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INDUSTRIAL MARKETINGINDUSTRIAL MARKETING

Lecture Notes for Industrial Marketing

By CA Yatish Vernekar


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THE MARKETING MIXTHE MARKETING MIX


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The Marketing MixThe Marketing Mix


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The Marketing MixThe Marketing Mix The tools available to a business to gain the

reaction it is seeking from its target market

in relation to its marketing objectives

7Ps Price, Product, Promotion, Place,

People, Process, Physical Environment

Traditional 4Ps extended to encompass

growth of service industry


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PricePrice


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PricePrice

Pricing Strategy

Importance of:

knowing the marketelasticity

keeping an eye

on rivals


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ProductProduct


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ProductProduct

Methods used to improve/differentiatethe product and increase sales or target sales moreeffectively to gaina competitive advantage e.g.

Extension strategies

Specialised versions

New editions

Improvements real or otherwise!Changed packaging

Technology, etc.


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PromotionPromotion


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PromotionPromotion

Strategies

to make the consumer aware of the

existence of a productor service

NOT just advertising


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PlacePlace


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PlacePlace

The means by which products and services

get from producer

to consumer and where they can beaccessed by the consumer

The more places to buy the product and the

easier it is made to buy it, the better for the

business (and the consumer?)


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PeoplePeople


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PeoplePeople

People represent the business

The image they present can be important

First contact often human what is the lasting

image they provide to the customer?

Extent of training and knowledge

of the product/service concerned

Mission statement how relevant?Do staff represent the desired culture

of the business?


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ProcessProcess


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ProcessProcess

How do people consume services?

What processes do they have to go through to acquire

the services?

Where do they find the availability

of the service?

Contact

Reminders

Registration

Subscription

Form filling

Degree of technology


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Physical EnvironmentPhysical Environment


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Physical EnvironmentPhysical Environment

The ambience, mood or physical presentation of

the environment

Smart/shabby?Trendy/retro/modern/old fashioned?

Light/dark/bright/subdued?

Romantic/chic/loud?

Clean/dirty/unkempt/neat?

Music?

Smell?


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The Marketing MixThe Marketing Mix

Blend of the mix depends upon:

Marketing objectives

Type of product

Target marketMarket structure

Rivals behaviour

Global issues culture/religion, etc.

Marketing position Product portfolio

Product lifecycle

Boston Matrix


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SOCIETAL ROLE OFSOCIETAL ROLE OF

MARKETINGMARKETING


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Societal ConceptSocietal Concept

Societal concept holds that theorganization's task is to determine theneeds, wants, and interests of target

markets and to deliver in desiredsatisfaction more effectively andefficiently than competitors in a waythat preserves or enhances the

consumer's and society's well being.Build social & ethical considerationsinto marketing practices.


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Types of Marketing ChannelsTypes of Marketing Channels

Marketing channelMarketing channel: system of marketing

institutions that promotes the physical flow of

goods and services, along with ownership title,

from producers to consumer or business user; also

called a distribution channel

Marketing intermediaryMarketing intermediary: wholesaler or retailer

that operates between producers and consumers or

business users; also called a middleman WholesalerWholesaler: marketing intermediary that takes

title to goods and then distributes these goods

further; also called a jobber or distributor


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Direct SellingDirect Selling

Direct channelDirect channel: marketing channel that moves

goods directly from a producer to ultimate user

Direct sellingDirect selling: strategy designed to establishdirect sales contract between producer and final

user


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Channels Using MarketingChannels Using Marketing

IntermediariesIntermediariesProducer to wholesaler to retailer to consumer

Producer to wholesaler to business user

Producer to agent to wholesaler to retailer toconsumer

Producer to agent to wholesaler to business user

Producer to agent to business user


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Dual DistributionDual Distribution: Network that moves

products to a firms target market through

more than one marketing channel

Reverse ChannelsReverse Channels: Channels designed to

return goods to their producers


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Channel Strategy DecisionsChannel Strategy Decisions

Selection of a Marketing Channel

Factors which impact the selection of a

marketing channel include:Market factors

Product factors

Organizational factors

Competitive factors


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DISTRIBUTIONDISTRIBUTIONChannel ofDistribution - a group of

interrelated organization that directs the

flow of products from producers to ultimateconsumers

Marketing Intermediary - an individual or

organization in marketing channel thatprovides a link among producers, other

channel members, and final consumer


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Distribution OveragesDistribution Overages

IntensityDistribution - market coverage in which

all available outlets are used for distributing a

productSelectiveDistribution - Market coverage in which

only some of the available outlets are used for

distributing a product

ExclusiveDistribution - Market coverage in which

one outlet is used in specific geographic area for



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MARKET SEGMENTATIONMARKET SEGMENTATION


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What is Market?

What is Market?

PEOPLE


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PEO

PLE

PEO

PLE

BUT-Not just ANYpeople, they have to have

Willingness to buy

Purchasing power [money]

Authority to buy


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Market SegmentationMarket Segmentation With large country

Many different types of people

It is too difficult to create a product that will

satisfy every body, that is why we focus on

the segment of the total market.


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Market SegmentationMarket Segmentation

Definition

Grouping people according to their similarity

related to a particular product category


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Market SegmentationMarket SegmentationCharacteristics

Age Gender Geographic

location

Income Spending pattern

Marital status

Education

Mobility

Demographics

Cultural

background


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Market SegmentationMarket Segmentation

44 commonly used basis for segmentationcommonly used basis for segmentation

Descriptive

Geographic location

Demographic

Behavioral Psychographic

Benefits


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Market SegmentationMarket SegmentationGeographic location-based upon where

people live [historically a popular way of

dividing market]

Demographic-based upon age, gender and

income [very often used]


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Market SegmentationMarket SegmentationPsychographic/ lifestyles-based on peoples

opinions, interests, lifestyles.

Benefits-based on the different expectation

that customer have about what a product/

service can do for them.


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PRODUCT DEVELOPMENTPRODUCT DEVELOPMENT


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Stages in NewStages in New-- ProductProduct

DevelopmentDevelopment Expensive, time consuming, and risky.

Only one third of the new productsbecome success stories.

Each step requires a go or no godecision


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Process of Developing New Goods &Process of Developing New Goods &

ServicesServices

Commercialization

Test marketing

Product development

Concept development & business analysis

Screening

Generate new product ideas


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PRICING STRATEGYPRICING STRATEGY


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P

RICINGP

RICING Price - the value that buyer exchange for a

product in the marketing transaction

Pricing Objective:

Market share

Profit

Return on Investment

Status Quo


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P

ricing Decision and MethodsP

ricing Decision and Methods Factors in Pricing Decisions:

Price and non-price competition

Supply and demandConsumer perception of price

Pricing Methods:

Cost-

Oriented Pricing-

Mark-

up PricingDemand-Oriented Pricing - Break event point

Competition Oriented Pricing


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PricingSt

rate

gies

PricingSt

rate

gies


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Marketing ConceptsMarketing Concepts

Marketing is the process of planning and executing

the conception, pricing, promotion, and

distribution of idea, goods, and service to createexchanges that satisfy individual and

organizational objective

Marketing Mix is the combination of products,price, promotion, and distribution, used to satisfy

the needs of the target market

M k ti Mi


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ProductVariety

QualityDesign

Features

Brand Name

Packaging

Services

Price

List price

Discounts

Allowances

Credit Terms

Promotion

Advertising

Personal Selling

Sales Promotion

Public Relations

PlaceChannels

Coverage

AssortmentsLocations

Inventory

Transportation

Logistics

Target

Costumers

Intended

Positioning

Marketing Mix


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Marketing ActivitiesMarketing Activities

Product:

Develop new products

Modify existingproducts

Test-market products

Select brand name Package product

Pricing:

Establish price

objectives Conduct cost

analysis

Analyzecompetitors price

Set actual prices


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Marketing ActivitiesMarketing Activities

Promotion:

Determine types of

promotion Design the advertising

massage

Selecting advertising

media Schedule the

advertisements

Distribution:

Select wholesalers and

retailers Establish procedures

for handling andmoving products

Find the best locationsfor plants, warehousesand retail outlets


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MarketMarket

Market ispeople with the authority, financial

ability, and willingness to purchase a

product

Types ofMarket:

Consumer market - for personal use

Industrial market - to use in the productionor resell


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Target MarketingTarget Marketing

Target market - a group of people that has similar

wants and needs which a firm directs its marketing

activities Undifferentiated approach one marketing mix

for a product to the total market

Market Segmentation approach the division of

the total market into segment with marketing mixdirected to different segment


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MarketSegmentationMarketSegmentation

Market segment division of heterogonous market

into homogonous market based on different

characteristicsSegmentation Based:

Geographic bases - city, region

Demographic bases - sex, race, marital

Psychographics - a persons attitude, lifestyle

Product-related -brand loyalty


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PRODUCTPRODUCT

Product - a good, service or idea, including allattributes provided in an exchange between buyerand seller

Product Classification:

Consumer goods products purchased by

consumers for personal use Industrial goods product purchased by

companies to produce other products


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Classifying GoodsClassifying Goods

ConsumerGoods:

Convenience good

inexpensive andregularly consumed

Shopping goodsmoderately expensiveand infrequently

Specialty goodsexpensive and rarely

Industrial goods:

Raw material

Components parts

Equipment and

installations

Services


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Product Line and ProductProduct Line and Product

MixMix Product Line - a group of related products

that are considered a unit because of

marketing, technical or use similarity Product Mix - the total group of product

offer sale, or all of the firms product lines

Product Differentiation creation ofproduct or product image that differs fromexisting product to attract consumers


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Product AttributesProduct Attributes

Brand - a name, sign, symbol, design, or

combination a companys product to

distinguish it product from others

Packaging - the development of a container

and graphic design for a product

Labeling - the display of importantinformation on a product package


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PRICINGPRICING

Price - the value that buyer exchange for a

product in the marketing transaction

Pricing Objective:

Market share

Profit

Return on Investment Status Quo


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Pricing Decision and MethodsPricing Decision and Methods

Factors in Pricing Decisions:

Price and non-price competition

Supply and demand Consumer perception of price

Pricing Methods:

Cost-Oriented Pricing - Mark-up Pricing

Demand-Oriented Pricing - Break event point

Competition Oriented Pricing


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Pricing StrategiesPricing Strategies

Pioneer pricing leadership pricing in the market

Price skimming setting an initial high price to

cover new product cost and generate a profit Penetration pricing setting an initial low price to

establish a new product in the market

Psychological Pricing setting an initial high

price to respond irrationally consumers Price Discounting Price reduction offered as an

incentive to purchase


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PROMOTIONPROMOTION

Promotion - the communication of favorable,persuasive information about a firm or product inorder to influential buyers

Promotional Objectives:

Informing

Increasing sales

Stabilizing sales Positioning the product

Building a public image


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The Promotion MixThe Promotion Mix

Promotion Mix - the combination of advertising,

personal selling, sales promotion, publicity used to

promote a specific product


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AdvertisingAdvertising

Non-personal communication to a target audience

through a mass medium, such as TV, Radio,

newspapers, or magazines, and outdoor display

Types of Advertising:

Primary-Demand Advertising: for all products

Selective Brand Advertising: for specific products

Institutional Advertising: create public image


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Advertising PromotionAdvertising Promotion

Advertising Media variety ofcommunication devices for carrying

massage to potential customers Direct Mail delivery massage directly to

customer places

Internet Advertising put the massage intowebsite or mailed directly to customeremail


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Personal SellingPersonal Selling

Person-to-person communication with one or

more prospective customers in order to make sale

Telemarketing using telephone to perform thepersonal selling process

Types of Salespeople:

Order Getter

Order taker

Support salespeople


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Sales PromotionSales Promotion

An activity that offers customers or marketingintermediaries direct incentives for purchasing aproduct

Type of Sales Promotion:

Coupon: reduces the price of a product by statedamount at the time of purchase

Rebate: an extra discount

Free Sample

Contest: consumer compete for prizes

Trade show


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Publicity and Public RelationPublicity and Public Relation

Publicity - a non-personal form ofcommunication transmitted in news story

form and not paid for directly sponsor

Public Relations - a set of communicationactivities designed to create and maintain afavorable public image for firm


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SpecialEventsSpecialEvents

WrittenMaterialsWrittenMaterials

PublicService

Activities

PublicService

Activities

SpeechesSpeeches

NewsNews

AudiovisualMaterials

AudiovisualMaterials

CorporateIdentity

Materials

CorporateIdentity

Materials

Web SiteWeb Site

Major Public Relation Tools


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Promotional Strategy:Promotional Strategy:

Push Strategy: promotion of a product to

wholesaler or retailers in the marketing

channel, who in turn promote the product toconsumers

Pull Strategy:promotion of a product

direct to consumers to stimulate strongconsumer demands


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DISTRIBUTIONDISTRIBUTION

Channel ofDistribution - a group of

interrelated organization that directs the

flow of products from producers to ultimateconsumers

Marketing Intermediary - an individual or

organization in marketing channel thatprovides a link among producers, other

channel members, and final consumer


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Type of Marketing Channels:Type of Marketing Channels:

Consumer Products:

Producer-consumer: plant and flower, services

Producer-retailer-consumer: automobile, furniture Producer-wholesaler-retailer-consumer: e.g.

convenience goods

Producer-Agent/broker-wholesaler-retailer-

consumer: e.g. consumer products


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Type of Marketing ChannelsType of Marketing Channels

Industrial Products:

producer

-industrial user: heavy

equipment and machinery

producer-wholesaler-industrial

user: tools and automotive parts


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Distribution OveragesDistribution Overages

IntensityDistribution - market coverage in which

all available outlets are used for distributing a

productSelectiveDistribution - Market coverage in which

only some of the available outlets are used for


ExclusiveDistribution - Market coverage in whichone outlet is used in specific geographic area for



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WholesalingWholesaling

The marketing activities of intermediates who sell to retailer,industrial users, and other wholesalers.

Types of Wholesalers:

Merchant Wholesaler: takes ownership of goods and therisks associated with ownership

Sales Branch: a manufacture-owned wholesaler that taketitle to products, risks, and provides service

Agent: a wholesaler hired by a buyer or seller on apermanent basis and paid commissions

Broker: a wholesaler who bring together buyers and selleron temporary basis


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RetailingRetailing

The marketing activities involved in selling products

to final consumers for personal or household use

Department Store: a large retailer organized intoseparate departments and offering a full line of

services and wide product mix

Supermarket: a large self-service retailer that stock

a wide variety of groceries and a limitedassortment of nonfood products


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RetailingRetailing

Catalog Showroom: a form of warehouse show-

room where customers select products from

catalogs sent to customers homes or available inthe store

Direct Marketing: non-store retailing that uses

non-personal media to introduce products to

consumers who then purchase the product by mail,telephone, computer, orTV


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Physical DistributionPhysical Distribution

Those activities that involve the movement ofproducts through marketing channels frommanufacturer to customer, including:

Transportation: shipping goods to customers by rail, air,truck, water, and pipeline

Warehousing: the receiving, storing, and shippingactivities involved in the physical distribution of goods

OrderProcessing: the receipt and preparation of an orderfor shipment

Material Handling: the physical handling of productsduring transportation and warehousing


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Basic Channels of DistributionBasic Channels of Distribution

Manufacturers/products

Agents/brokers

Wholesalers/distributors

RetailersRetailers

Consumers and organizational end users


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Typical Distribution of DrugsTypical Distribution of Drugs

Manufacturers

Marketing Agents

Retailers/Wholesalers/Distributors

Private

GPs/specialists

Group

Procurement

Office

Retail

Pharmacy

Public Hospitals / Institutions

Documents

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