Industrial Marketing

Industrial Marketing is marketing of goods and services to industrial and institutional customers (business to business marketing).

   The institutional customers use purchased goods and and services in their own production of goods and services. Consumer marketing, in contrast, is marketing of goods and services to individuals, families and households purchasing goods and services for their own consumption.

The Nature of Industrial Markets

Industrial/ B-to-B marketing involves the process of providing goods and services to industrial market intermediaries, as opposed to ultimate (final) consumers.

Industrial goods are differentiated from final consumer goods based on their ultimate use.

Types of Industrial Goods

Raw Materials –These are products destined to become part of another product, subject to further processing.

Fabricated Materials –In contrast to raw materials, these have already been processed but may require further processing.

Installations – Major equipment with long lives, such as buildings and machineries.

Accessory Equipment – Such equipment is used to aid and implement production and includes office machines as well as machine tools.

Operating Supplies – Materials used in producing goods & services.(Are similar to convenience goods in that they are consumable)

The nature of Industrial goods and services

They are often more complex than consumer goods and services

They can be categorized as:

·        Construction

·        Heavy equipment

·        Light equipment

·        Components and subassemblies

·        Integrated system, e.g., production line, power generator

·        Raw material

·        Processed material

·        Maintenance, Repair and Operating (MRO) supplies and services

Some Examples of Organizational Buying

·        Paper cups by McDonald's

·        Computer chips by Toshiba

·        Concrete by Local Authorities

·        Oil by Electricity Generators

·        Fertilizer by Farmers

·        Accountancy services by Ltd. Companies

Nature of Industrial Customers

·        Industrial customers: consisting of manufacturing and processing firms

·        Institutional customers: consisting of institutions such as hospitals, educational institutes.

·        Governmental customers: agencies, municipalities at different levels.

·        Industrial customers tend to be relatively few

·        They buy higher volume (comparing to individual customer)

·        Decision making is more complex

·        Formal purchasing procedures/routines

·        Many actors involved in purchasing process

·        The buying decision making may takes long time

·        They are less emotional and more rational

How industrial Marketing Differs from Consumer Marketing

·        Differences in basic assumptions.

·     Different theories

·        Aiming for improved profit and performance

·     Different customer’s needs

·        High degree of buyer-seller interdependence

·        Long lasting buyer-seller relationship

·        Very often special design for special customers

·        System solution/project

How Industrial Marketing differs...

•Higher functional dependence, particularly manufacturing and R & D, much closer relations with overall corporate strategy.

•More customer-oriented

•Technical product complexity, different sales techniques and different salesmanship.

Industrial Customers Type	Market Segments	Organisational Missions	Buying Behaviour
1. Commercial enterprises	Raw material producers Construction Manufacturers Services and professions Wholesalers and retailers Transportation Communication and other public Utilities	Serve a customer needs at a profit	Multiple influencers Multiple buying motives Complex purchasing process
2. Government	Federal, State, Local	Provide for the welfare, defense, education, crime, prevention, transportation, infrastructure, etc. needs of its citizens	Negotiated buying Precise specifications Bid buying
3. Institutions	Hospitals Nursing homes Schools College and universities Religious organisations Non-profit foundations	Social concerns Charitable concerns	Professional influencers