B2B Marketing

Prof. Rupali Rajesh

overview

Industrial marketing experts Fred Webster and Jerry Wind have described as a Sleeping Giant, has been the subject of very little research.
The fact is that Generates higher volumes of sales than consumer

Technology become comer stone of industrial marketing. New product technologies are emerging and manufacturing processes are evolving. IT is being leveraged to develop new products and services, in addition to streamlining operations. Internet has revolutionized and helped bring down the communication costs. E-procurement and e-market places have gained popularity among organizational buyers.

Nature of competition has undergone a sea change in the industrial marketplace. It has reached a stage where we can say, The Business Network is the Business Strategy. Today, competition is between value-chain partnerships rather than between industrial firms.

Concept of Industrial Marketing

Marketing of products and services to business organizations. Firms buy products and services to satisfy many objectives like production of goods and services, making profits, reducing costs, and so on. It includes manufacturing companies, government undertakings, private sector organizations, educational institutions, hospitals, distributors, and dealers.

Areas

Industrial Markets

Consumer Markets
Geographically disbursed Mass markets Standardized products Small unit of sale Service is somewhat important

Market Geographically Characteristics concentrated Relatively fewer buyers Product Customized products Characteristics technically complex Large quantities or high value items are involved. Service is a strategic tool, having high importance

Areas Nature of demand

Price

Industrial Markets

Consumer Markets

Derived (it is depend Direct upon consumer goods)

Complex pricing policies.(list prices for standard products) Competitive bidding and negotiated prices Every transaction is important for an industrial marketer Simple pricing policies List prices or maximum retail price (MRP) Single transaction may not influence profit margin

Areas

Industrial Markets

Consumer Markets

Service Service, timely Characteristics delivery and

availability very important

Channel distribution

Service, delivery, and availability somewhat important

More direct Indirect Fewer Multiple layers of intermediaries/mid intermediaries dlemen

Emphasis on advertising and sales promotion

Promotional Emphasis on Characteristics personal selling

Areas

Industrial Markets

Consumer Markets Involvement of family members Purchase decisions are mostly made on physiological/social/psyc hological needs Less technical expertise Non-personal relationship

Buyer Involvement of various Behaviour functional areas in both buyer and supplier firms Purchase decisions are mainly made on rational/performance basis Technical expertise Stable interpersonal relationship between buyers and sellers

Areas
Decision Making

Industrial Markets Quality is checked by the customer Informed buyer Customer is a professional in decision making Less emotion involved in decision making Customers take impersonal decisions More number of influencers More emphasis is placed on negotiation skills and the negotiation process is time processing

Consumer Markets Few quality tests are conducted by the consumers Relatively ignorant buyers Consumer is relatively an amateur in decision making Irrational decisions are possible Emotion is present in decision making Consumers take personal decisions Negotiation is less important Less number of influencers

Characteristics of Industrial Marketing

Demand characteristics:The nature of demand for industrial products is derived, i.e. demand for industrial goods depends on the demand for consumer goods. Market Characteristics: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.

Characteristics of Industrial Marketing

Product Characteristics:It include both standardized and tailor-made products. Standardized products are manufactured on the basis of specifications developed by manufactures of products and services and meant for general use and application. Tailor products are those that are manufactured to customer designed specifications. They are very complex and technical.

Contd

Price Characteristics: For standardized industrial products, Prices are governed by price list. Customers negotiate on these prices and get a better deal. Commercial terms & conditions such as payment terms, delivery terms, delivery schedules, delivery, quantity per shipment, fright and insurance are negotiated. Follow system of Rate Contract wherein the price of products and terms of business are fixed for a specific period of time.

Contd

Promotion characteristics: Product characteristics calls for a close and sustained pre-and post-sale interaction between suppliers and customers. This can be achieve through strong personal selling. Advertising and sales promotion are either to make customers aware or remind them about purchasing becomes redundant (unnecessary) in industrial marketing.

Contd

Behaviour characteristics:

Industrial buyers are knowledgeable, technically sound and skilled in negotiations. They need good pre-sales and post-sales support from the suppliers. Pre-sales: providing timely technical details and drawings, making suggestions, prompt handling of their queries or clarifying their doubts, timely submission of offers etc. Post-sales: Includes courtesy calls, informing customers of changes in design, company news, advice to buy spares, timely supply of spares and service and training.

Complex Decision Making

Decision making unit in BtoB, markets is highly complex or at least it has the potential to be so. Ordering products for low value and low risk (paper clips)may well be the responsibility of the office junior. However purchase of a new plant that is vital to a business may involve a large team who makes their decision over a protracted period.

Buyers are more Rational

Buyers as more rational than their consumer . B2B buyers has to make a profit each month. They are buying a product for the purpose of ROI (return on investment). B2B buyers buy products What they want, not what they Need.

Products are often more complex

Purchase of an industrial product frequently requires a qualified expert. Industrial products, frequently have to be integrated into wider systems and as a results have very specific requirements and need intimate, expert examination and modification.

It is difficult to imagine a turbine manufacturer or commercial website design buyer having a look at three or four products and then choosing on simply because it looks nice. No, It involved a whole host of technical, productivity and safety issues, whilst the choice of website might be based on its integration into a wider

Fewer behavioral and needs based segments

Behavioral or needs vary less than that of a consumer audience. The buying decision involves numerous colleagues, work place norms, time etc. Need based segments: Price-focused

segment Quality and brand-focused segment Service-focused segment A partnership-focused segment

Personal relationships are more important

The important features of B2B markets is the importance of personal relationship. A small customer base that buys regularly from the B2B supplier is relatively easy to talk. Sales and technical representatives visit the customers. People are on first name terms. Personal relationships and trust develop. It is not unusual for a B2B supplier to have customers that have been loyal and committed for many years.

Emerging trends in industrial Marketing

Shift form sellers market to buyers market: Many industrial products such as steel, cement, transport vehicles, turbines, telephone cables, tractors, computer hardware, several bulk drugs and chemicals and the like, Indian markets have now turned from sellers market to buyers market. This has happen due to rise in production, excess capacity in certain sectors and liberal imports. Become more conscious about quality and cost. Customer orientation is a consequences of shift

Emerging trends in industrial Marketing

A concept of application engineering (identifying new application of the existing products is emerging fast in this sector. Improved product quality: quality assurance rather than quality control has become the order of the day. ISO 9000 certification is an indicator of growing industrial concern. About 85% production in industrial machines and machine tool sectors in India is now from

Emerging trends in industrial Marketing

Up gradation of technology: In order to improve quality and reduce cost many firms have upgraded their systems and technologies. Steel Authority of India (SAIL), earmarked 210 billion to be spent between 1994 and AD 2001 for modernization of its plants, which the firm has already spent in its first phase of modernization completed 1994. Tisco has spent Rs. 50 billions to modern to modernize its Jamshedpur plant.

Emerging trends in industrial Marketing

More frequent and meaningful interaction with customers: for understanding the needs of customers and developing relationships Developed useful database on the purchase pattern, order quantity and order to remittance cycle to cater to the needs of the customer in a more effective manner. Firms like Bajaj Scooters have created extensive computer networks linking their sales offices to dealers and distributors to enable a quick response to demand in the

Customer service: service has become a thrust area for several well-known industrial firms in the country. Some lesser known firms have been benchmarking themselves against the service quality of Xerox, Wipro and Toyota. Firms like Kirolskar Engines, Lucas- TVS, Cummins Ltd, Larsen & Toubro (L&T) and Xerox are setting examples with their In service lies success motto.

Arranging finances for the customers:

competition has made it inevitable for firms to arrange finances for their clients if they happen to need it. Looking to the needs of buyers several firms have promoted their own financing subsidiaries. Kotak Mahindra, Reliance, Bajaj and Tata Finances are a few examples in this regard. Some resourceful firms have responded to the needs of customers by introducing the supplier credit concept.

Dealer Network: In a competitive market,

distribution is the key to maintaining a hold on the market and boosting sales. Few dealers of industrial products are qualified engineers or techno craft themselves, they seek good reward and better growth potential from the firm for which they work. This is why several firms have begun to treat their dealers as customers.

Emergence of a New High Technology Segment: emergence of a new technologies in the areas of bio-engineering, software development, electronics, space applications and the like have opened new vistas of growth for technology driven firms. The new segment termed as High Technology Segment has emerged. The outcome is firms have started shifting from a low quality, low price position to high quality, competitive price stance. The search for better quality and cost

contd
Increased Marketing Interaction with R&D: Firms are trying to produce more user friendly goods with the help of inputs from marketing. Relationship Marketing: Industrial marketing is building relationship with the consumer and dealers. Trust is an integral part of buyers decision on making major investments in the sellers products, so it has to be first priority of the marketer.

Trust building exercise often takes consultative route, the marketer should know who his customer is, what he is all about, what problems he is facing, the best way of strengthening a relationship is to help him in solving his problem. The interaction is more visible in computer software, industrial dyes, electric turbines, industrial lighting, printing machinery, transport vehicles and packaging industries.

Contd

Diversification: Firms are seeking

diversification mainly to become multi-product, multi-market organizations and exploit the untapped opportunities that exist in the allied on new areas. Some of the examples of successful diversification of Indian firms are listed below:-

Escorts-the manufacturer of tractors, bikes, shock absorbers, railway coupling equipment, etc., have ventured into production of floating dry docks. Sunderam Clayton, manufacturers of automobile ancillaries, air brake systems, etc., are now moving into railway signal equipment manufacturing. BPL-Sanyo, better known as an entertainment electronics and home appliances firm is now moving into high-reach satellite communication equipment and diagnostic systems.

Reliance Industries has successfully diversified into telecommunication business.

Telco (now Tata Motors) has diversified into passenger car segment. Videocon is entering into real estate and construction business.

www.nirma.co.in
Diversification

might improve the bottom lines of firms if they do their homework well and support new products with sound marketing strategies.

Emergence of E-commerce: Internet has emerged as a strong contender for top position in the communication industry. Websites are being used extensively to promote goods and services, handle the queries and network with dealers and distributors. The automotive sector, for example, continues to take significant steps in wiring up their supply chain while Internet usage in the banking and financial sector in on the upswing. http://www.tradeindia.com/Seller/Transportation/R ailway-Components/

According to the National Association of Software and Service Companies (NASSCOM) by the end of March 2002 the number of public limited and private limited companies with Internet connections had grown to 314,588 and 162,639 respectively. (www.nasscom.org) http://www.bksmotors.in/ http://www.bajrangautoparts.com/tata-motorsgenuine-spare-parts.html http://www.eisparts.com/BEP.html

Some Examples of Organizational Buying

http://www.antonyasia.com/html/products.htm http://www.tradeindia.com http://www.industryrailway.com/category/8tools.aspx http://www.suzukipartshouse.com/ http://www.suzukimotorcycle.co.in/products.asp http://www.slideshare.net/mohammadaarifkhan/t he-making-of-tata-nano http://h71028.www7.hp.com/enterprise/downloa ds/Sundaram%20Clayton-IN.pdf

Thank You