The document discusses business marketing, which refers to marketing products and services to business organizations rather than individual consumers. It covers key differences between business marketing (also called B2B marketing) and consumer marketing. Business marketing deals with marketing to organizations like manufacturing companies, government undertakings, private sector organizations, and educational institutions. These business customers purchase products and services for use in production and business operations. The document also discusses industrial demand, purchasing practices of different business customers, and strategies for managing the industrial marketing environment.

1. Business
Marketing

2. Nature of Business Marketing

3. What is Business Marketing?
Business marketing also referred to as “Industrial marketing” or “B2B marketing”
or “Organizational marketing”.
Business marketing is the marketing of products & services to business
organizations.
Business organizations include:
Manufacturing companies
Govt. undertakings
Private sector organizations
Educational institutions
Business organizations buy products
& services to satisfy many objectives
like production of other goods &
services, making profits, reducing
costs, & so on.
Hospitals
Distributors / Dealers
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Consumer marketing is the marketing
of products & services to individuals,
families, & households. The
consumers buy products & services
for their own consumption.
Business Marketing

4. B2B Marketing vs. Consumer Marketing
Areas
Industrial Markets
Consumer Markets
1. Market characteristics
• Geographically concentrated
• Relatively fewer buyers
• Geographically distributed
• Mass markets
2. Product characteristics
• Technical complexity
• Customized
• Standardized
3. Service characteristics
• Service, timely delivery &
availability is very important
• Service, timely delivery &
availability is somewhat
important
4. Buying behavior
• Involvement of various
functional areas in both buyer
& supplier firms
• Purchase decisions are mainly
made on rational/performance
basis
•Technical expertise
• Stable interpersonal
relationship between buyers &
sellers
• Involvement of family
members
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• Purchase decisions are
mostly made on physiological
/ social / psychological needs
• Less technical expertise
• Non-personal relationship
Business Marketing

5. B2B Marketing vs. Consumer Marketing
Areas
Industrial Markets
Consumer Markets
5. Channel characteristics
• More direct
• Fewer intermediaries
• Indirect
• Multiple layers of
intermediaries
6. Promotional
characteristics
• Emphasis on personal selling
• Emphasis on advertising
7. Price characteristics
• Competitive bidding &
negotiated prices
• List prices for standard
products
• List prices or maximum retail
price (MRP)
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Business Marketing

6. Industrial Demand
Demand
for new
homes
Derived Demand
The demand for industrial products & services does not exist
by itself. It is derived from the ultimate demand for
consumer goods & services.
Demand
for
furniture
Demand
for wood
Industrial customers buy goods & services for use in
producing other goods & services.
Joint Demand
Joint demand occurs when one industrial product is useful if
other product also exists.
Demand
for pen
Demand
for ink
Cross-Elasticity Demand
Demand is „elastic‟ if the %age change in quantity demanded
is more than the %age change in price.
Cross elasticity of demand is the responsiveness of the sales
of one product to a price change in another product.
Price of
Tea
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Business Marketing

7. ISB&M
Commercial
enterprise
Govt.
customers
Institutional
customers
Cooperative
societies
Business / Industrial customers
Industrial Market & Environment
Industrial
distributors / dealers
Original equipment
manufacturers
Users
Intermediaries / middlemen, reselling to OEMs,
users, Govt. firms
For Exide (battery manufacturer), Telco, is an OEM
For HMT, TVS-Suzuki is the ‘user’
Public sector units
BHEL, ONGC, IOL
Govt. undertakings
Indian Railways, Defence units, State Elec. Boards
Public institutions
Govt. hospitals, prisons
Private institutions
Schools, colleges
Manufacturing units
Maharashtra Sugar Cooperative Society
Non-manufacturing
units
Cooperative banks, housing cooperative societies
Business Marketing

8. ISB&M
Materials &
parts
Raw materials
Manufactured
materials
Component parts
Capital
items
Subassemblies
Light equipment or
accessories
Installations or heavy
equipment
Plant & building
Suppliers &
services
Industrial products & services
Industrial Market & Environment
Supplies
Services
Basic products like iron ore, crude oil, fish, fruits,
vegetables
Acids, fuel oil, steel, chemicals
Semi-finished parts like bearings, tyres, small
motors, batteries
Semi-finished goods like exhaust pipe in motorcycle
Hand tools, dies, computer terminals
Furnaces, machines, turbines
Offices, plants, warehouses, parking lots, real
estate property
Operating & maintenance suppliers like fuels,
packaging materials, lubricants, paints, elec. items
Legal, auditing, advertising, courier, marketing
research agency
Business Marketing

9. Marketing Implications for Different
Customer & Product Types
Materials & Parts products, for large OEMs or users, selling is done directly from a
seller organization to a buyer organization.
For smaller volume OEMs & users, standard raw materials or components are sold
through industrial dealers or distributors as it is cost effective.
If the components are custom-made, considerable interaction takes place between
technical & commercial persons from both buyer & seller organizations. Selling is
direct.
Industrial salesman remain in close touch with various departments like purchase,
finance, R&D, marketing, production & quality of buyer organizations as they
influence the buying or payment releasing decisions.
Personal contacts, product leaflets/brochures help as industrial marketer in
communicating product & other information.
For standard products, the factors which influence buying decisions are:
Product quality & performance
Delivery dependability
Customer service
Price
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Payment terms
Customer rapport
Business Marketing

10. Marketing Strategy for Capital Items,
Supplies & Services
Capital Items (heavy machinery, office buildings, construction of factories etc.)
Direct selling with extensive interactions, involving top executives from both sides.
Negotiations take considerable time on key factors such as price, ROI, credit facilities,
delivery period, installation time etc.
Personal selling is the primary promotional method used.
Suppliers
Direct selling is used for large-volume buying firms.
Distributors or dealers are used to market to diverse markets consisting of small & medium
size companies.
The purchase or materials department generally make buying decisions based on
dependable delivery, price, & location convenience.
Advt. in magazines, trade journals, local newspapers, & yellow pages are used to create
awareness of the company & its products to potential users & distributers/dealers.
Services (consulting, advising etc.)
Buying firms contact the selling firms who have their reputation by way of word-of mouth.
Continuation of service depends upon the quality, price, & timeliness of service.
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Business Marketing

11. Purchasing Orientations of Industrial
Customers
Business buyers choose one of the three purchasing orientations
Buying Orientation - Firms has narrow & short-term focus.
Lowest price
They follow the practice of Lowest Price where they select the lowest price
supplier.
Quality & availability are the “qualifying factors” for a supplier.
Negotiation style – “I win-you lose”.
Gain power
Buyer firm gain power over suppliers by applying tactics like Commoditization –
all suppliers provide similar technical services, product quality & product
features. Price is the only thing to be negotiated.
Multisourcing – the buyer firm asks quotations from various suppliers, & after
negotiations, places order with many suppliers, who compete to get more share of
buying firms purchase.
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Business Marketing

12. Purchasing Orientations of Industrial
Customers
Risk
Buyers avoid risk from buying from new suppliers. The tactics used for avoiding
risks are
• Follow the standard purchasing procedure of the company.
• Depend on suppliers who have proved their performance earlier.
Procurement Orientation – Purchasing firm has a strategic (i.e. long term) focus & is
proactive. The buyers seek both quality improvement & cost reduction.
Practices adopted by the company to fulfill the above objectives are:
Collaborative relationship with major suppliers
This results in quality improvements & cost reduction.
The buyer & supplier have inter-firm teams who implement JIT delivery
scheduling & quality assurance to attain zero defects level.
Integrative negotiation – resources can be expanded to benefit both buyer &
supplier.
Working closely with other functional areas
Buyers are involved in describing specifications of products & services ensuring
quality & timely availability.
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Business Marketing

13. Purchasing Orientations of Industrial
Customers
Supply chain management (SCM) Orientation – Focus is on how to improve the value
chain from raw-materials to end users.
Purchasing philosophy
Deliver value to end users
Using market research, the supply managers would understand the requirements
of end-users.
Outsource non-core activities
The firm would outsource those systems or sub-systems that have become non
competitive, are non-strategic, involve mature technology, & have qualified
suppliers.
Support collaborative relationships with major suppliers
Partnering relationship requires cooperation, communication, trust, &
commitment between buyers & suppliers.
The objective is to lower total cost and/or increase value in order to achieve
mutual benefit.
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Business Marketing

14. Purchasing Orientations of Industrial
Customers
SCM Orientation
Procurement Orientation
Buying
Orientation
Raw Material
Suppliers
Component
&
Subassembly
Suppliers
Intermediaries
(dealers)
Final
Assembly
Manufacturer
Consumers /
End users
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Business Marketing

15. Purchasing Practices of Industrial
Customers
Purchasing in Commercial Enterprise
Depends on nature of business, size of the enterprise, volume, variety, & technical
complexity of the products purchased.
In large/medium organizations, purchase decision involves persons from departments
like production, materials, quality, finance, engineering, & also senior management
executives.
Various techniques, such as material planning, supplier rating system, EOQ etc. are
used by the buyer organization.
Take use of in-house technical expertise when required.
Major tasks in purchasing process are:
Identifying potential suppliers
Negotiating & selecting suppliers
Ensuring right quality & quantity of material at right time
A long-term business relationship with the suppliers
Many commercial organizations have separated purchasing (material or purchase
function) from manufacturing to form a distinct functional area, on the same level as
marketing, finance, R&D etc.
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Business Marketing

16. Purchasing Practices of Industrial
Customers
Purchasing in Govt. Units
Get the name of the company & the products registered with the govt. units.
Registration involves the submission of duly filled standard forms, product leaflets, &
company details certified by a chartered accountant.
Some govt. units depute their inspectors to inspect the company‟s manufacturing
facilities before approving their registration.
For standard products & services, tender notices are advertised in national
newspapers, based on which suppliers procure tender fees.
In closed & limited tender, tender inquiry is to only few (limited) suppliers who are
registered with govt. unit for certain category of non-standard products.
Based on the lowest price or the lowest landed cost, the orders are released on the
lowest bidder.
If the tender value is large, maximum order is placed on the lowest bidder (L1) & the
balance order is distributed to more than two bidders (L2, L3, L4, .. etc) if they match
the lowest bid.
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Business Marketing

17. Purchasing Practices of Industrial
Customers
Institutional Purchasing & Purchasing in Cooperative Societies
Institutional buyers are either the government or the private organizations.
For govt. organizations, it normally follows the govt. purchase procedure.
An industrial marketer should study the purchasing practices of each institutional buyer
so as be effective in marketing the company‟s goods or services.
Purchasing in Reseller’s Market
Reseller market (replacement market) consists of industrial dealers/distributors whose
main goals are profits & sales volume.
Dealers / distributors select suppliers not only on product quality but also on the
policies of the supplier‟s product.
Supplier related policies which affect competiveness of traders are
Sharing local advt. cost by the supplier
Providing product leaflets or display materials
Competitive prices & trade discounts
Flexible payment terms with credit facility etc.
Both reseller & supplier has to work harmoniously to beat the competition.
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Business Marketing

18. Environmental Analysis in Business
Marketing
Air & water pollution, solid waste disposal,
conserving natural resources
Environment
Ecological &
Physical
Water, power, skilled manpower, low-cost
labor, transportation
Company location, R&D facilities, production
facilities, HR, Financial resources, marketing
effectiveness, reputation or image of the
company
Internal
Strength & weaknesses analysis
External
Micro
Affect a
particular firm
Opportunity & threat analysis
Macro
Affects all firms
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• Customers & competitors
• Suppliers
•
•
•
•
•
Economic
Technological
Govt. & political, & legal
Cultural & social
Public-press, institutional investors,
shareholders, banks, public interest groups
Business Marketing

19. Strategies for Managing Industrial
Environment
Effective use of marketing mix such as 4Ps are not adequate for the survival & success in
such a dynamic environment.
The first step is the continuous gathering & monitoring of information on the relevant
external environment. This is done by:
Collecting information on customers & competitors through marketing & field sales
persons.
Analyzing trade & govt. publications.
Carrying out marketing research & economic forecasting.
These activities help the company to:
Understand changes in customer needs.
Monitor competitor‟s actions & strategies.
Identify technological innovations.
Consider the changes talking place in govt., political, & legal factors.
Identify changes in demand of major customers & the total market.
Consider the changes in any other relevant environmental factors.
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Business Marketing

20. Strategies for Managing Industrial
Environment
The strategies to respond proactively & creatively for managing external environment
Independent Strategies: These are the independent efforts of an industrial firm by using
its own resources (or strengths).
Pricing strategy based on competitors pricing.
Product superiority through product development.
Carry env. protection measure & creates awareness through corporate image advt.
If the product is not performing well, a firm might decide to demarket in that
geographic region.
Cooperative Strategies: An industrial firm cooperates with other firms, industries, or
groups in the environment.
Industry associations like Confederation of Indian Industries (CII) & Federation of Indian
Chamber of Commerce & Industries (FICCI) protect the Indian industries from unfair
political or legal regulations of the govt.
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Business Marketing

21. Strategies for Managing Industrial
Environment
Strategic Planning: An industrial firm carries out strategic planning by identifying longterm product/markets, based on forecasts of external env., analysis of its strengths &
weaknesses, & its long-term objectives & goals.
Backward integration – A company seeks ownership or control of its supply system.
Eg., Set up new manufacturing plant for the product which earlier was procured from
other supplier.
Forward integration – A company seeks ownership or increased control on its
distribution system. Eg., open own branches with warehousing facilities, in place of
agents, in order to improve customer service.
Horizontal integration – A company seeks ownership or control of some of its
competitors. Eg., Reduce the competition by acquiring the management control of
some competing firm.
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Business Marketing

22. Organizational Buying & Buying Behavior

23. Purchasing Objectives
The purchase / materials management objective is defined as buying the right items in
the right quantity, at the right price, for delivery at the right time & place.
Delivery / availability – Purchased goods are delivered when & where it is needed.
Product quality – Consistent quality as per the specifications & product use.
Lowest price – Lowest price consistent with availability & quality of the product.
Services – Services accompanying the purchase of goods like:
Prompt & accurate information from suppliers
Technical assistance
Spare-parts availability
Repairs & maintenance capability
Training (if required)
Supplier relationship – Develop a good long-term supplier/vendor relationship & to
develop new sources of supply.
Buying members are influenced by both purchasing objectives of the firm & personal
objectives like higher status, job security, salary increments, promotions, & social
considerations (friendship, mutually beneficial relationships etc.)
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Business Marketing

24. Purchasing Activities
The industrial purchasing/buying activities consists of various phases/stages of buying
decision making process called ‘Buyphases’.
Phases in Buying Decision Process
Recognition of a problem or need.
Determination of the application or characteristics & quantity of needed product.
Development of specifications or description of needed product.
Early Supplier Involvement (ESI) Program: Involving purchasing persons as active
members of cross-functional development teams.
Search for & qualification of potential suppliers.
Obtaining & analyzing supplier potential.
Evaluation of proposals & selection of suppliers.
Selection of an order routine. – Placements of orders, quantity, frequency, levels of
inventory needed, follow-up of actual delivery to ensure delivery is as per schedule,
payment.
Performance feedback & post-purchase evaluation.
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Business Marketing

25. Supplier Evaluation System
Attribute (Factors)
Weight (Importance)
Supplier
performance
Supplier Rating
Quality
30
0.8
30 X 0.8 = 24
Delivery
25
0.4
25 X 0.4 = 10
Price
15
0.6
15 X 0.6 = 9
Service
20
0.6
20 X 0.6 = 12
Flexibility
10
0.2
10 X 0.2 = 2
Total
100
57
The supplier(s) who gets the highest total score receives the business or the order form
from the buying organization.
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Business Marketing

26. Supplier Evaluation - Balanced Scorecards
Technique
The Balanced Scorecard (BSC) Framework
Financial
To succeed financially,
Company should focus on
financial objectives that will
satisfy shareholders.
Customer
Which customer value
company should focus on to
achieve its mission?
Mission
&
Strategy
Internal-Business-Process
To satisfy shareholders &
customers, what business
process company must excel
at?
Learning & Growth
How can company improve &
change to achieve its
mission?
The BSC is a new technique or framework that can be used to evaluate supplier performance in
information age companies. It translates a company‟s mission & strategy into a set of performance
measurements.
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Business Marketing

27. Internal-Business-Process
Design & Develop
Product/Services
Make/Buy
Products/Services
Innovation Processes
Market
Products/Services
Operations Processes
Identify Customer
Needs & Market
Company executives should identify the key internal
processes in which the company must excel in order to –
• deliver superior customer value
Satisfy Customer
Needs
• satisfy shareholders with excellent financial
performance
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Business Marketing

28. Buying Situations
Three types of buying situations also called ‘buyclasses’.
New purchase (or New Task) – In this situation the company is buying the item for the
first time.
Risk is more
Decision takes longer time
More people are involved in decision making
Change in supplier (or Modified Rebuy) – This situation occurs when the company is not
satisfied with the performance of the existing supplier, or there is a need for cost
reduction or quality improvement.
Repeat Purchase (or Straight Rebuy) – This situation occurs when the buying
organization requires certain products or services continuously & when such
products/services has been purchased in the past.
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Business Marketing

29. Buying Centre or Decision making Unit
(DMU)
The buying center is a useful tool which answers the question – Who are involved in
buying decision in an industrial organization?
Buying Center Roles
Initiators – This category includes individuals who first recognize a problem or a need,
which could be resolved by purchase of a product or service. Often users play this role.
Buyers – Their major responsibility includes
Obtaining quotations
Supplier evaluation & selection
Negotiation
Processing purchase orders
Expediting deliveries
Implementing purchasing policies of the organization
They are usually purchase officers.
Users – Individuals who use the product or service that is to be purchased. They may be
floor workers, R&D engineers etc.
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Business Marketing

30. Buying Centre or Decision making Unit
(DMU) contd..
Influencers – People who can influence the buying decision like technical people (QC
engineers, design engineers etc.)
Deciders – People (Senior executives / purchase executives) who make the actual buying
decisions.
Gatekeepers – People who control/filter the flow of information regarding
products/services to the members of buying center.
Key members of Buying Centre
Top Management Persons (MD, President, VP, GM etc.)
Generally involved in • Purchase policy decisions like diversification into a new product/project
• Approval of purchase or materials department annual budgets & objectives
• Deciding the guidelines for purchase decisions
Technical Persons (Design Engr., Prod. Mgr., Maintenance Mgr., QC Mgr., R&D Mgr.,
Industrial Engr. etc.)
Generally involved in product specification, technical evaluation, negotiation with
suppliers, performance feedback of product supplied etc.
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Business Marketing

31. Buying Centre or Decision making Unit
(DMU) contd..
Key members of Buying Centre
Buyer/Purchasers or Purchase Dept. (Sr. Exe., Managers, Purchase Officers or
assistants)
Generally involved in • Coordinate with Top Management, Technical persons, Finance persons within
the org. as well as with suppliers.
• Maintain good relationship with Suppliers & Decision making members.
Accounts/Finance Persons (or Dept.)
The contribution of finance/accounts are seen while finalizing commercial terms
such as mode of payment, financial approval of capital purchases, issuing payments
to suppliers etc.
Marketing Function
Ensure the product is marketable (packaging).
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Business Marketing

32. Models of Organizational Buying Behavior
- The Webster and Wing Model
Environmental Variables
• Physical
• Technological
• Economic
• Political & legal
• Labor unions
• Cultural
• Customer demands
• Competitive practices &
pressures
• Supplier information
Individual Variables
• Personal Goals
• Education
• Experience
• Expertise
• Values
• Job Position
• Lifestyle
• Income
Organizational Buying Decisions
• Choice of suppliers
• Delay decision & search for more
information
• Do not buy
Organizational Variables
• Objectives/goals
• Organization structure
• Purchasing policies & procedures
• Evaluating & reward systems
• Degree of decentralization in
purchasing
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Buying Centre Variables
• Authority
• Size
• Key influencers
• Interpersonal relationship
• Communication
Business Marketing

33. Models of Organizational Buying Behavior
- The Sheth Model
Component (1)
Component (2)
Component (3)
Differences among
individual buyers
caused by factors:
• Background of
individuals
• Their
information
sources
• Active search
• Perceptual
distortion
• Satisfaction with
past purchases
Variables that
determine if the
buying decision is
autonomous or
joint:
Methods used for
conflict resolution in
joint-decision making
process
• Problem solving
• Persuasion/influence
• Politicking
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(A) Product specific
factors • Time pressure
• Perceived risk
• Type of purchase
(B) Company
specific factors –
• Company size
• Company
orientation
• Degree of
centralization
Situational Factors
Supplier or
Brand choice
Situational Factors
• Economic condition
• Labor disputes
• Mergers & acquisition
Business Marketing

34. Buyer-Seller Relationship

35. Buyer-Seller Relationship
Development of mutually satisfying, profitable, long-term relationships with
customers is a major business asset of an industrial marketer.
Buyer’s
perception of
sales rep
Is the
industrial
buyer rational
or irrational
Dimensions
of BuyerSeller
Relationship
Role played
by industrial
buyer
Role played
by industrial
sales rep
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Business Marketing

36. Buyer-Seller Interaction – A Conceptual
Framework
Compatible Style
Incompatible Style
Compatible
Content
Incompatible
Content
Interaction
Oriented
Task
Oriented
Selforiented
Styles of interaction
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Business Marketing

37. Relationship Marketing
Relationship marketing is a task of creating strong customer bond or loyalty.
Transaction marketing is
Add financial
benefits
transaction oriented buyer-seller
interaction, which focuses on
Add structural
ties to
financial &
social
benefits
closing a sale with a customer.
Approaches
for
developing
customer
bond
This is achieved by single sales
person.
Add social
benefits
For large customer, companies
are moving towards team selling
& relationship marketing.
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Business Marketing

38. Methods used to influence Industrial
Customers
Sales Presentation
Get information about the buying centre members, needs of potential customer
firms.
A sales presentation must be tailor made to fit the needs & expectation of the
potential customer.
A sales presentation should first present the positive points about his products,
services & company, & keep difficult or negative points at the en.
Project the products/services as differentiator.
Negotiation with Industrial Customers
Negotiation is a process that tries to maximize the benefits to both buyer & seller,
& takes long-term view of their relationship.
Purpose | Information | Customer Trust | Styles of negotiation | Time factor
Styles of negotiation
I win, you lose | Both of us win | You win, I lose | Both of us lose
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Business Marketing

39. Methods used to influence Industrial
Customers contd..
Reciprocity
It is a practice of buying from one’s own customers & also using purchasing power
to sell to one’s supplier.
When products are homogenous or products have little differentiation & price
competition are less, reciprocal dealings are likely to occur.
Caution must be exercised to keep it to minimum level.
Dealing with Customer’s Customer
One of the complexities in Industrial marketing is the need to deal with a
customer’s customer & become the customer’s competitor.
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Business Marketing

40. Customer Service
In B2B, customer service is sometimes more important
than the physical product.
Customer service supplements the sales of physical product &
creates a total value for a customer.
The nature of customer service varies with the type of
the product & the stage of PLC.
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Business Marketing

41. Types of Relationship
Transactional
Exchanges or
Relationships
• It include one-time-only exchanges with economy & necessity as the main
motivation factors.
• Customers prefer a transactional relationship, when (a) many suppliers are
available, (b) the supply market is stable, (c) the purchase decision is not
complex, & (d) the purchase is considered as less important to meet firm’s
objective.
Value-added
Exchanges
• The focus is on complete understanding of the present & future needs of the
customer, & meeting those needs better than competitors, so as to obtain a
maximum share of the customer’s business.
Collaborative
/ Partnering
Exchanges
• The focus is between a customer firm & a supplier firm, & it is the process of
building strong social, economic, service, & technical ties over a period of time.
• The purpose of partnering is to lower the total cost or increase value, in order
to achieve mutual benefits.
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Business Marketing

42. Marketing Strategies
Concentrated Marketing - is a market segmentation and market coverage strategy
whereby a product is developed and marketed for a very well-defined, specific segment of
the consumer population. The marketing plan is highly specialized one catering to the needs
of that specific consumer segment. Concentrated marketing is particularly effective for small
companies with limited resources because it enables the company to achieve a strong
market position in the specific market segment it serves without mass production, mass
distribution, or mass advertising.
Differentiated Marketing - also called multisegment marketing. It is a market
coverage strategy whereby a company attempts to appeal to two or more clearly defined
market segments with a specific product and unique marketing strategy tailored to each
separate segment.
Undifferentiated Marketing - market coverage strategy whereby a company ignores
differences within a market and attempts to appeal to the whole market with a single basic
product line and marketing strategy. Undifferentiated marketing relies on mass distribution
and mass advertising, aiming to give the product a superior image in the minds of
consumers. It is cost effective because there is only one product line to be produced,
inventoried, distributed, and advertised. Also the absence of segmented market research
lowers the costs of consumer research and product management.
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Business Marketing

43. Marketing Strategies
4 criteria - mostly used in Business Marketing:
Technological Contributions
Dependence
Purchasing Orientations
Sales Potential (or Business Potential)
Information for each customer is obtained by the sales person
Customer are categorized into A, B, & C based on high, medium, & low
business potential
• Type A – Collaborative relationship
• Type B – Value-added
• Type C – Transaction relationship
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Business Marketing

44. B2B Marketing through E-commerce

45. What is E-commerce?
E-commerce is defined as a modern business methodology that addresses the needs of
organizations & consumers to cut costs, improve the quality of goods & services, &
increase the speed of service.
It is also defined as the process of using digital technology for transmitting information
between organizations.
Important parts of E-commerce
Internet
World Wide Web (WWW)
Intranet
Extranet
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Business Marketing

46. Marketing Strategy for Electronic Market Place
Major Components of Marketing Strategy
Segmenting & Targeting
Product Differentiation & Positioning
Identifying the target customers’ wants in terms of major benefits
Selecting one or more benefits or niche for differentiation based on
company’s strengths or distinctive competencies
Communicating the company’s positioning to the target market
Marketing-mix Strategies, i.e., Product, Price, Promotion & Distribution Strategies
Web-design
Domain name
Distribution channel
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Business Marketing

47. Logistics

48. Distribution Channels
Manufacturer
Mfg’s Rep /
Agents
Mfg’s Sales
force /
Branches
Distributor
/ Dealer
Valueadded
Resellers
Distributor
/ Dealer
Direct
Marketing
Telemarketing
Direct Mail
Brokers
Commission
Merchants
Online
Marketing
Industrial Customers
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Business Marketing

49. Channel Design Framework
Channel Objective
Channel tasks
Channel Constraints
External
environment
Competition
Company
Product
Characteristics
Customer
Channel Alternatives
Evaluation of Alternative
Selection of Channel
Economic factors
Control factors
Adaptive factors
ISB&M
The type of
intermediaries
• VARs
• Industrial distributors /
dealers
• Manufacturer’s agents
• Brokers
• Commission merchants
No. of intermediaries /
channels
• Selective distribution
• Intensive distribution
• Exclusive distribution
Terms & responsibility of
channel members
Business Marketing

50. Logistics Management – Business Logistics System
Physical supply
Industrial manufacturer
Raw materials
Components
Material Storage
Supplies
Manufacturing
Finished goods
storage
Physical distribution
Tasks
Transportation
Warehousing
Inventory control
Packaging
Material handling
Order processing
Communication
Factory & warehouse
locations
Customer service
Industrial customers
Industrial distributors /
dealers
Total Distribution Cost = Freight + Warehouse Cost + Inventory Cost + Cost of Lost
Sales due to Delayed Delivery
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Business Marketing

51. Marketing Research & Intelligence

52. Marketing Research & Marketing Intelligence
Marketing research is defined as the objective & systematic process of obtaining,
analyzing, & reporting of data (or information) for decision making in marketing. It
undertakes periodic projects to collect & analyze data with specific objectives.
Marketing Intelligence is an ongoing activity to provide continuous information for
decision making.
Difference between survey method
Areas of survey methods
Industrial Research
Consumers Research
Sample size
Small sample due to small
universe (or population) &
concentration of buyers
Large sample due to large
dispersed population
Respondent cooperation &
accessibility
More difficult due to time
constraints; accessibility is
limited to working hours
Less difficult to obtain data;
accessibility is easier
Defining respondent
More difficult as buying
decisions are made by several
members of the buying
committee
Simple, as individuals or
household users are the buyers
ISB&M
Business Marketing

53. Scope of Industrial Marketing Research
Development of Market potential
Market Share Analysis
Sales Analysis
Forecasting
Competitor Analysis
Benchmarking
New Product Acceptance &
Potential
Business Trend Studies
Sales Quota Determination
ISB&M
Business Marketing

54. Marketing Research Process
Identify the
problem /
opportunity &
define research
objective
Develop research
design (or plan)
Information
type
Sources of
data
Research
methods
Sampling plan
Method of
contacts
Data collection
method
ISB&M
Collect the data (or
information)
Primary data
Process & analyze
the data
Present the
research findings
(or report)
Observational | Exploratory | Survey |
Experimental
Secondary data
Business Marketing

55. Industrial marketing Intelligence
Marketing
research
studies
Secondary
data
sources
Marketing
Intelligence
System
Decision
Support
System
Marketing
Strategy
Development
Market
response
Internal
Information
System
ISB&M
Business Marketing

56. Components of DSS
Action
Marketing Manager
Question
Answer
Decision
models
Statistics
Display
Database
Environment
ISB&M
Business Marketing

57. Strategic Planning, Implementing &
Controlling

58. Market-Oriented Organizations
Market-oriented organizations stay
close to the customers & ahead of
the competitors.
Shared
Values
They understand the basic principle
that the purpose of a business is to
attract & satisfy customers at a
profit.
An effective strategic planning
includes market-oriented strategies
in which marketing function has an
important role.
Stakeholders
Organization
Strategy
Factors Affecting the Market Orientation
ISB&M
Business Marketing

59. Marketing in Strategic Planning
Strategy hierarchy
(Type of management)
ISB&M
Organization
structure
Business Marketing

60. Role of Marketing in an Organization
Organizational Level
Role of Marketing
Formal Name
Corporate
Provide information on competition & customer,
& advocate customer orientation for developing
long-term corporate strategy
Corporate
marketing
Business Unit / SBU
Provide competition & customer analysis for
developing long-term business strategy, including
competitive advantage
Strategic
marketing
Develop segmenting, targeting, & positioning
strategies
Take product-line decisions
Functional
Evolve & implement marketing-mix strategy in
short-term to achieve business unit objective
Marketing
management
Coordinate marketing activities
Allocate resources
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Business Marketing

61. Developing Corporate Strategies
Strategic planning gap is
filled by:
Current products
New products
Intensive growth
Integrative growth
Diversification growth
Current
markets
Concentric diversification: consists
of searching for new products that
have technological / marketing
synergies with firm’s existing
products.
Horizontal diversification: consists
of adding new products
technologically unrelated to the
existing products.
New
markets
Conglomerate diversification:
consists of seeking new productmarkets that are unrelated to
existing products.
ISB&M
Business Marketing

62. Strategic Planning Process at BU Level
Define the business unit’s mission
Scanning the ext. env. (Opportunity & threats)
Analysis of the int. env. (Strength & weaknesses)
Developing objectives & goals
Formulating strategies for achieving the goals
Preparing programme or action-plan from the strategies
Implementing the strategies & action-plan
Monitoring results & taking corrective actions (i.e., control)
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Business Marketing

63. Business Unit’s Mission
The business mission statement should have the following components:
What business the company is in, & What business it intends to be in?
What methods would be uniquely followed (which are different from competitors) in
pursuing business activities?
What is the social standing of the organization as a business entity?
What business the company is in? [Thermometer manufacturer]
Customer groups/segments: Who are being satisfied? Which customer groups an SBU
intends to satisfy? [Household/Hotels/Health care/ Factories]
Customer needs or functions: What needs of customers are being satisfied? [Body
temperature/Cooking temperature/Atmospheric temperature/ Process temperature]
Technologies used: How customer needs are satisfied? [Mercury-base/Alcoholbase/Digital]
ISB&M
Business Marketing

64. SBU’s Objective & Goals
Corporate mission
Corporate objectives & goals
SBU Mission
SBU objectives & goals
Company history
SBU’s business strategy
Current preferences
Market environment
Marketing strategy
Company’s resources
Company’s core competence
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Business Marketing

65. Formulating Strategies at BU Level
Porter’s Generic Strategies Framework
Strategic Advantage
Strategic Target
Uniqueness perceived
by the customer
ISB&M
Low-cost position
Industry wide
Particular
segment only
Business Marketing

66. Developing Industrial Marketing Plan
Section
Contents
Situational analysis
Market situation
Includes data on market size, growth, projections, sales,
market share , & profits for past 3/5 years. It also indicate
target customer needs, buying behavior, buying stage, &
buying situations.
Competitive situation
Consists of identifying, ranking, market share, objectives
& strategies, strength & weaknesses, & reaction patterns
of major competitors.
Product situation
Includes data on sales, unit price, profits for each major
product item in the product line for past 3/5 years.
Macro-env. situation
Consists of identifying PEST factors & then forecasting
the future trends & the impact on the product.
SWOT analysis
Includes identifying major strengths, weaknesses,
opportunities, & threats faced by the product.
Issues analysis
Consists of determining major issues faced by the firm,
based on situational & SWOT analysis.
SWOT & issues
analysis
Objectives & goals
ISB&M
Determine sales, market share, & profit, considering the
env. & issues analysis done earlier.
Business Marketing

67. Developing Industrial Marketing Plan
Section
Contents
Marketing strategy
Selection of target market segments.
Positioning strategy relative to competitors.
Marketing-mix strategy.
Customer service & marketing research strategy.
Action plan
Each marketing element is broken down to specific actions to answer:
Who will take the specific action, by when, & at what cost?
Marketing budget
Building the revenue & expenditure budget. Revenue budget includes
forecasted sales in units, average unit price, & sales revenue. Expenditure
budget includes estimated marketing expenses on personal selling,
promotion, distribution, etc.
Implementation & control
Building marketing org. to implement the marketing plan. Control
includes periodic review of actual performance against goals & taking
corrective actions.
Contingency plans
Some firms prepare contingency plans in case uncertain situation arise.
ISB&M
Business Marketing

68. Controlling Marketing Performance
Setting Goals
Performance
Measurement
Performance Analysis
Taking Corrective
Actions
ISB&M
Business Marketing

69. Types Marketing Controls
Strategic Control
(Marketing audit)
Annual Plan
Control
Efficiency Control
Profitability
Control
ISB&M
•
•
•
•
The firm’s marketing opportunities & strategies
Use of information technology
Impact of changing environment
Strategy implementation
• Sales analysis
• Market share analysis
• Expense-to sales ratio
• Profit/contribution analysis
• Customer satisfaction monitoring
• The control system provides information on the
resources like money & manpower used in product,
promotion, distribution, & pricing strategies &
tactics
• Purpose is to find if the company is making or loosing money
• Companies measure the profitability of each product-line & productitem, each market segment, each branch, & each distribution
channel
Business Marketing

70. Product Strategy & New Product
Development

71. What is an Industrial Product?
The industrial product is defined not only as a physical entity, but also as a complex
set of economic, technical, legal, & personal relationship between the buyer & the
seller.
From customer’s point of view, a product is a
combination of basic, enhanced, & augmented
properties.
Basic properties are included in the
generic product, with fundamental
benefits sought by the customer.
Generic products are made differentiable
by adding tangible enhanced properties
like product features, styling, & quality.
Augmented properties include intangible
benefits such as technical assistance,
availability of spare parts, maintenance &
repair services, warranties, training,
timely delivery, & attractive commercial
payment terms.
ISB&M
Business Marketing

72. Changes in Product Strategy
Customer
Needs
Technology
Factors
determining
change in
product
strategy
PLC
Govt.
Policies /
Law
ISB&M
Business Marketing

73. Industrial Product Life Cycle – General Model
Industrial products typically follow the
pattern of sales & profits.
The behavior of PLC depends on
three factors on which
management has little or no
control.
Different marketing strategies are needed
at different stages of PLC.
Changing
needs of
customer
Technological
Changes
Changing
Competition
Sales & Profits
(Rupees)
The PLC concept highlights the importance
of long-term planning for a new product.
+1
0
-1 Introduction
Industry
sales
Industry
profits
Growth
Maturity
Decline
Time
ISB&M
Business Marketing

74. Sales
Industrial Product Life Cycle – High-tech Products
Time
NPD
I&G
M
Decline
NPD = New Product Development
I&G = Introduction & Growth
M = Maturity Period
ISB&M
Business Marketing

75. Locating Industrial Products in their LifeCycle
Develop a trend analysis for the past 3-5 years based
on information for a product on quality, value of
sales, profit %, market share, no. of competitors &
prices.
Analyze competitors’ market share, product
performance, new product introduction,
diversification or expansion plans.
Estimate & project sales & profits of the
product over the next 3-5 years.
From the above analysis, fix the product’s
position on its life-cycle curve.
ISB&M
Business Marketing

76. Developing Product Strategies for Existing
Products
Evaluate the performance of all existing products or product
lines by using product evaluation matrix.
By using perceptual mapping technique, examine the
relative strengths & weaknesses of the company’s products
in comparison to competitors’ products.
Based on the above analysis, decide the product strategies
for the existing products.
ISB&M
Business Marketing

77. Product Evaluation Matrix
Company Sales
Profitability
Below
Industry Mkt
Target
Sales
Share
Decline
Target
Stable
Above
Target
Below
Target
Target
Growth
Above
Target
Dominant
Growth
Average
Dominant
Average
Marginal
Dominant
Decline
Average
Target
Above
Target
P
Marginal
Stable
Below
Target
S1
Product ‘P’ (Last 3 years)
Market Share = 40%
Company Share = 30%
Industry Sales = 25%
Profitability = as / target
S
Product ‘S’ (Last 3 years)
Market Share = 12%
Company Share = 15%
Industry Sales = 16%
Profitability = below target
Marginal
Market Share less than 10% = Marginal
Market Share between 10% to 30% = Average
Market Share greater than 30% = Dominant
ISB&M
Business Marketing

78. Perceptual Mapping Technique
High Quality
B*
This technique is used to study
the strengths & weaknesses of
a firm’s product in comparison
to that of its competitors.
A1*
A*
Old
Position
Strong Service
Weak Service
C*
New
Position
Deciding Product Strategies
Maintain the product & its
marketing strategy.
Modify the product &
change the marketing
strategy.
Eliminate the product or
product line.
Low Quality
ISB&M
Add new products or
product lines.
Business Marketing

79. Product Elimination
Dropping the product or product line is the most controversial decision as many
stakeholders are threatened by this decision.
Factors to be considered:
Will the customer relationships be affected?
Will the profitability be affected due to change in overhead allocation?
What will be the reaction of the employees?
Will the sales of other products get affected?
Is there a new product to replace the eliminated product?
Will the company’s image be affected?
What will be the possible competitive reactions?
ISB&M
Business Marketing

80. New Product Development
Classification of New Products:
Products that are innovative & new to
the world.
Products that are new to the
company, but not new to the world.
Revisions or improvements to the
existing products in the existing
markets.
Additions to the existing product lines
with additional markets.
Repositioning existing products to
new market segments.
Products with substantial cost
reductions without reduction in
performance.
ISB&M
Business Marketing

81. New-Product Development Process
Is the new product in line with the
long-term objectives & strategies?
Do we have adequate resources?
Is it useful to the customers?
What is the future growth, market
size, & competition?
A detailed version of the
product idea that is
stated in a meaningful
customers’ terms.
The purpose is to develop an
estimated projection of the
sales, costs, & profitability of
the new product for 5-7
years.
Design
Process Engr.
Final product
Tooling
Mfg
Testing
Alfa & Beta testing
Introduction at trade shows
Testing at distributors/dealers
showroom
Test marketing
ISB&M
Business Marketing

82. High-Tech Marketing
High-Tech includes a wide range of industries such as telecommunications, computers,
software, biotech, & consumer electronics.
Two major characteristics that
distinguish hi-tech marketing are:
Product
Technology
High Technological Uncertainties
High Market Uncertainties
Other characteristics that
distinguish hi-tech marketing are:
Technology
High Competitive Volatility
Management
Technology
Process
Technology
Short life or High-tech products
High Development Cost
ISB&M
Business Marketing

83. High Technological Uncertainties
Will the product function as promised?
Will the promised delivery be met?
Will the supplier give high quality service?
Will there be a risk of obsolescence?
Will there be any side effects of the new Product/Service?
ISB&M
Business Marketing

84. High Market Uncertainties
Which are the customer needs that new technology can meet?
How will needs change in future?
Will the market accept technical standards?
How fast will the innovation spread?
What is the size of the potential market?
ISB&M
Business Marketing

85. Technological Uncertainty
Classification of Marketing Situations
Low-tech marketing includes known
technology applications to meet
clear & well known market needs.
E.g., Pump sets
High
Hi-fashion marketing consists of
known & slow changing technology
applications to meet difficult to
predict consumer needs. E.g.,
Motion pictures, fashion clothes.
Hi-tech marketing consists of
difficult to predict both technology
applications & market. E.g.,
Biotechnology products.
Low
Low
High
Market Uncertainty
ISB&M
Better mousetrap marketing
includes a new technology to meet
well-established market. E.g., Water
purifying system.
Business Marketing

86. Technology Adoption Life Cycle
Early majority
(34%)
Early adaptors
(14%)
Late majority
(34%)
Laggards
(16%)
Innovators
(3%)
Time of Adoption of Innovation
ISB&M
Business Marketing

87. Unique nature of High-tech Marketing
Strategy
Target a Niche
market
Plan Whole
Product
Properties
Develop
Partnerships
Distribution
Strategy
Communication
Strategy
Unique
Positioning
Strategy
Pricing Strategy
ISB&M
Business Marketing

88. Business Communication

89. Steps to Develop Effective Communication
Determine the communication objectives
Identifying the Target Audience
Determining the Promotional Budget
Develop the Message Strategy
Select the Media
Evaluate the Promotional Results
Integrate the Promotional Programme
ISB&M
Business Marketing

90. Role of Advertising in Industrial Marketing
Creating awareness
Reaching members of buying centre
Increasing sales efficiency & effectiveness
Efficient reminding
Sales lead generation
Supporting distribution channel members
ISB&M
Business Marketing

91. Promotional Tools & Media
Promotion
Tools
Advertising
Sales
Promotion
PR & Publicity
Direct
marketing
Personal
Selling
Promotion
Media, &
Promotion
Support
Print media
Trade shows
Charitable
donations
Direct mail
Sales calls
General business
publications
Exhibitions
Adopting
villages
Telemarketing
Sales
presentation
Trade journals
Catalogues
Community
relations
On-line
marketing
channels
Team selling
Industrial
directories
Sales contests
News item in
press
Relationship
marketing
Promotional
novelties (gifts)
Seminars
Promotional
letters
Entertainment
ISB&M
Business Marketing

92. Pricing Strategies & Policies

93. Pricing & Factors Influencing Pricing
Decision
Pricing is the process of
determining what a company will
receive in exchange for its products.
Pricing factors are manufacturing
cost, market place, competition,
market condition, and quality of
product.
Pricing objectives
Survival
Maximum short-term profits
Maximum short-term sales
Maximum sales growth (Market
penetration)
Maximum marketing skimming
Product-quality leadership
Demand analysis
Cost analysis
Break-even analysis
Competitive analysis
Government regulations
Price discrimination
Predatory pricing
ISB&M
Business Marketing

94. Cost Behavior at Different Production Levels
– Economies of Scale
Cost / Unit (in rupees)
300
200
100
0
100
200
240
300
Quantity Produced / Year (in thousand)
ISB&M
Business Marketing

95. The Pricing Strategies
Competitive bidding in competitive markets
Probabilistic bidding
Pricing new products
Skimming strategy
Penetration strategy
Pricing across the product life-cycle
Growth stage pricing
Maturity stage pricing
Decline stage pricing
ISB&M
Business Marketing

96. Thank You