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CLASSIFICATION OF
INDUSTRIAL PRODUCTS
&
INDUSTRIAL MARKETING
ENVIRONMENT
Presentation by
ASHUTOSH SINGH
“Individuals and organizations that acquire goods
and services to be used, directly or indirectly, in
the production of other goods and services or to
be resold.”
INDUSTRIAL PRODUCTS
Classification is done on the basis of
three broad groups:
• Material and Parts
• Capital Items
• Supplies and Services
1. MATERIAL AND PARTS
Goods that enter the product directly. The cost of
these items are treated by the purchasing company
as the part of manufacturing cost. Material and
parts are further segregated into three parts that
are:
 Raw Materials
 Manufacturing Materials
 Component Parts
Raw Material: These are the basic products which enter
into the production process with little or no alterations.
They may be marked to user customers or OEMs
(Original Equipment Manufactures). Such as iron ore,
crude oil, vegetables.
Manufactured Materials: That also includes those raw
materials that are subjected to some amount of
processing before entering the production process. Such
as acids, fuel oil, steel and chemicals.
Component parts: These are the semi finished parts
that can installed directly into the products with little or
no additional change. Such as small motors, batteries
and tyres.
2. CAPITAL ITEMS
Capital items are those which are used in the
production process. They are normally treated as
user customers. Capital items are classified into
three groups:
Heavy equipments
Light Equipments
Plant and Buildings
Heavy Equipments: These are the major and long term
investments such as general purpose and special purpose
machines, turbines, generators and earth moving
equipments.
Light Equipments: Light equipments and tools which have
lower purchase prices and are not considered as the part of
heavy equipment such as typewriters, computers and small
electric motors.
Plants and Buildings: These are the real estate property
of the company. It includes the firm offices, plant,
warehouses, warehouses and parking lots.
3. SUPPLIES AND SERVICES
Supplies and services support the operations of the
purchasing organization. They are not consider as
the part of the finished goods. They are further
segregated into two parts:
Supplies
Services
Supplies: These items are generally standardized and
are marketed to a wide cross section of industrial
users. Such as paints, oils, greases, pencils,
stationary etc.
Services: Company needs a wide range of services like
building maintenance services, auditing services, legal
services, courier services and many more.
10
Materials and parts
1. Raw materials ( natural gas, HDPE etc.)
2. Manufactured materials ( copper wire, steel sheets )
3. Component parts ( switches, motors or customized gears )
Characteristics : Normally large custom made orders are sold
By the manufacturers & standard products by industrial distributors.
Organizational Customer
Based on Type of products purchased
11
Capital Items
1. Installations ( buildings, computers, machinery etc.)
2. Accessories ( PC, Office furniture)
Characteristics: Normally major installations, because of
extensive interaction required and long negotiation time required,
the manufacturers deal directly with the customer & accessories are
sold by industrial. distributors.
Organizational Customer
Based on Type of products purchased
12
Supplies and services
1. Supplies ( soaps, stationery etc.)
2. Services ( maintenance, canteen etc.)
Characteristics : Normally industrial distributors are used &
services are provided by the individual contractors ).
Organizational Customer
Based on Type of products purchased
13
Industrial Market Vs Consumer Market
Market Structure
Industrial Market
Geographically concentrated
Fewer buyers (relatively)
Big buyers
( small number of large buyers)
Consumer Markets
Geographically dispersed
Mass markets
Free Market
(large number of buyers)
14
Industrial Market Vs Consumer
MarketBuyer Behavior
Industrial Market
*Evaluated for functionality
rational/task motive to buying.
*Purchasers are experts & focus
is more on performance/service.
*Higher interaction with the
supplier.
* Formal processes.
Consumer Market
*Social / psychological
factors are important.
*Family involvement & focus
more on product per se.
*Nor personal relationship
with the supplier.
* Less of formal processes.
15
Industrial Market Vs Consumer
MarketProducts
Industrial Market
* Technical complexity and
customized.
* Service, delivery and
availability is very
important.
Customer Markets
* Standardized.
*. Service, delivery and
availability is somewhat
important.
16
Industrial Market Vs Consumer Market
Distribution channel characteristics
Industrial Markets
* Shorter, more direct &
fewer linkages between seller
and buyers.
Consumer Markets
* Indirect and multiple
linkages
17
Industrial Market Vs Consumer Market
Promotion
Industrial Markets
* Emphasis on personal selling
or one to one dealing.
Example : Selling fridges
with new technology.
You go and deal
with Coke or Pepsi H.O.
Consumer Markets
* Emphasis on mass market
promotion.
Example : You plan an adv.
campaign to highlight decals
and generate customer flow.
18
Industrial Market Vs Consumer Market
Pricing
Industrial Markets
* Competitive bidding &
multistage negotiation.
* Sharing of cost data &
budgeting of acceptable
profits in many cases.
Consumer Markets
* Normally MRP & MOP
* Concept of list price & its
implementation.
19
Industrial Marketing Environment
Buyer
Seller
Interface
Publics
Macro Environment
Govt. influences
20
Industrial Marketing Environment
Buyer seller interface
Labour
Capital
R.M.
Components
Equipment
Mafg.
Dist. /
Dlrs.
Compt.
Manufacturer’ rep
Dist / Dlrs
Transporters
Warehousing firms
Mktg. Research firms
Bankers & insurers
Suppliers Buyers Facilitators Market
segments
Govt.
Commercial
Enterprises
Industrial
Distributors
21
Industrial Marketing Environment
Publics
1. Financial publics – FI / Stockbrokers / Individual Stock Holder
( Stock prices, confidence in company )
2. Independent press – Impact on reputation of company
( Dhabol power corporation )
3. Public interest groups – Environmentalists
( Euro II , CNG vehicles, Narmada bachao)
4. General publics – MacDonald's coating French fries with beef
tallow
Business serves the society
22
Industrial Marketing Environment
Macro Environment
1. Economics - Increased demand for oil led to increase in prices
of oil in the world markets. Changes the cost base of most
oil based companies. Also changed the demand pattern of
automobile ( petrol to diesel ).
Government policies like subsidizing diesel at the cost of petrol.
2. Ecological influences - The concern for the environment
so emission norms are stringent & industry has to adjust.
Bhopal gas tragedy, changes in the law to use MIC as an
intermediary.
“Right to Know”  Companies have to furnish details of the
hazardous products made & used by them.
23
Industrial Marketing Environment
Macro Environment
3. Physical environmental Influences – Steel plants need iron
ore, water & lime stone deposits for setting up. MP, Bihar and
Orissa have the concentration of steel plants.
.
4. Politico / Cultural influences – Hire and fire policy of west Vs
militant trade unionism & job protection in India.
5. Technological influences – Typewriters manufacturers had
to shift market focus, change products etc after PC’s and word
processors became common.
24
Industrial Marketing Environment
Macro Environment
6. Government influences –
Anticipating governments action: WTO treaty signing
and IMF loans linkages for govt. The govt. needs the
loan so it is likely to sign the treaty.
Influencing Govt. actions: Lobby for reduction in excise
duty (to create level playing field).
Lifting of Liquor ban in A.P. ( a lot of lobbying ).
CNG buses for Delhi ….
THANKS…

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CLASSIFICATION OF INDUSTRIAL PRODUCTS AND INDUSTRIAL MARKETING ENVIRONMENT

  • 1. CLASSIFICATION OF INDUSTRIAL PRODUCTS & INDUSTRIAL MARKETING ENVIRONMENT Presentation by ASHUTOSH SINGH
  • 2. “Individuals and organizations that acquire goods and services to be used, directly or indirectly, in the production of other goods and services or to be resold.” INDUSTRIAL PRODUCTS
  • 3. Classification is done on the basis of three broad groups: • Material and Parts • Capital Items • Supplies and Services
  • 4. 1. MATERIAL AND PARTS Goods that enter the product directly. The cost of these items are treated by the purchasing company as the part of manufacturing cost. Material and parts are further segregated into three parts that are:  Raw Materials  Manufacturing Materials  Component Parts
  • 5. Raw Material: These are the basic products which enter into the production process with little or no alterations. They may be marked to user customers or OEMs (Original Equipment Manufactures). Such as iron ore, crude oil, vegetables. Manufactured Materials: That also includes those raw materials that are subjected to some amount of processing before entering the production process. Such as acids, fuel oil, steel and chemicals. Component parts: These are the semi finished parts that can installed directly into the products with little or no additional change. Such as small motors, batteries and tyres.
  • 6. 2. CAPITAL ITEMS Capital items are those which are used in the production process. They are normally treated as user customers. Capital items are classified into three groups: Heavy equipments Light Equipments Plant and Buildings
  • 7. Heavy Equipments: These are the major and long term investments such as general purpose and special purpose machines, turbines, generators and earth moving equipments. Light Equipments: Light equipments and tools which have lower purchase prices and are not considered as the part of heavy equipment such as typewriters, computers and small electric motors. Plants and Buildings: These are the real estate property of the company. It includes the firm offices, plant, warehouses, warehouses and parking lots.
  • 8. 3. SUPPLIES AND SERVICES Supplies and services support the operations of the purchasing organization. They are not consider as the part of the finished goods. They are further segregated into two parts: Supplies Services
  • 9. Supplies: These items are generally standardized and are marketed to a wide cross section of industrial users. Such as paints, oils, greases, pencils, stationary etc. Services: Company needs a wide range of services like building maintenance services, auditing services, legal services, courier services and many more.
  • 10. 10 Materials and parts 1. Raw materials ( natural gas, HDPE etc.) 2. Manufactured materials ( copper wire, steel sheets ) 3. Component parts ( switches, motors or customized gears ) Characteristics : Normally large custom made orders are sold By the manufacturers & standard products by industrial distributors. Organizational Customer Based on Type of products purchased
  • 11. 11 Capital Items 1. Installations ( buildings, computers, machinery etc.) 2. Accessories ( PC, Office furniture) Characteristics: Normally major installations, because of extensive interaction required and long negotiation time required, the manufacturers deal directly with the customer & accessories are sold by industrial. distributors. Organizational Customer Based on Type of products purchased
  • 12. 12 Supplies and services 1. Supplies ( soaps, stationery etc.) 2. Services ( maintenance, canteen etc.) Characteristics : Normally industrial distributors are used & services are provided by the individual contractors ). Organizational Customer Based on Type of products purchased
  • 13. 13 Industrial Market Vs Consumer Market Market Structure Industrial Market Geographically concentrated Fewer buyers (relatively) Big buyers ( small number of large buyers) Consumer Markets Geographically dispersed Mass markets Free Market (large number of buyers)
  • 14. 14 Industrial Market Vs Consumer MarketBuyer Behavior Industrial Market *Evaluated for functionality rational/task motive to buying. *Purchasers are experts & focus is more on performance/service. *Higher interaction with the supplier. * Formal processes. Consumer Market *Social / psychological factors are important. *Family involvement & focus more on product per se. *Nor personal relationship with the supplier. * Less of formal processes.
  • 15. 15 Industrial Market Vs Consumer MarketProducts Industrial Market * Technical complexity and customized. * Service, delivery and availability is very important. Customer Markets * Standardized. *. Service, delivery and availability is somewhat important.
  • 16. 16 Industrial Market Vs Consumer Market Distribution channel characteristics Industrial Markets * Shorter, more direct & fewer linkages between seller and buyers. Consumer Markets * Indirect and multiple linkages
  • 17. 17 Industrial Market Vs Consumer Market Promotion Industrial Markets * Emphasis on personal selling or one to one dealing. Example : Selling fridges with new technology. You go and deal with Coke or Pepsi H.O. Consumer Markets * Emphasis on mass market promotion. Example : You plan an adv. campaign to highlight decals and generate customer flow.
  • 18. 18 Industrial Market Vs Consumer Market Pricing Industrial Markets * Competitive bidding & multistage negotiation. * Sharing of cost data & budgeting of acceptable profits in many cases. Consumer Markets * Normally MRP & MOP * Concept of list price & its implementation.
  • 20. 20 Industrial Marketing Environment Buyer seller interface Labour Capital R.M. Components Equipment Mafg. Dist. / Dlrs. Compt. Manufacturer’ rep Dist / Dlrs Transporters Warehousing firms Mktg. Research firms Bankers & insurers Suppliers Buyers Facilitators Market segments Govt. Commercial Enterprises Industrial Distributors
  • 21. 21 Industrial Marketing Environment Publics 1. Financial publics – FI / Stockbrokers / Individual Stock Holder ( Stock prices, confidence in company ) 2. Independent press – Impact on reputation of company ( Dhabol power corporation ) 3. Public interest groups – Environmentalists ( Euro II , CNG vehicles, Narmada bachao) 4. General publics – MacDonald's coating French fries with beef tallow Business serves the society
  • 22. 22 Industrial Marketing Environment Macro Environment 1. Economics - Increased demand for oil led to increase in prices of oil in the world markets. Changes the cost base of most oil based companies. Also changed the demand pattern of automobile ( petrol to diesel ). Government policies like subsidizing diesel at the cost of petrol. 2. Ecological influences - The concern for the environment so emission norms are stringent & industry has to adjust. Bhopal gas tragedy, changes in the law to use MIC as an intermediary. “Right to Know”  Companies have to furnish details of the hazardous products made & used by them.
  • 23. 23 Industrial Marketing Environment Macro Environment 3. Physical environmental Influences – Steel plants need iron ore, water & lime stone deposits for setting up. MP, Bihar and Orissa have the concentration of steel plants. . 4. Politico / Cultural influences – Hire and fire policy of west Vs militant trade unionism & job protection in India. 5. Technological influences – Typewriters manufacturers had to shift market focus, change products etc after PC’s and word processors became common.
  • 24. 24 Industrial Marketing Environment Macro Environment 6. Government influences – Anticipating governments action: WTO treaty signing and IMF loans linkages for govt. The govt. needs the loan so it is likely to sign the treaty. Influencing Govt. actions: Lobby for reduction in excise duty (to create level playing field). Lifting of Liquor ban in A.P. ( a lot of lobbying ). CNG buses for Delhi ….