ABS

Introduction to Industrial Marketing

Lecture 1by Shilpa Singh

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ABSIndustrial Marketing

• Course Code : MMS 305• Program : MBA (Marketing & Sales) 2011-13• Credit Points :3• Faculty: Shilpa Singh, Ashwin Bhatia

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ABSCourse DescriptionWhile the basic tenets of consumer marketing are equally applicable to industrial marketing, the composition of the industrial market is uniquely different, as are the forces that affect industrial demand. Thus industrial marketers face many unique marketing situations not normally encountered in the consumer market. Therefore,

• This course aims to incorporate into students an understanding of industrial market characteristic, industrial marketing strategies & techniques.

• This course will also expose the student to practical applications of different concepts of Industrial Marketing

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ABSLearning Objectives Upon successful completion of this course, students will

be able to:• Identify the difference between consumer and industrial

marketing management;• Understand the unique characteristics of organizational

purchasing• Identify the major participants and forces in the

industrial marketing environment• Understand the strategic planning process in industrial

marketing

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ABSSession PlanModule I (Session 1-7 ; 7 hrs.)• Session 1: Introduction to industrial Marketing• Session 2: Understanding Industrial Marketing

Environment• Session 3: Industrial Buying Behavior• Session 4: Buying center and environmental &

organizational influences• Session 5: Industrial market segmentation, targeting, and

positioning techniques• Session 6: Tutorial 1 - Case Discussion• Session 7: Tutorial 2 - Case Discussion

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ABSSession Plan Contd…Module II (Session 8-14; 7 hrs.)• Session 8: Industrial Channels• Session 9: Channel integration• Session 10: Developing the Industrial Sales Force• Session 11: Industrial marketing communication• Session 12: Managing Advertising, Sales Promotion,

Publicity Strategy• Session 13: Tutorial 3 - Case Discussion• Session 14: Tutorial 4 - Case Discussion

After Session 14 - Assessment 1: Mid Term Examination

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ABSSession Plan Contd…Module III (Session 15-19 ; 5 hrs.)• Session 15: Industrial PLC• Session 16: The strategic planning process in industrial

marketing• Session 17: New product development• Session 18: Industrial Marketing: Legal Perspective• Session 19: Tutorial 5: Case Discussion

Session 20 and 21 (2 hrs.) – Assessment 2:Group Presentations

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ABSSession Plan Contd…

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Module IV (Session 22-25; 4 hrs)• Session 22: Purchasing in industrial sector• Session 23: Industrial Pricing Strategies and Policies• Session 24: Modes of Payment• Session 25: Tutorial 6 - Case Discussion

Module V (Session 26-30 ; 5 hrs.)• Session 26: Industrial marketing research techniques• Session 27: Sales and demand forecasting• Session 28: Industrial marketing in international context• Session 29: Introduction to nature of turnkey and BOT

projects• Session 30: Revision & Problem Resolution

ABS List of Suggestive Cases• Case 1: Case Study of Kone Escalators for Delhi

Metro • Case 2: Case Study of Titan Controls Corporation• Case 3: Case study of Tata Steel –Delivering Superior

Customer Value • Case 4: Case Study of Prentice Machine Tools • Case 5: Case Study – Hindustan Engineering and

Automotive Products Ltd

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ABSEvaluation Criteria

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Total Internal Marks :30 marks ( 25 + 5 Attendance)

ComponentsCodes

Mid-Term Case Presentation Individual Assignment

Weightage 10 10 5

Session Planned

After Session 14

(Week 27 Aug – 31 Aug)

Session 20-21(Week 17 Sept – 21

Sept)

Session 185th

September

ABSReference Books• Havaldar, K.K., (2009). Industrial Marketing: Text and Cases, McGraw

Hill• Reeder, Robert R., Reeder, Betty H., Brierty, Edward G. (2009).

Industrial Marketing: Analysis, Planning and Control,PHI Learning• Kotler, Keller,Koshy,Jha,(2009). Marketing Management: A South

Asian Perspective, Pearson Education• Dwyer, Tanner (2010). Business Marketing: Connecting Strategy,

Relationships and Learning, McGraw Hill• Newspapers- Economic Times, Business Standard, Financial Express,

Brand Equity• Magazines- Advertising and Marketing, Business World, Business

India

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ABS

Reading about following organizations / standard reports / publications is suggested:

1. Directorate General of Supplies and Disposals (DGS & D)2. Business Monitor International (BMI)3. National Industrial Classification (NIC)4. International Standard Industrial Classification (ISIC)5. Thomas Register (USA)6. Business Marketing Association (BMA)7. Directorate General of Commercial Intelligence and Statistics

(DGCI&S)8. Export Credit Guarantee Corporation (ECGC)9. Minerals and Metals Trading Corporation of India Limited (MMTC)10. Transport Corporation of India (TCI)

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ABSSession Plan

• Session Plan has been uploaded in Amizone. Lets have a look

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ABSLecture 1 will cover

• What is industrial marketing• Why study Industrial Marketing• Characteristics of the B2B Market• What Distinguishes B2B from B2C• Classifying Goods & Services for the Business

Market• Categories of B2B Customers

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ABS

IS• MARKETING OF GOODS AND SERVICES TO BUSINESS

ORGANIZATIONS– Companies– Government Bodies– Institutions (eg. hospitals)– Non-Profit Organizations ( eg.Cooperative societies)

FOR• USE IN PRODUCING THEIR PRODUCTS AND/OR TO

FACILITATE THEIR OPERATIONS

Industrial Marketing

ABS

Why study Industrial Marketing???• Marketing Majors begin in Business Marketing• Magnitude in Business Marketing• Business Marketing is unique

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Characteristics of the B2B MarketGEOGRAPHIC MARKET CONCENTRATION• Business market more concentrated than consumer

market.• Example: Companies that sell to the Central Government

are often located near New Delhi.

SIZES AND NUMBER OF BUYERS• Business market has smaller number of buyers than

consumer market.

ABS

• Many buyers are large organizations, such as Boeing, which buys jet engines.

THE PURCHASE DECISION PROCESS• Sellers must navigate organizational buying processes

that often involve multiple decision makers.• Purchasing process usually more formal than in

consumer market.• Purchases may require bidding and negotiations.BUYER-SELLER RELATIONSHIPS• Often more complex than in consumer market.• Greater reliance on relationship marketing.

ABS

• B2B: goods or services are sold for any use other than personal consumption

• Note: It is notnot the nature of the product; it

is the reason for the transactiontransaction.

What Distinguishes B2B from B2C?

ABSBusiness vs. Consumer Marketing

Salt Mine

Business Marketing Business Marketing Consumer Marketing

Salt is mined Salt is processed into food-grade or industrial-grade salt

Consumer

Distribution of Salt

Morton’s Salt

McDonald’s(salt is added to

fries)

Krogers(Salt is sold in

shakers)

General Foods(Salt is added to frozen dinners)

ABS

B2B versus B2C Marketing

ABSB2B versus B2C Marketing

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• You buy a gear to fix your bike.• Ford buys the same gear to fix a machine.• Amity buys soft drinks for its cafeterias.• You start a landscaping business and purchase a

lawnmower. • The Indian government buys…anything.

Is it a B2C or a B2B Transaction?

ABSClassifying Goods & Servicesfor the Business Market

Entering Goods Foundation Goods

Facilitating Goods

Raw Materials - Farm Products - Natural Products (e.g., iron ore, lumber)Manufactured Materials/Parts - Component Materials - Component Parts (e.g., tires, microchips)

Installations - Plant and Buildings - Fixed Equipment

Accessory Equipment - Light Factory Equipment (e.g., lift trucks) - Office Equipment

Supplies - Operating Supplies (e.g., lubricants, paper) - Maintenance & Repair Items (e.g., paint)Business Services - Maintenance & Repair Services - Business Advisory Services

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3 Main Categories of ProductsCategory 1: Entering Goods

– Become part of the finished product– Cost assigned to the manufacturing process

• Raw Materials– Farm products & natural products– Only processed as necessary for handling & transport– Require extensive processing– Eg. Crude Oil, fish , fruits, iron ore etc.

Classifying Business Goods & Services

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• Manufactured Materials & Parts– Any product that has undergone extensive processing

prior to purchase– Component Materials require additional processing.

• Eg. Acids, Fuel oil, chemicals etc.– Component Parts generally do not require additional

processing. • Eg. Bearings, gauges, tyres etc.

Classification continued…

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Category 2: Foundation Goods– Capital Items– Typically depreciated over time– Used in production processes

• Plant and Building– Major long-term investment items– Plants, land, warehouses, offices etc.

• Installations– Major long-term investment items– Furnaces, machines, turbines.

• Accessory Equipment– Less expensive & short-lived– Not considered part of fixed plant– Portable tools, PC’s, etc.

Classification continued…

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Facilitating Products– Support organizational operations– Handled as overhead expenses

• Supplies– Any supplies necessary to maintain the organization’s

operations– Eg. Paints, packaging materials, fasteners

• Services– Maintenance & Repair support– Advisory support– Logistical support– Eg. Legal, auditing, courier etc.

Classification continued…

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• Commercial enterprises– Indirect channel members and facilitators– OEMs (original equipment manufacturers)– Users = customers

• Governmental organizations

• Institutions

• Cooperative societies

Categories of B2B Customers

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Institutional Customers

Government Customers

Commercial Enterprises

Cooperative Societies

Industrial distributors/dealers

OEMs

Users

Public Sector Units

Government Undertakings

Public Institutions

Private Institutions

Manufacturing Units

Non Manufacturing Units

Intermediaries, reselling to OEMs,

For a battery manufacturer Exide, a truck manufacturer like Telco is an OEM

For HMT machine tools manufacturing company, TVS-suzuki company is the user

BHEL, ONGC

Indian Railways, State Electricity Boards,Defense

Units

Govt. Hospitals, Prisons

Schools, Colleges

Maharashtra Sugar Cooperative Society

Cooperative banks, housing cooperative societies

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Industrial distributors/dealers

OEMs

Users

Intermediaries/middleman, reselling to

OEMs, users, government firms

For a battery manufacturer Exide, a truck

manufacturer like Telco is an OEM

For HMT machine tools manufacturing company,

TVS-Suzuki company is the user