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INDUSTRIAL MARKETING
TOPIC 2: UNDERSTANDING INDUSTRIAL MARKETS.
2.1:UNDERSTANDING THE MARKET
• Understanding the market means understanding “customers”:
– Customer’s may be categorised based on:
• business mission.
• Buying Motivation - The products role in the customer’s in the production process and cost structure.
• The buying characteristics in each customer category, for each buying motivation.
• Many “individuals” constitute the decision making process.
– Procurement is becoming more “enlightened”, across the Supply Chain. At what level is a specific customer?
2.2: CUSTOMER CATEGORY BY BUSINESS MISSION.
2.3: CATEGORIZATION BY BUYING MOTIVE.
2.4: CATEGORIZATION BY BUYING MOTIVE……...Notes
• Entering goods:
– A BoM item. Approved designs, specifications, quality procedure, etc.
– Continuous improvement (Kaizen)
» JIT
» TQM- Cost and Quality
» Six Sigma
– Resellers – VMI.
– Cost-of-goods sold.
– Buy Class:
• Straight Re-buy: dealers
• Modified Re-buy: Engineering Change. Direct Sales force intervenes.
2.5: CATEGORIZATION BY BUYING MOTIVE… notes
• Foundation goods.
– Capital Assets. Typically 60% machinery, 40% building.
– Cost assigned as depreciation item
– Determine “capacity” to deliver. Planned capacity is indicator of demand.
• Current utilization
• Growth “sentiment”
• Availability of Long-term Credit.
– Buy Class:
• New Task:
• Direct Sales Force. A Complex sale.
• Top-down selling – capacity increase is a “strategic” decision.
2.6: CATEGORIZATION BY BUYING MOTIVE…….notes
• Facilitating:
– Office supplies:
• Routine, through dealers. STRAIGHT RE-BUY.
– Business Services.
• Accounts for 80% of employment in US.
• SERVICES OUTSOURCING – A strategic management tool.
• As a tool for cost and differentiated strategy
– Service differentiators (over product features) critical. Service delivery is “people” dependent.
» The information age is behind us. Welcome the Knowledge age!
– DISCUSSION: Writing new rules for MARKETING.
• The new B2B and B2C landscape- telecom, web, globalization
• Mass customization – “customized service products”.
• Cycle time reduction – short windows of opportunity.
2.7: EVOLUTION IN PROCUREMENT
2.8 THE GOVERNMENT BUSINESS
• How government buys:
– Public announcement of requirements
– Buying procedures
• Open bid
– Qualified suppliers – bidder’s list to receive invitation
– Clear specifications – should not be restrictive (favorable to only one)
– Generally lowest bidder – premium if any must be justified. TCO considered.
• Negotiated (limited tender)
– At least three
– For complex projects
» Cost-plus
» Fixed
» Fixed-and-incentive (if TCO costs reduced).
– 2.9 THE GOVERNMENT BUSINESS…contd
• No frills marketing
– Understand government buying procedures, and qualification and selection criteria.
– Collate procurement plans of different agencies
– Custom products required – R&D involvement.
– Pre-spec – technical and commercial.
2.10 INDUSTRIAL SELLING INVOLVES MULTIPLE DECISION MAKING ROLES
2.11: SUMMARY- UNDERSTANDING INDUSTRIAL MARKETS.
• Looked at different customer types, based on their business mission.
• Customers buy differently, based on buying motives.
• Buyer behavior is less adversarial. More collaborative. Sellers will have to get equally sophisticated.
• The rules for SERVICES MARKETING are being re-written.
• Government is becoming transparent. And not all bad. So go for it!
• While selling, make sure that you have covered all “decision makers”, and addressed their needs (according to their roles).