a long time (iv) Buyers want to buy directly from manufacturers. Indirect Channels. Consists of intermediaries like distributors / dealers, manufacturer’s reps / agents, value-added resellers (VARs), brokers andBy Prof. Havaldar www.a2zmba.com commission merchants.
  • Types of Intermediaries IM/8-3/141. Industrial Distributors / Dealers. They perform many functions like buying, storing, promoting, financing, selling, transporting and servicing certain geographic market, & are given discounts. Major categories are (i) General – line distributors, (ii) Specialized distributors, and (iii) Combination house.2. Manufactures’ Representatives / Agents. They perform functions like promoting manufacturers’ products / services, getting orders, and colleting market information. They are independent business Havaldar representing various www.a2zmba.com By Prof. firms,
  • IM/8-4/143. 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. www.a2zmba.com By Prof. Havaldar
  • CHANNEL DESIGN IM/8-5/14 It includes developing new channels and modifying the existing channels. The procedure / steps are as follows; (i) Developing channel objectives; (ii) Analyzing channel constraints; (iii) Analyzing channel tasks; (iv) Identifying channel alternatives. These include the following issues : (a) Types of intermediaries. (b) Number of intermediaries. (c) Number of channels. (v) Evaluating the channel alternatives. The criteria used are: (a) Economic factor (b) Control factor www.a2zmba.com By Prof. Havaldar (c) Adaptive factor
  • IM/8-6/14MANAGING CHANNEL MEMBERSIt 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). www.a2zmba.com By Prof. Havaldar
  • IM/8-7/14Concept 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. www.a2zmba.com By Prof. Havaldar
  • IM/8-8/14 Main aims of SCM are (i) Reduce cost per unit, (ii) Reduce waste & duplication, (iii) Minimize order to delivery cycle, and (iv) Ensure superior delivery service. Firms adopting SCM gain competitive advantage. The aims are achieved by a network of interdependent firms working together with partnering relationships to manage and control various activities, in order to improve flow of materials and information from suppliers to end users. Firms involved in SCM are suppliers of raw www.a2zmba.com By Prof. Havaldar
  • IM/8-9/14Logistics 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 www.a2zmba.com By Prof. Havaldar
  • IM/8-10/14Business Logistics SystemP h y s ic a l S u p p ly In d u s tr ia l M a n u fa c tu e r P h y s ic a l D is tr ib u tio n (o r M a r k e tin g L o g is tic s ) Marketing Logistics (or Physical distribution) consists of delivering finished products to intermediaries and customers. www.a2zmba.com By Prof. Havaldar
  • IM/8-11/14TASKS 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 www.a2zmba.com By Prof. Havaldar
  • IM/8-12/14 A firm must minimize “total distribution cost”, instead of minimizing individual cost elements, to balance customer service and total distribution cost. Another approach, called “total systems approach or channel integration” focuses on “return on investment” (ROI). Here, a firm’s channel members work together to improve “customer service”, in order to get higher sales l revenueu. e - T o t a l P h y s i c a l D i s t r i b u t o r C o s t Sa es R even = C a p ita l In v e s tm e n t www.a2zmba.com By Prof. Havaldar
  • IM/8-13/14SUMMARY OF CHAPTER – 8INDUSTRIAL 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 www.a2zmba.com By Prof. Havaldar
  • IM/8-13A/CUSTOMER SERVICE Service Quality Gap : Gap between perceived service and expected service. A firm may have a strategy of giving superior quality service than competitors and exceeding customer’s expectations. Factors that determine service quality by customers are : (i) Reliability (ii) Responsiveness (iii) Assurance www.a2zmba.com By Prof. Havaldar
  • IM/8-13B/ Strategies followed by successful customer service firms (a) Top management commitment. (b) Setting high-standards of service quality. (c) Monitoring system. (d) Systematic approach to resolving customer complaints. (e) Satisfy both employees and customers . www.a2zmba.com By Prof. Havaldar
  • IM/8-13C/ Developing customer service levels/ standards Neither all customers nor all products need the same level of service. Steps involved : (i) Conduct marketing research study to find which elements of customer service are important to customers. (ii) Find needs / expectations of customers in quantitative standards for the service elements. (iii) Get information on actual performance of the company and it’s competitors from customers. (iv) Analyse variance of actual performance www.a2zmba.com By Prof. Havaldar
  • IM/8-14/144. 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). www.a2zmba.com By Prof. Havaldar
  • IM/9-1/12 CHAPTER 9 MANAGING THE PERSONAL SELLING FUNCTIONLearning 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. www.a2zmba.com By Prof. Havaldar
  • IM/9-2/12Role of Personal Selling in BusinessMarketing• Personal selling or direct selling through company sales force plays greater role in business marketing than consumer marketing• Major roles of personal selling (i) A part of problems – solving capabilities of the company. (ii) A part of the company’s communication or promotion mix . (iii) Gives an effective customer service . www.a2zmba.com By Prof. Havaldar
  • IM/9-3/12Business Selling Process• No magic formula for making a sale. But chances of making a sale improves, if the following “sales process” is followed.• The major steps in selling process are : (i) Prospecting. It is searching or identifying prospective or likely customers from various sources. (ii) Qualifying . Prospective customers are screened by qualifying criteria like expected volume, location & financial strength. (iii) Preparation / Pre-approach. Sales person should prepare plan before making sales presentation by obtaining all relevant information about the customer and competitors through personal visits and websites. www.a2zmba.com By Prof. Havaldar
  • IM/9-4/12(iv) Sales Presentation / Approach . Different methodsare used like “(AIDAS Approach – Attention, Interest,Desire, Action, Satisfaction), or “need –satisfactionmethod’’.(v) Overcoming Objections . Often prospects raiseobjections, which are real or practical andpsychological or hidden. These should be answeredsatisfactorily by the sales person.(vi) Closing. Asking for an order or closing the sale isimportant. Sales person can use some of the closingtechniques.(vi) Post - Sales service and Follow-up This includesdelivery, installation, training, payment collection,warranty service, and rejections /returns. www.a2zmba.com By Prof. Havaldar
  • IM/9-5/12Characteristics of B2B Selling1. Promotional strategy focuses more on “ personal selling’’ through company’s sales force. Hence, salespersons are active in getting orders.2. Adverting is used as a support to personal selling.3. The sales person sells technical and non-technical products, and uses “problem solving’’ approach4. 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. www.a2zmba.com By Prof. Havaldar
  • IM/9-6/12Team 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. www.a2zmba.com By Prof. Havaldar
  • IM/9-7/12Solution – Oriented Effort• Two major roles of personal selling : (1) A part of problem-solving capabilities, (2) A part of communication ( or promotional) mix.• A sales person is a part of selling firm’s problem- solving abilities. He should identify and analyse the buying firm’s problem. He should then show how his company’s products and services can solve the buyer’s problems, better than competitors. This is called solution-oriented effort or approach. www.a2zmba.com By Prof. Havaldar
  • IM/9-8/12Intrapreneurial 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. www.a2zmba.com By Prof. Havaldar
  • IM/9-9/12 MANAGEMENT OF MAJOR AND NATIONAL ACCOUNTS • Both major and National accounts (or customers) have large (sales and profit potentials). But there is a difference.S a le s L a rg e M a jo r N a tio n a lP o t e n t ia l A ccount A ccountof D y a d ic M in o rC u s to m e r S m a ll In te r a c tio n A ccount S im p le C o m p le x Complexity of customer www.a2zmba.com By Prof. Havaldar
  • 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. www.a2zmba.com By Prof. Havaldar
  • IM/9-11/12How 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. www.a2zmba.com By Prof. Havaldar
  • IM/9-12/12SUMMARY OF CHAPTER-9• Personal selling has a greater role in business marketing than consumer marketing.• Business selling process consists of prospecting, qualifying, preparation (or pre-approach), sales presentation (or approach), overcoming objections, closing, post-sales service and follow-up.• B 2 B selling characteristics include problem solving, systems selling and team selling approaches.• Intrepreneurial philosophy results in consistently good performance.• Management of major and national accounts is done by team selling, relationship marketing and support from top management and functional managers. www.a2zmba.com By Prof. Havaldar
  • IM/10-1/10 CHAPTER –10 BUSINESS (INDUSTRIAL) COMMUNICATIONLearning Objectives :1. Develop an effective communication (or promotional) program.2. Understand the role of advertising3. Understand the importance of sales promotion, publicity, public relation (PR), and direct marketing. www.a2zmba.com By Prof. Havaldar
  • IM/10-2/10DEVELOPING AN EFFECTIVECOMMUNICATION / PROMOTIOALPROGRAMME FOR BUSINESS MARKETS The steps involved are : (i) Decide communication objectives. (ii) Identify the target audience. (iii) Decide the promotional budget. (iv) Develop the message strategy. (v) Select the media. (vi) Evaluate the promotion’s results. (vii) Integrate the promotion’s programme. www.a2zmba.com By Prof. Havaldar
  • IM/10-3/10 Promotional Tools and Media in Business MarketsP r o m o tio n a l A d v e r tis in g S a le s P. R . and D ir e c t P erso n a l T o o ls P r o m o tio n P u b lic ity M a r k e tin g S e llin g P r o m o tio n a l  P r i n t M e d ia  T rad e sh ow s  C h a r ita b le  D ir e c t m a il  S a le s c a lls M e d ia  B u s in e s s  E x h ib itio n s d o n a tio n s  T e le m a r -  S a le s & P u b lic a tio n s  C a ta lo g u e s  A d o p tin g k e tin g p r e s e n ta tio n s S u p p o r ts  Trade  S a le s C o n s e n t s v illa g e s  O n - l in e  T e a m s e l li n g J o u r n a ls  P r o m o tio n a l  C o m m u n ity m a r k e tin g  R e la t io n s h ip  In d u s tr ia ls n o v e ltie s ( g ifts ) r e la t i o n s m a r k e tin g d ir e c t o r ie s  S e m in a r s  N e w s ite m in  D e m o n s tr a tio n p ress  P r o m o tio n a l  T e c h n ic a l le tte r s a r tic le s in  E n te r ta in m e n t j o u r n a ls www.a2zmba.com By Prof. Havaldar
  • IM/10-4/10ROLE 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. www.a2zmba.com By Prof. Havaldar
  • IM/10-5/10ADVERTIING MEDIA USED AND SELECTIONCRITERIA• The media generally used for industrial advertising are: (i) Business Publications. (ii) Trade journals/ publications – Horizontal and Vertical publications. (iii) Industrial directories – published by government and private publishers (e.g. Tata Yellow pages).• Criteria used for selection of advertising media are: (a) Target audience and their media habits. (b) Promotional objectives and goals. (c) Expenditure budget, by using the following formula: C ost per page = C ir c u la t io n in t h o u s a n d www.a2zmba.com By Prof. Havaldar
  • IM/10-6/10IMPORTANCE 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/10-7/10IMPORTANCE / ROLE OF DIRECT MARKETING (DM)• Definition Direct marketing is an interactive marketing system that seeks a measurable response and /or transaction. Direct marketing is also referred to as direct response marketing.• Benefits For business marketers, benefits of DM are many : Can personalise / customise communication messages, builds a continues relationship with each customer, can measure responses from alternative media, and direct relationship marketing company strategy less visible to competitors.• Main Channels or tools of DM. Direct mail, telemarketing and on- line marketing. In addition, kiosk marketing and catalog marketing are also DM channels, but are less popular in India.• Direct mail is not only paper based postal service or courier service, but can be fax mail, e-mail, or voice mail. Direct marketers send not only letters, but also audio and videotapes, CDs, and diskettes. Response rate is about 2%. www.a2zmba.com By Prof. Havaldar
  • IM/10-8/11• Telemarketing uses telephone to contact existing customers, to attract new customers, or to take orders. Telemarketing gives immediate feedback, identifies and qualifies prospects, and reduces sales force travel costs. Both inbound (incoming calls from prospects / customers) and outbound (out going calls) are important. Practice, training, pleasant voices and right timing (late morning to afternoon) are needed for effective telemarketing.• On-Line Marketing can be done by establishing an electronic presence (by opening own website or buying space on a commercial on-line service), placing ads on- line, and using e-mail. A web site should be attractive on first view and interesting enough to encourage repeat visits. Marketers use on-line marketing to find, reach, communicate and sell to business customers. www.a2zmba.com By Prof. Havaldar
  • 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 www.a2zmba.com By Prof. Havaldar
  • IM/10-10/11ROLE OF PUBLICITY & PUBLIC RELATIONS(PR) Public Relations (PR) performs certain tasks to promote or protect a company’s image or its products. The tasks / functions performed by PR are: press relations, corporate communication, lobbying, and counseling. PR department deals with various categories of people like press, legislators, Govt. officials, public, employees, suppliers, customers, and hence it tends to neglect marketing objectives. Publicity or Marketing Public Relations (MPR) has more credibility and lower cost compared to advertising, MPR includes placing technical articles from the company’s technical persons in trade journals, business magazines, and / or news papers. MPR should be planned with advertising and should be given larger budget allocation www.a2zmba.com By Prof. Havaldar
  • 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. www.a2zmba.com By Prof. Havaldar
  • IM/11-1/29CHAPTER 11INDUSTRIAL (BUSINESS) PRICING STRATEGIES & POLICIESLearning Objectives1. 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. www.a2zmba.com By Prof. Havaldar
  • IM/11-2/ 29SPECIAL 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 / 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 www.a2zmba.com By Prof. Havaldar
  • IM/11-4/ 29 F R A M E W O R K O F P R IC IN G D E C IS IO N S B e fo re ta k in g p ric in g (i) P ric in g o b je c tiv e sd e c is io n s , a b u y in g firm m u s t ( ii) C u s to m e r a n a ly s is fin d " p ric e d e te rm in a n ts " . (iii) C o s t a n a ly s is ( i.e . f a c to r s th a t in f lu e n c e (iv ) C o m p e tito rs a n a ly s is p ric in g d e c is io n s ) ( v ) G o v t. r e g u la tio n / p o lic ie s www.a2zmba.com By Prof. Havaldar
  • T w o ty p e s o f p ric in g d e c is io n s . IM/11-5/ 29P ric in g s tra te g ie s P ric in g p o lic ie s D is c o u n ts G e o g ra p h ic a l p ric in g S e ttin g a p ric e (p ro d u c t / m a rk e t s itu a tio n s ) In itia tin g a p ric e c h a n g e R e s p o n d i n g t o a c o m p e t i t o r s p ric e c h a n g e L e a s in g www.a2zmba.com By Prof. Havaldar
  • IM/11-6/ 29PRICE DETERMINANTS OR FACTORS INFLUENCINGPRICING 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 www.a2zmba.com By Prof. Havaldar
  • IM/11-7/ 29 2. Customer (Demand) analysis It includes demand analysis & cost - Benefit analysis (i) Demand analysis. Using experimental research, it measures relationship between price and demand (or sales volume). It sums up how sensitive customersg are qto nthe dpriced e d % c h a n e in u a tity e m a n = changes. The formula is: % C h a n g e i n p r i c eIf PED is > 1, demand is elastic, & customers are pricesensitiveIf PED is < 1, demand is inelastic, customers are lesssensitive to prices. www.a2zmba.com By Prof. Havaldar
  • IM/11-8/ 29 (ii) Cost – Benefit Analysis Necessary to know target customers’ perceptions of benefits (or value) and costs. Benefits are categorized into hard (or tangible) benefits like quality, production rate, performance, etc. and soft (or intangible) benefits like customer service, company reputation, warranty period, etc. Cost includes price, duties and taxes, freight, installation, maintenance. 3. Cost Analysis. A firm’s total cost of a product is the lowest point on the price range. Hence, for pricing decisions, the marketer must know the various types of costs like fixed, variable, total, direct, etc. for a www.a2zmba.com By Prof. Havaldar
  • IM/11-9/ 29C o st E c o n o m ie s o f S c a le p erU n it Q u a n tity P r o d u c e d p e r y e a rC o st E x p e r ie n c e / p er L e a r n in gU n it C u rv e. A v . C o s t R e d u c tio n = 1 0 -3 0 % A c c u m u la te d P r o d u c tio n www.a2zmba.com By Prof. Havaldar
  • IM/11-10/ 29 B r e a k - E v e n A n a ly s is is u s e fu l to c o n s id e r d iffe r e n t p ric e s (P 1 , P 2 , P 3 ), a n d its e ffe c t o n s a le s re v e n u e a n d p ro fits . S a le s R e v e n u e a t P 3S a le s &C o s ts S a le s R e v e n u e a t P 2 S a le s R e v e n u e a t P 1 T o ta l C o s t F ix e d C o s t S a le s V o lu m e www.a2zmba.com By Prof. Havaldar
  • IM/11-11/ 294. 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. By Prof. Havaldar www.a2zmba.com
  • PRICING STRATEGIES IM/11-12/ 29 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 In business markets, large volume of purchasing is done through competitive bidding, using either closed (or sealed) www.a2zmba.com By Prof. Havaldar
  • 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 www.a2zmba.com By Prof. Havaldar
  • IM/11-14/ 29Strategy / 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. www.a2zmba.com By Prof. Havaldar
  • IM/11-15/ 29An Application (example) of probabilistic Bidding Strategy C o m p e tito r s B id T o ta l C o st P r o fit (R s ) L ast Ten d er P r ic e P e r U n it T (A ) = P r ic e ( R s) (A ) (R s) (C ) (A ) - (C ) (R s) (B ) 450 350 360 0 .0 0 100 0 430 350 360 0 .1 5 80 1 2 .0 0 410 350 360 0 .4 0 60 2 4 .0 0 400 350 360 0 .5 0 50 2 5 .0 0 380 350 360 0 .7 2 30 2 1 .6 0 360 350 360 0 .9 0 10 0 9 .0 0 340 350 360 0 .9 5 (1 0 ) ( 9 .5 0 ) 330 350 360 1 .0 0 (2 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, high–tech, or capital intensive, and purchased by a market segment that is not sensitive to the initial high price. The advantage is faster www.a2zmba.com By Prof. Havaldar
  • IM/11-17/ 29Penetration strategy is appropriate when (i)buyers are highly price sensitive, (ii) strongthreat exists from potential competitors (dueto low entry barrier). The selling firm’sobjective is to achieve long – term profitsthrough high market share. The firm can alsoachieve “cost leadership” thru’ economies ofscale and experience curve, which gives “competitive advantage”.(iii) Pricing Across Product Life –Cycle (PLC)Marketing and pricing strategies vary as theproduct moves across 4 – stages of PLC.(a) Introduction stage. We have discussed www.a2zmba.com By Prof. Havaldar
  • IM/11-18/ 29(c) Maturity stage. The firm may cut theprices to match aggressive competitors’prices by giving volume discounts, absorbingfreight costs, or more credit. If industrialcustomers do cost - benefit analysis, a sellingfirm may increase prices or not make anychange in prices due to its superior productquality.(d) Decline stage. Pricing strategy variesdepending on conditions. (i) If buyers’perceptions about the firm’s quality of product/ service is good, then the price need not belowered, but costs should be reduced to earnprofits, (ii) if the quality of product / service isequal of lower than competitors, a firm may www.a2zmba.com By Prof. Havaldar
  • 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’ mind- set, by studying their business philosophy (or concepts), culture, beliefs and past behaviors. Based on above analysis the firm should predict competitor’s response.  The firm must also understand that customers generally Havaldar small price www.a2zmba.com By Prof. prefer
  • 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 company’s sales and profits, if it does not respond. (iv) What would be the reactions of other competitors. The responses can be in several ways: 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.Prof. Havaldar www.a2zmba.com By
  • 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 aeither ton single % Q u a n t i t y S iz e o f e a c h Y e r ly T o a l ordersP u r overe ao period, r usuallyr ones eyear (cumulative n t chas rder o P u cha D is c o u basis). For example, L e s s t h a n 5 n o s ., or L e s s t h a n R s . 5 ,0 0 0 , N il 5 - 1 0 n o s ., or R s . 5 ,0 0 0 - 1 0 ,0 0 0 , u p to 3 1 1 - 1 5 n o s ., or R s . 1 0 ,0 0 0 - 1 5 ,0 0 0 , u p to 6 > 1 5 n o s ., or > R s . 1 5 ,0 0 0 , u p to 1 0Above discounts are applicable for all types of customers –OEMs, users, and dealers / distributors. www.a2zmba.com By Prof. Havaldar
  • IM/11-23/ 29Cash 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 decisionsHavaldar how to price the www.a2zmba.com By Prof. on
  • IM/11-24/ 29(i) Ex – Factory Pricing. It means pricesquoted are based on the prices at the factorygate, i.e. freight( transportation costs) and transit insurancecosts are to the customer’s accounts. Hence,the landed price (or costs) to customers varydepending on their geographic locations.(ii) F.O.R. Destination Pricing. Here, thequoted prices include freight costs. Transitinsurance is a small amount to be covered bythe customer’s “open insurance policy”.Hence, all customers get the product almostat the same price, despite differentgeographic locations. Marketer adds theaverage freight cost to the basic prices and www.a2zmba.com By Prof. Havaldar
  • ROLE OF LEASING. IM/11-25/ 29 Business buyers have options of either leasing or buying capital items like machinery. The advantages for 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 thewww.a2zmba.com By Prof. Havaldar party (lessee) in asset to another
  • IM/11-26/ 29Types of Leases :(i) Financial (or full – payment) leases,and (ii) operating (service or rental) leasesFinancial leases. These are full –payment, non - cancellable, long - termcontracts and fully amortised (sum of lease >payments purchase price of capital item) www.a2zmba.com By Prof. Havaldar
  • IM/11-27/ 29Operating Leases are service/rentalleases, that are cancellable, short-termcontracts or agreements, and are not fullyamortised. The rates are higher than thoseof financial leases, because risk ofobsolescence are of the lessorPricing StrategyIt is based on the firm’s marketing andpricing objectives. Three possiblealternatives are :(i) Decide lease rate to favor leasing(ii) Decide lease rate to favor outrightpurchase www.a2zmba.com By Prof. Havaldar
  • IM/11-28/ 29SUMMARY OF CHAPTER – 11 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 product- market situations are: (a) competitive www.a2zmba.com By Prof. Havaldar
  • 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 www.a2zmba.com By Prof. Havaldar
  • IM/12-1/19CHAPTER – 12STRATEGIC PLANNING, IMPLEMENTING, ANDCONTROLLING IN INDUSRIAL MARKETINGLearning 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. www.a2zmba.com By Prof. Havaldar
  • IM/12-2/19CHARACTERISTICS OF MARKET – ORIENTEDORGANISATIONSFirms achieve market – orientation bymanaging the following factors. (i) Shared values. (ii) Organization structure, policies and culture. (iii) Strategic Planning. (iv) Needs or expectations of stakeholders. www.a2zmba.com By Prof. Havaldar
  • H ie ra rc h y o f S tra te g ie s IM/12-3/19B e fo re u n d e rs ta n d in g th e ro le o f m a rk e tin g in s tra te g ic p la n n in g , w es h a ll firs t e x a m in e h ie ra rc h y o f s tra te g ie s . O r g a n is a tio n a l O r g a n is a tio n a l S tr a te g y h ie r a r c h y L e v e ls S tr u c tu re (T y p e o f M a n a g e m e n t) C o rp o ra te C o rp o ra te D iv is io n a l/ O ffic e B u s in e s s S tra te g y D iv is io n a l / (S tra te g ic B u s in e s s U n it M a n a g e m e n t) /SBU SBU SBU SBU I II III F u n c tio n a l F u n c tio n a l S tra te g y (O p e ra tio n s P ro d u c tio n M a rk e tin g F in a n c e M a n a g e m e n t) www.a2zmba.com By Prof. Havaldar
  • IM/12-4/19The earlier figure shows hierarchy ofstrategies and organization structure of alarge company.Strategic management gives a direction tothe firm and focuses on developingstrategies to achieve long – term objectives& goalsA Strategic business unit (SBU) consistsof an independent business or relatedbusiness that has its own competitors andspecific markets. In some large companiesthere are (product ) divisions and eachdivision has a divisional plan. Each SBU isheaded by a manager who is responsible www.a2zmba.com By Prof. Havaldar
  • IM/12-5/19ROLE OF MARKETING IN STRATEGIC PLANNING IN A FIRM C om pany F o rm a l R o le o f M a rk e tin g L evel N am e C o rp o rte T o g iv e in fo rm a tio n o n m a rk e ts a n d C o rp o rte to e n s u re c u s to m e r o rie n ta tio n , fo r M a rk e tin g c o r p o ra te s tra te g y d e v e lo p m e n t. CoL evlmpany FormaNe lR olefMa rketing Co rpote CorpMaketi tengTo ogivenfsurc ormatinse onmarketi, sandfor co rpoates rategydv elopmnt . Div isonal/ Straeg icTanstr ocaryuteg,inlsf tcusomedvlping ngbusier&comptv setion BuUn sinetlv Marketi ngadpo vantge,sio egmntisra .g,tarein g,and T odevlp eshort- ermak eting Fun citonal Marketingm ngetplr andstroucel ategy,coin. rdinato, and T o c a rr y o u t c u s to m e r & c o m p e titio nD iv is io n a l / a n a ly s is , f o r d e v e lo p in g b u s in e s s S tra te g ic B u s in e s s s tra te g y , in c lu d in g c o m p e titiv e M a rk e tin g U n it le v e l a d v a n ta g e , s e g m e n tin g , ta rg e tin g , a n d p o s itio n in g s tra te g ie s . T o d e v e lo p s h o rt - te rm m a rk e tin g M a rk e tin g F u n c tio n a l p la n a n d s tra te g y , c o o rd in a tio n , a n d M anagem ent re s o u rc e a llo c a tio n . www.a2zmba.com By Prof. Havaldar
  • IM/12-6/19STRATEGIC 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. www.a2zmba.com By Prof. Havaldar
  • BCG Model : Growth – Share Matrix IM/12-7/19 S ta r s Q u e s tio n m a r k s 5 R a p id 6 4 M a rk e t G ro w th R a te 3 8 C ash C ow Dogs S lo w 1 2 7 L a rg e S m a ll R e la tiv e M a r k e t S h a r e www.a2zmba.com By Prof. Havaldar
  • IM/12-8/19GE Model : Business Screen Matrix B u s in e s s S tr e n g th 5 H ig h M e d iu m Low 1 S e le c tiv ity / H ig h E a r n in g s M e d iu m Low 1 www.a2zmba.com By Prof. Havaldar
  • 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. www.a2zmba.com By Prof. Havaldar
  • IM/12-10/19DEVELOPING 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. D e s ir e d S a le s A S tr a te g ic S a le s P la n n in g g a p B C P r o je c t e d S a le s 0 T im e (Y e a rs ) 5 www.a2zmba.com By Prof. Havaldar
  • 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 nshouldc first revieww existing s C u rre t P ro d u ts N e P ro d u c t business, using Ansoff’s product-marketC u expansion r grid,e shown n hereafter t :d e v e l o p m e n t rre n t M a k e t P n e tra tio P ro d u cM a rk e ts S tra te g y S tra te g yN ew M a rk e t d e v e lo p m e n t ( D iv e rs ific a tio nM a rk e ts S tra te g y S tra te g y ) www.a2zmba.com By Prof. Havaldar
  • IM/12-12/19( B) Integrative Growth Strategyincludes increase in a firm’s sales andprofits by integrating backward, forward, orhorizontally within that industry.(A) Diversification growth strategy isconsidered when (B) & (C) strategies areinadequate to achieve desired growth andalso good opportunities are found outsidethe present businesses. www.a2zmba.com By Prof. Havaldar
  • IM/12-13/19STRATEGIC PLANNING PROCESS AT BUSINESS UNIT LEVELThe following steps are followed by the business – unithead.1. Defining the business unit’s 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) www.a2zmba.com By Prof. Havaldar
  • IM/12-14/19* PORTER’S Generic Strategies Framework for Businessunit L o w - c o s t p o s itio n In d u s try O v e ra ll c o s t D iffe re n tia tio n le a d e rs h ip w id e P a rtic u la r s e g m e n t o n ly Focus www.a2zmba.com By Prof. Havaldar
  • Marketing Planning Process IM/12-15/19 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. www.a2zmba.com By Prof. Havaldar
  • IM/12-16/19Business ( Industrial ) Marketing Plan1. Situational analysis. Market, competitive, product, and macro – environmental analysis.2. SWOT and Issues analysis3. Marketing Objectives and goals4. Marketing Strategy. Selection of target market segments, positioning, marketing mix, customer service and marketing research.5. Action plans / Tactics6. Marketing Budget www.a2zmba.com By Prof. Havaldar
  • IM/12-17/19IMPLEMENTATION OF MARKETING PLAN 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 www.a2zmba.com By Prof.deviations, if any (e) causes of Havaldar
  • IM/12-18/19SUMMARY OF CHAPTER 12 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 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. www.a2zmba.com By Prof. Havaldar