rural marketing

1. Nature, Scope and Challenges of
Industrial Marketing - Overview
• Industrial markets present different types of
challenges and opportunities as compared to
consumer markets
• Industrial Markets are markets for products and
services, local to international, bought by
businesses, government bodies and institutions
for incorporation ( ingredient material or
components), for consumption( process
material, consulting services), for use(
installations or equipment)or for resale.

2. Nature, Scope and Challenges of
Industrial Marketing - Overview
• Industrial markets consist of all organisations
that purchase goods and services to use in the
creation of their own goods and services
• Industrial marketing is the process of
matching and combining the capabilities of
the supplier with the desired outcomes of the
customer to create value for the “customers
customer” and hence for both organisations

3. Characteristics of Industrial Market
Customers
• Industrial Market customers comprise
commercial enterprises, institutions and
governments – HCL Computers customers can be
Air India, Delhi University and State Governments
• A single purchase by an industrial customer may
be far larger than individual customers – An
individual may purchase one unit of Microsoft
software or an upgrade but Citibank may buy
1000

4. Characteristics of Industrial Market
Customers
• The demand for industrial products is derived
from the ultimate demand for consumer products
– Increase in demand for housing will stimulate
demand for wood for making furniture and
numerous other related products
• Relationships between industrial marketers tend
to be close and enduring - HCL Computers
relationship with some key customers spans
decades

5. Characteristics of Industrial Market
Customers
• Buying decisions by industrial customers often
involve multiple buying influences rather than
a single decision maker – a cross functional
team from an industrial buyer, say textile
producer will evaluate various textile
machinery companies before buying from any
particular company. Purchasing, engineering,
material mgt and other division members may
be involved in this purchase

6. Contrast between Industrial and
Consumer Marketing
Market Structure
Industrial Markets:
• Geographically concentrated – Auto component
manufacturers in Pune, Gurgaon etc
• Relatively Fewer Buyers
• Oligopolistic Competition
Consumer Markets:
• Geographically Dispersed – Demand for buying cars is
dispersed
• Mass Markets, Many Buyers
• Monopolistic Competition

7. Contrast between Industrial and
Consumer Marketing
Products
Industrial Markets:
• Can be technically complex – Axles for railway wagons
• Customised to user preference
• Service, delivery and availability very important
• Purchased for other than personal use – Ministry of
Railways purchases for the Indian Railways
Consumer Markets:
• Standardised – rail travel
• Service, delivery and availability only somewhat
important
• Purchased for personal use

8. Contrast between Industrial and
Consumer Marketing
Buyer Behaviour
Industrial Markets:
• Professionally Trained Personnel – Purchase of
sterile pumps by a biotech or pharma plant
will involve quality control department,
purchase etc
• Functional Involvement at many levels –
Departmental heads will decide jointly
• Task Motives predominate

9. Contrast between Industrial and
Consumer Marketing
Buyer Behaviour
Consumer Markets:
• Individual Purchasing – an OTC product will be
choice of consumer. Aspirins etc are sold by
many pharma companies
• Family involvement, influence – a family may
decide whether to purchase generic or
branded drugs
• Social/ psychological motives predominate

10. Contrast between Industrial and
Consumer Marketing
Buyer –Seller Relationship
Industrial Markets:
• Technical Expertise an asset – engineers are hired
by companies selling railway equipment
• Interpersonal relationships between buyers and
sellers
• Significant information exchange – a pharma
company will explain in detail the specs of a
tableting machine
• Stable, long term relationships encourages loyalty

11. Contrast between Industrial and
Consumer Marketing
• Buyer –Seller Relationship
Consumer Markets:
• Less technical expertise – expensive consumer
durables like home theatres may be purchased on
simple technical specs
• Nonpersonal relationships
• Less exchange of information – OTC products are
purchased on simple advertising and drugs on
doctors prescriotion
• Changing short term relationship

12. Contrast between Industrial and
Consumer Marketing
Channels
Industrial Markets:
• Shorter, more direct – Automotive component
manufacturers will sell directly to car
manufacturers
Consumer Markets:
• Indirect, multiple linkages – car owners buy
auto parts through a distribution channel

13. Contrast between Industrial and
Consumer Marketing
Promotion
Industrial Markets:
• Emphasis on direct selling – Sale of packaging
material to companies making toiletries and
allied products will involve a large amount of
personal interphase
Consumer Markets:
• Emphasis on advertising – Soap like Lux may be
purchased on advertising appeal of film stars

14. Contrast between Industrial and
Consumer Marketing
Price
Industrial Markets:
• Competitive bidding or the result of a complex
purchase process – purchase of a nuclear power plant
or fighter planes may involve a complex purchase
process involving many ministries and the final price
would be various rounds of competitive bidding
Consumer Markets:
• List or predetermined prices – In some developed
countries power can be bought from various sources at
different prices

15. Industrial Demand
Derived Demand – Demand in Industrial
markets is derived from consumer demand.
Nylon →Spin Yarn→ Weave Fabric→Clothes
Changes in consumer demand will effect the
Industrial market. Inventory problems can
occur if final demand is over or under what
was forecasted.

16. Industrial Demand
• A small percentage change in consumer
markets leads to much greater changes in
industrial markets.
• There can be dramatic shifts in the demand
curve. In recession the demand for capital
goods will fall and in recovery the sales will be
stimulated. There are swings in demand.
• Small changes in consumer buying attitudes
are closely watched

17. Cross-Elasticity of Demand
• It is the responsiveness of sale of one product to
a price change in another
• This has a significant bearing on marketing
strategy
• In the construction industry, sales of steel will be
effected by the price of a close substitute
Aluminium
• The larger the number of substitute resources
available, the greater the cross-elasticity of
demand for a particular resource

18. Industrial Customers
1.Commercial Enterprises
• Users
• Original Equipment manufacturers
• Dealers and Distributors
2. Government Organisations
3. Institutions

19. Commercial Enterprises
• Users purchase industrial products or services to
produce other goods or services that are sold in
business or consumer markets. Machine tools is an
example of such a purchase. Products purchased by
users are not incorporated into final product, hence
different from OEM’s as explained below.
• Original Equipment Manufacturers ( OEM’s)-
Enterprises like Maruti, Xerox purchase industrial
goods to be incorporated into products that they
produce, classification is OEM. They are generally the
large volume users of goods and services

20. Commercial Enterprises
Dealers and Distributors – They are
commercial enterprises that purchase
industrial goods for resale( in basically the
same form) to users and OEM’s. They
accumulate, store and sell a large assortment
of goods to industrial users. They ensure that
their customers have timely access to the
goods. They play an important strategic role

21. Overlap of Categories
• These three categories are not exclusive. The
classification is based on the intended purchase
the product serves to the customer
• User will purchase a capital item for the
manufacturing process but is an OEM when
purchases products like radios to be installed in
the car
• Purchases are expected to enhance profit making
ability and understanding of buying criteria of
various categories is required

22. Government Organisations /
Institutions
• Government and its agencies can be the large purchasers
of industrial goods
• The high volume purchasing can have procurement and
administrative requirements that may require a large
amount of effort to ensure compliance.
• Focus should be on the value expectation and the factors
that influence the buying decision
• Public and private Institutions are also important
customers and their procedural requirements should be
carefully understood. Some of them may be subject to
public scrutiny and may follow detailed procedures

23. Classifying Goods for Industrial
Markets
• Entering Goods- They become part of the finished
product and are raw materials, Manufactured
Materials and Parts
• Raw materials are processed only to the level
required for economical handling and
transportation. McDonald uses potatoes as raw
material
• Manufactured materials like component material
are subject to some amount of processing before
entering manufacturing

24. Classifying Goods for Industrial
Markets
Marketing Requirements:
• The marketing strategy is related to the goods sub
classification
• Standardised parts and materials are purchased in
large quantities by OEM’s on contractual basis
• Custom made parts will require a large amount of
interaction with purchase and engineering
department
• Industrial distributors can be used when selling to
smaller OEM’s or users

25. Classifying Goods for Industrial
Markets
Foundation Goods – Installations and Accessory
Equipment
• Installations are the major long term investment items
such as buildings and fixed equipment, Their demand is
shaped by the economic climate
• Accessory Equipment is generally less expensive and
short lived ( light equipment and tools) as compared to
Installations
• Personal selling is important and negotiations may be
prolonged for installations. Accessories can also be sold
through industrial intermediaries

26. Classifying Goods for Industrial
Markets
• Facilitating Goods – they are the supplies and
services that support organisational operations
• They do not enter the production process or
become part of the finished products. They are
items like cleaning compounds or repair services
• Direct marketing can be used for large users but
intermediaries can be used for this broad and
diverse market

27. Industrial Market Environment
• The interface level involve key participants who
interface with industrial buyers or sellers with regard to
facilitating production , distribution and purchase of a
firms goods and services
• Input suppliers, distributors, facilitators are part of the
interface. Competitors actions also play an important
role on the marketing strategy of companies
• On account of interdependence, industrial firms form
long term buyer-seller interface.

28. Industrial Market Environment -
Publics
• Financial Publics
• Independent Press
• Public Interest Groups
• General Publics
• Internal Publics
These publics have interests because of economic
or societal effects of activity in the market or
because they provide financing and companies
must be sensitive to them

29. Industrial Market Environment -
Macroenvironment
• Demographic
• Economic
• Sociocultural
• Natural
• Technological
• Competitive
Classifications are important for marketers to
frame the issues, threats and opportunities and it
should be an ongoing process.

30. Influence of Government
• Government laws and regulations play an important
role and affect all the participants
• Matters like funding, interest rates and
taxes, standards, research and environmental issues
are of great importance to the activities of
companies
• International trade regulations are also part of
Government interface
• Companies generally act through associations and
bodies with regard to general matters but must take
suitable action regarding their own priorities

31. Overview
• The current industrial environment which is
rapidly changing requires development and
implementation of suitable strategies
• Market research, technological
innovations, assessing political and regulatory
developments and evaluating social change
are some measures
• Independent, Cooperative and Strategic
manoeuvring strategies can be utilised

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