Page 1 : 220, Advanced Marketing Techniques, , , , , , etc Men ea 9, , , , , , , , , , , , , , , , , , , , , , ee ITS, , , , 6.1.1. Introduction, , Business marketing is also referred as the industrial marketing or B2B, marketing. Business marketing may be defined as the marketing of, products, services, and solutions to organisations such as big enterprises,, government departments, and institutions. Industrial products and, services are typically used in the production of other consumptionrelated products and services, either for the end-consumers or for, , organisational use. u, (, , Marketing concept for the business enterprises of industrial buyer is to, define the needs of a target market and modifies the organisation’s, product or service to satisfy those needs more successfully than its, competitors. Industrial customers like organisations-businesses,, institutions, and government agencies having unique needs., , The business marketing concept involves more than facilitating exchange, with these customers because it is based upon the structure of a partnership, between buyer and seller for the purpose of achieving the organisational, goals of both. Generally, industrial organisations tend to solve the technical, problems which customers are facing. For marketing effectiveness, the, product should always be regarded as a variable and. should be viewed from, the perspective of the customer. Customer benefits and need satisfaction,, rather than the physical product, should be the centre of attention., , , , 6.1.2. Nature of Busigess Marketing, , Following are the key nature of business marketing for mat :, , 1) Demand Characteristics: The nature of demand for i dustrial, products is derived, i.e., demand for industrial goods depends on the, demand for consumer goods. The relation between consumer and, industrial goods may be clarified by the following illustration:, , mand for various types of cars continued to, Id meet this demand by increasing their, fhe production was achieved first by, , In coming years, the de!, increase. Manufacturers coul<, production figures. Increase in t, , , , , , , , 2), , 3, , ess Marketing (Unit 6) io, , improving the capacity sation, increasing the number of shifts, and, thereafter, by capacity augmentation by adding machine tools, and other equipments, etc.; industrial consumables like cutting tools,, welding electrodes, gases were also required in higher quantities., it is seen that the increase in demand for consumer goods, resulted in increase in demand for industrial products. Demand for, industrial products and services also depend on government policies, and regulations. A reduction in the customs duty on imported, machinery or steel is likely to have an adverse impact on domestic, industrial products and steel manufacturers., , , , , , , , , , , , Nature of Business Marketing, , , , , , , , i, , , , , , , , , , , , , , , , , , , , , , Demand Characteristics, E Market Characteristics, Product Characteristics E: ents, Price Characteristics, Place or Distribution, Characteristics Promotion Characteristics, , , , , , , , , , , , , , Behaviour Characteristics, , , , , , , , Market Characteristics: Industrial markets differ from consumer, markets in size of the market or number of customers and location, of the market. While the number of customers of consumer products and services is very large, the number of customers of industrial, products and services is very small. But this small number of, customers is responsible for large-scale as well as repetitive buying., Consumer markets are widely scattered whereas industrial markets, are concentrated in specific geographical territories, for example,, large number of manufactusing firms in states of Gujarat,, Karnataka, and Maharashtra located in the respective state, industrial development corporation assigned areas. The marketing, implication of this is that it is easy to reach and service these, customers at low costs., , Product Characteristics: Industrial products include both, standardised and tailor-made products. Standardised products are, products that are manufactured on the basis of specifications, developed by manufacturers of products and services and meant for, general use and applicatien. Tailor-made products are those that are, manufactured to customer designed specifications. Usually, these, are meant for specific objectives or applications. Machine tools such

Page 2 : p22: ‘Advanced| Marketing Tecliniques;, , 4), , , , as lathes, drilling machines, and ng. machines, may be, standardised or custom-made. Usually, bearings, belts, electric, motors, compressors, excavators, wheel loaders| and. cutting tools, are standardised. Products such as conveyor belts, machine tools,, and flexible manufacturing: systems are comy only , order-made., Tailor-made products and services are very complex and technical., Standardised products and services are comparatively less complex., However, both the product groups are definitely more technical and, complex as compared to consumer products. and fervices. Industrial, . Customers require a lot of pre-sales and post-saleg support from their, suppliers. Their requirement of timely service. level is very high., , Secondly, the products have to be reliable, easy tio use, and backed- ”, , up by excellent after-sales support., , Price Characteristics: Generally, for standardised industrial, Products, prices are governed by price lists. However, customers, negotiate on these prices and get a better deal. Commercial terms, and conditions such as payment terms, delivery schedules, delivery,, quantity per shipment, freight, and insurance ate also negotiated., Many large firms and public sector undertakings follow a system’, called ‘rate contract’ wherein the price of products and terms of, business are fixed for a specific period-of-time. |These are binding, on both the customer and the supplier. This system is, however,, applicable for items of repetitive purchase. Negotiations do not, generally take place in the case of government tenders. Thus, every, supplier, with desire to get the order, quotes the lowest price. and, customer friendly commercial terms he: can. This «is. called, competitive bidding. In the case of custom-built products, there can, be no list of prices. A supplier estimates the cost|of a product, adds, the overhead component and the desired margin| and comes to the, price. The customer compares the different compptitors.on the basis, , * of technical features and quoted prices, negotiates and finalises the, , 2), , 6), , deal. The marketing implication for this is the requirement of sales, personne! who are strong technically as well as at|negotiations., , Place or Distribution Characteristics: Channel lengths’ in, industrial marketing are short and in many pases direct. The, marketing implication for this is the simplified distribution, functions. a, , Promotion Characteristics: It has been seqn under product, characteristics that industrial marketing: ‘calls |for a-close and, sustained pre- and post-sale interaction betw¢en suppliers and, customers. This can be achieved through ‘strong personal -elling., , , , , , 223, Business ae ba frotiotion are sparingly used for a variety of, sth Acverste ee customers are’aware of various suppliers o;, ‘reasons. In ducts and services and they buy only when the need, en otha role of advertising either to make customers aware, ind’them about purchasing becomes redundant in indust ial, » of remin ‘All purchases are task-driven; they are not going to bu), athe absence of a need) merely because a promotionall measure i, Gn ee guppliers. Thus, the role of sales promotion is very, adopted Le Be ean extent, trade promotion, i.¢., promotion, eons dealers is resorted to. This, however, is limited to, consumables and standardised products. :, , i cteristies: Industrial buyers are knowledgeable,, " aa eee and skilled in negotiations. They are rational, buyers driven by task motives. They need good pre-sales = postsales support from the suppliers. Pre-sales support is in the orm of, ing timely~ technical details and drawings, : making, suggestions, prompt handling of their queries or clarifying their, doubts, timely submission of offers, and _Prompt responses o;, retuming of their calls. Post-sales activities include courtesy, informing customers of chanj design, company news, and, advice to buy spares, timely supply of spares, and. service and, training. A few companies conduct free training of ope!, mechanics, and engineers employed by its customers. This also, ensures that these personnel: use and maintain the equipment well,, reduce the Service demands from its customers, and create a, \é |timately result in brand loyalty:, , , , , , , , , , . Importance f Business Marketing, re t portance of business marketing: ©, , , , ind marketing. With the, ach and everyday, business, transactions are carried-out more easily and effectively as well:, os efficient way. It also shortens the selling cycle. |t, °s_ Wasting marketing efforts on.’ ineffective ‘marketing, , , , tent in, technology, industrial, electronic commerce: With, transfer-using EDI can be, Iso includes business-business, ion of various services.

Page 3 : 1) Product:, market, or offering a type of product, wi, with the potential buyer. Asset, , 224, , 3), , 4), , 5), , 6.1.4., , The, , ! Advanced Marketing Techniques |, Online Auction: With the help of online auction the buyer of, industrial goods can get the product at a cheap deal, as there are ', many competitors in an online auction. This’ bus, , types of organisations, right from auctioneers to business solu, providers., , , , Just-in-Time: The most important advantage of industrial, marketing is to have Just-in-Time (JIT) delivery, the company can, have the track very easily and effectively of good as to which place, it has reached with the help of electronic commerce and thus, satisfying both the client and the vendor. Prompt delivery satisfies, not only the business but also ensures instant profits, thus making, the transaction.a successful one: _,, , Speed and Efficiency: It is very important in today’s competitive, world, no matter what kind of businesses organisations!conduct, and, business to business has proven to be a big success because of the, speed and efficiency. Businesses act with more speed and efficiency, satisfying their customers which has proved to be an integral part of, today’s industrial marketing business. Moreover the growing, resources of online services are helping business grow faster in, every possible business area. Paper has been replaced by technology, which makes the process easier and faster., , Strategies for Business Marketing, understanding of business marketing strategies is compulsory for, , business'‘marketing success. Business marketing strategies are to, assemble the 4Ps to industrial customers and to keep-up with changing, requirements of industrial customers while doing business on a proactive basis. Marketing strategies in industrial marketing consist of, , following aspects: en, Strategies for Business Marketing, ee IH Piece (Chennel Stratezy), |, | Price Ly) oo], dH Promotion, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , adapting their product to the, ith specifics to be negotiated, led firms will have a product or, , ), , Firms can be market led,, , a, , 3, , , , Tr, , | pusiness Marketing (Unit 6), , 2), , 225, , range of products, and offer these for sale to the market. Products, will often be adapted to meet the needs of the buyer, this adaptation, may mean ‘simple labelling, or is could go as far as changing, technical specifications. Component suppliers may be required to, change product design, or produce products to fit with the, production methods of buyers., , Because business customers are focused on creating shareholder, , * value for themselves, the cost-saving or revenue-producing benefits, , of products and services are important to factor in throughout the, product development and marketing cycles. B2B product branding is also different from:B2C in some crucial ways, including the need to, closely align corporate, brands, divisional brands and product/service, brands and to apply the brand standards to material often considered, “informal” such as e-mail and other electronic correspondence. It is, , * mainly of large scale when compared with B2C., , Price: At the time ofintroducing a new industrial. product, a firm is, likely to have a considerable amount of sunk cost invested in it., ‘Activities associated with new product development such as, research, planning, testing, training salesmen, informing customers,, and building stocks of materials as well as finished units often, represent a: substantial cash outlay. Unless it is recovered, such an, outlay can cause an impairment of the firm’s cash position. How, fast management should attempt to recover. it depends on the, financial strength of the company, the anticipated life span of the, , ‘new product, the expected volumes, and the- speed with which, , competition is. expected to develop a product similar to it., , Management usually has two broad strategy options:, , i) To'price the new product at a very high level with a substantial, gross marginer, , ii) To price it at or near the level to which its price would be expected, to settle after competition has developed, i.e., a low price., , The business market can be convinced to pay premium prices more, often than the consumer market if individual know how to structure, the pricing and payment terms well. This price premium is, particularly achievable if individual support it with a strong brand., , Place (Channel Strategy): A marketing channel is: composed of, outlets through which a manufacturer’s goods flow to the market., The types of outlets available and the functions they perform, represent the structural el@ments of the channel strategy, Some ., distribution outlets such as manufacturer’s branch offices are part of, the internal organisation structure of the manufacturing firm.

Page 4 : 27, , 226 _ Unrated ue eh offer his customers expert information, help, , ‘ Bae es ‘The inventory management and, customer servicing, , ine ae ace improved by opening a branch office. The salesmen, , f the branch can also be a fruitful source. of information about, , a the markets and the developments that are taking place in it. The, , “Chief drawback of the branch house system of distribution lies in, its expense, creating its own overhead costs., , Advanged Marketing Techniques, Others, such as distributors or wholesalers, sales agents and other, types Of agents are usually independently wned and operated, enterprises. 5 Rs ee, i) Industrial Distributors: Industrial distributors, middlemen who buy and sel] products for industrial uses: They, » offer manufacturers the services of taking |title to and stocking, Products, assuming some of the risks of 1 eting, maintaining, Teasonably close contact with buyers. Some distributors stock a 4)~, »wide variety of Supplies: and small -eqlii ment, and sell to a, diversified’ group of customers. These: gre: known. in many, , specialise, either in, , , , are identified as, , , , , , romotion: Typically promotion occurs through trade magazines, f d trade fairs. Person. to’ person selling is also very important. It, Ga be as important ‘to take the best customers (or potential, customers) to lunch, or on a golfing weekend, as to place a glossy, , u they serve.’ Firms | ad in a well read.trade magazine. Key prominion oo, Specialising in products May limit their inyentories to. narrowly marketing are as follows: _, , defined product categories such as office equipment and supplies,, , abrasives, or electrical equipment and suppl, , ii) . Sales Agents: Sales, , , , ing his output. In most, enough volume to support, willing to wholesale the products of other, later case, he has to take over all the mana, go with being.a industrial distributor. On, his line is ‘limited be can hardly “expect., distributor, if he decides to market, devote much effort to promoting his goods., , iii) Manufacturer’s Branch Office:, a very large scale, they may, where the customers are, , antifacturers. In the, erial headaches that, , If the cor pany is operating on, have their jown branch offices, , ‘Materials such as, , of industrial goods accomplishes several t, direct contact with the customers, com:, , heavier and highly skilled promotional pressure on users of their, product that would not be possible otherwise. By operating well, trained technical specialises from the b: h, the technical, , ings. By means of, , fhinery ‘unless he is ., , —, , , , through this outlet, will |, , anufacturer’s sales |, ign, the manufacturer fe, , S are able to apply |, , - iii) Trade Shows:, , i) Personal Selling: Personal selling is of greater importance in, , eting than advertising. Personal selling is a direct,, , Ae ne ae “to buyer conversation which can, communicate relevant facts about the product and the firm to, the prospect so that he or she may take buying decision., Personal selling objectives may be of: short-term and long-term, duration. Short-term personal selling objectives are more, ific. and of short-term duration. These objectives change, itly as soon as there is change in promotion mix., they are usyally quantitative, objectives. On the, ___ contrary, long-term personal selling objectives are broad and, "general. There | i, objectives. They z, , , , , , ii) BusinessAndustrial ‘Advertising: Business advertising is also, , known as business-to-business or B2B advertising, industrial, , -»\ advertising is the strategy of attracting the attention of another, , ‘business and convincing that company to purchase the goods, ~and_ services, , offered’ by another business. This type of, advertising will likely use all the normal forms of generating, rs luding the placement of Print ads in appropriate, direct mail campaigns, and any other means that is, , iikely..to. produce the desired sales, Industrial advertising is, common within just about every profession or industry type,, and helps to meet the demand for a wide Tange of items that are, necessary to conducting business within that industry., Trade shows are designed to let exhibitors mect, many potential customers face-to-face in a brief period of time, _ inexpensively, Ex ibitors usually try to present a large, Proportion of their range of \produets/services at these trade

Page 5 : ‘Advanced Mark, , , , shows, gaining in two ways. The fi, trade show is advertising and bran, of the target audience leams, launched. The second gain i, happen at these trade shows., Opportunities by attendin:, of enthusiastic buyers, because they get'a goo, business events., , tst gain of marketer through, id promotion. A good Portion, about new products to be, is through the direct sates that, The visitors also get a lot of, ig these trade shows. A large number, ectly purchases new products. Th, , d discount during the course of such, , , , , , 5) Target Market: Quite often, the target market for a business, product or service is smaller and has more specialised needs, reflective of a specific industry or niche. A B2B niche, a segment of, the market; can be described jin terms of firmographics which, Tequires marketers to have good business intelligence in order to, increase response rates. Regardless of the size of the target market,, the business customer is making an organisational purchase decision, and the dynamics of this, both procedurally and in terms of how, , they value what they are buying; differ dramatically from the, consumer market., , , , There may be multiple influencers on the purchase decision,, , may also have to be marketed to, though they may not be me, of the decision-making unit., , which, mibers, , , , , , , , 6.1.5. Business Marketing versus Consumer, Marketing, The following table‘describes the contrast between business marketing, and consumer marketing., Basis of Business Marketing , Consumer Marketing, Difference \, 1) Market | Geographically Geographically diversified, Structure | concentrated markets., , markets ~ dispersed., , Large number of consumers —, mass markets,, , Demand is usually direct., , , , Relatively fewer consumers, = fewer buyers., , Demand is derived,, , , , , , , , 2) Products, , Large quantities or high, , Small unit of sale., value items are involved. h, , , , , , , , , , , , , , Service is a strategic tool; | Service is somewhat, having high importance, important. %, Customised products —] Standardised products., technically complex. :, , More emphasis on cost, of | Cost of maintenance is, , maintenance,, , , , unimportant,, , , , , , r, , }) pusiness Marketing (Unit 6), ', , , , , , , , , , , , , , , , , , , , , 229, , Functional” involvement —, , buying centre/committees,, , Rational buying ~~ — | Impulsive buying — social/, 3) Buyer rational/task motives | psychological motives, , Behaviour | predominate. predominate., More technical expertise. Less technical expertise., Interdependence between | No interdependence between, , Customer and manufacturer, , consumers and manufactures, , , , Reciprocity may exist). (Reciprocity non-existent),, More importance fo | Less importance: to personal, personal relationships | relationships between, between customer —_ and | consumer and manufacturer., manufacturer., , , , , , Quality is checked iby the, customer., , , , Few quality tests are, conducted by the consumers., , , , Informed buyer., , Relatively ignorant buyers., , , , Customer is a professional, in decision-making., , Consumer is relatively an, amateur in decision-making., , , , More ratignal _ decision, Irrational, , , , , , decisions are, making. possible., Less’ emotion involved in| Emotion is present in, decision-making. * decision-makingCustomers take impersonal | Consumers take personal, , decisions., , decisions., , , , , , More emphasi, , , , n process is time, consuming., , , , Negotiation is less important., , , , More number of influencers, in decision-making., , Less number of influencers in, decision-making., , , , , , , , , , 5) Channels, , Sales are direct or through, middlemen., , Sales are usually through, , , , Usually short channels., ul, , , , , , Organised purchases. *, , , , Unorganised purchases., , , , Fewer sales outlets exist., , More sales outlets exist., , , , Less stock holding in the, channel., , More stock holding in the, , , , , , , , 6) Promotion | Personal selling is and sales, preferred, promotion are more popular., Every transaction is, , 1) Price, , , , important for an industrial, marketer., , , , gle transaction may not, influence profit margin., , , , Competitive bidding., , List price selling., , , , Complex pricing policies., , Simple pricing po!, , , , , , Products can be leased., , , , , , , , Products are not leased.