purchase committee. Product line decisions include the addition, deletion or repositioning of products within the line. Buyers are the individuals in the purchase or materials department. The new product concept will more on to the next stage. Many managers in such firms are promoted out of engineering and research and development departments.

Furthermore, the factors like quality of product or service, reliability in delivery, and service are considered in qualifications of suppliers. Since the job of sales people involves lot of missionary work before closing any sales, they are paid commission and bonus apart from their regular fixed salary. adding all charges with basic price, the orders are released on the lowest bidder who has quoted the lowest price or has the lowest landed cost, if other factors such as technical specifications, delivery period, and payment terms are the same as per tender enquiry. The individuals or heads constituting the sample is referred as sample elements. It is therefore, important for an industrial salesman to remains in close touch with purchase or materials department persons as well as with quality, production, R&D, marketing, and accounts/finance persons of buyer organisations as they influence buying or payment releasing decisions. The success rate for consumer products is above 25% while the success rate for new Industrial Products is around 45%. *****. Then vendor must find a 'beachhead' or foothold, niche among pragmatist on the other side of the chasm. But, for high-value and technically complex products, senior executives are the deciders. A high potential customer needs to be offered effective and professional service backup, ensured availability of varied products compared to the low potential customer.

If the objective of manufacturer is to offer good customer service to develop long-term relationship while that of distributor is to somehow make short-term profits, then it gives rise to conflict among the two. Additionally, numerous industrial marketers are also making more use of the telephone as a means of enhancing the efficiency of their overall communications program. Positive motivators like higher margins, special prices, allowances etc, along with threats like reduction in margins, slow delivery, terminating the contracts etc, are used to increase business. Though this is one of the cheapest tool used by the industrial marketers, they should be careful about the selection of target audience as wrong identification would waste the entire efforts. In case of raw materials or process materials the product form pricing is very common for it is this form that would impact the price of the final product. The Manufacturer whose pursues a selective strategy can expect some savings in marketing cost.

In consumer marketing, consumers make buying decisions based on certain mental stages such as need recognition, information search, evaluation, purchase decision, and post-purchase behaviour. When obtaining mailing lists from outside sources, however, care should be taken to make certain that the lists are up to date.

The team of specialists is needed to achieve the synergy between commercial and technical functions. Advertising helps salespersons to improve their sales by increasing their sales efficiency and effectiveness as people are already aware of their company, products, etc. Marketing consideration includes the size of the market, marketing methods etc. There are various ways in which a sample can be distributed. Each supplier is evaluated on Notes each attribute by giving a weightage to each attribute proportionately or on rating scale basis. Industrial customers also tend to be concentrated in specific areas of India such as Andaman Nicobar, the Leh Hills. Channel objectives are aligned to the company's marketing objectives that need to be stated in terms of targeted service output levels. In oligopolistic industries that sell a commodity such as steel, paper, or fertilizer, firms normally charge the same price. These outlays should be monitored separately to evaluate their individual effectiveness.

To stay competitive, many companies have downsized and reinvented themselves. Buildup approach: Number of potential buyers purchases, number of buyers in area, same for each area, then add areas to calculate total market potential. The example is more for the consumer market but in industrial market it refers to different thing.

For instance, a tyre manufacturer (say, MRF), who sells tyres to a truck manufacturer (say, , under such as circumstance the truck manufacturer is referred as an OEM. Each element of service (as given in the figure below) has different levels of importance that the industrial marketer should recognize. Customer service is a core element in the strategic plan. Once established, management chooses the strategies and actions necessary to achieve those objectives. For example, while a customized non-standard product requires company sales force to sell directly, products like HVAC (Heating, Ventilation and Air-conditioning) are either sold by the company or its franchised dealers. The grid in the given figure helps the marketing manager to allocate the salespersons based on the opportunity available from the PCU after assessing the optimality of sales force deployment decisions across PCUs. This type of specialization is adopted with products that are technically complex where the sales persons can influence the buyer easily. In addition, a sales person can meet only one customer at a time that makes it a costly affair of reaching a large audience.

As a result of the efforts of the company to launch a new industrial product for the first time in the market, fights back the competition in maturity stage by reducing the price, to match the competition spends more money on promotion, builds more intensive distribution, or new models by bringing major changes to the existing products. The decision makers in the buying organization may evaluate each supplier on a set of agreed-upon attributes or factors.

Actual instead of potential.

Use the Web and library to collect information. Selling and buying are the two major pillars in industrial marketing. Inexpensive, quick to obtain, multiple sources available, independent therefore credible. This is of four types, namely, nominal, ordinal, interval and ratio. The industrial customer has three options, namely, make, buy or rent. Brokers are the middlemen who represent either the buyer or the seller.

This is generally a major city or town where more of industries are located. To know these influences, firstly we have to study the purchase objectives of the industrial customers. Under such a situation the smaller firms cannot operate in a profitable manner. Controlling requires that various relevant aspects of performance be measured and compared with corresponding aspects of the plan. The firm's credit rating in the commercial market may be a criteria of reliability in this case. If the manufacturer elects to market through all outlets of the chosen type or types that will buy his products, he may be able to gain complete coverage of his total market rather quickly. As the unit purchase price of capital items is high, borrowing money for a period of time, which is roughly equivalent to the expected life of the fixed assets, finances these items. The marketing channel designer has to know at this stage itself that providing superior service output means increased channel costs and higher prices for customers. Relationships, partnerships and alliances are what define marketing today. Some of the common reasons include. In India, the largest purchasers of industrial products are Central and State Government departments, undertakings, and agencies, such as railways, department of telecommunication, defense, Director General of Supplies and Disposal (DGS&D), state transport undertakings, state electricity boards, and so on. Ultimately though it is desirable that that lower price be a criteria, then also it must be kept in mind that delivery and quality are not normally traded off with price. This is not the market Go Frugal caters or to say Capillary Technologies of Bangalore caters. There exists reciprocity between buyer and seller in reference to financial exchange. This can happen through frequent interactions with the channel members where they can discuss the common issues and sort them out. As information is gathered researchers can test the hypothesis. To develop a good long-term supplier/vendor relationship and to develop new sources of supply, industrial marketers need to understand that purchasing objectives. If the appropriation appears to be too high, the objectives may be scaled down and strategies adjusted accordingly. Price-Quality Effect. An ineffective performance of physical distribution system will impact the operations of the intermediaries. There are places that are not reachable by the company sales force and there are important decision makers for purchase of industrial products who cannot be met by the sales force. The industrial marketers should also be aware of models of organizational buying behaviour and the up to date purchasing activities, such as just-in-time delivery, single sourcing, value analysis, and purchasing committee. Some of the techniques they can use are as follows: Trade shows present the manufacturers an occasion to exhibit and demonstrate their products to a large number of customers in a short provides best quality product at economical price.

The reference price might have been formed by noticing current prices, past prices, or the buying context. If the byproducts have value to a customer group, then they should be priced on their value. This helps the potential customers to respond the company that in turn would send its sales force to meet them personally and close the sales. The channel must be responsive to change, adaptive to change and entrepreneurial so that the industrial buyer's need is properly addressed.

The product concept is the summation of technology, attribute and benefits that the product would offer. The tender offers of various suppliers are kept secret and not made known to suppliers. Personal selling starts with selecting the salesperson who acts as the representative of an organization.

There are various approaches the most common being AIDA( attention, interest, desire and action) is normally recommended. There is a process of exchange between the industrial buyer and. With this growth the demand for services like information processing, advertising etc, are in an increasing trend. An inefficient and untimely delivery can make the customers to. A combination of direct and indirect channels is used by some industrial marketers to cater to different market segments or when they have some resource constraints. proposed the new product idea should not be assigned with the task of business analysis because of excessive optimism or vested interest by such persons. The going price is thought to reflect the industry's collective wisdom as to the price that would yield a fair return and not jeopardize industrial harmony. Pricing is a problem when a firm has to set a price for the first time. The price will be somewhere between one that is too low to produce a profit and one that is too high to produce any demand. They merely provide buyers with a basis of comparison with other companies' products once a decision has been made to purchase a particular product. That is, not only does marketing tend to ignore its interface with other areas such as finance, manufacturing, and R&D, but "marketing concepts, methods and inputs are frequently ignored in the decision perspectives of other business function & While marketing should take the lead in defining market segments, needs, and opportunities and in determining what it will take to satisfy the various markets and, segments, planning in the industrial arena must be a collaborative effort between all key functional areas. Another strategic consideration is whether the principal source of new products should be internal or external.

The granting of credit or the need to exchange money from one currency to another at the time of dealing with foreign buyers/customers are included in this exchange. As the intermediaries perform all or most of the above functions, the industrial marketers find it more suitable to use their services rather than doing all the things by themselves. Under this stage an industrial marketer should adopt the strategy of withdrawing the existing product from the market or introducing a new product as a replacement or reduce marketing or other costs to make some profits. The quality of product should be consistent with the specifications and use of the product. To what extent are the possible purchasers concentrated geographically? Hence, a catalog should try to provide all the relevant information that a buyer is seeking from the company about a particular product (specific catalog) or all the products in general (general catalog). An efficient delivery system helps to reduce the costs, improve customer service, and minimize time that finally helps to gain customer loyalty.

Examples are selling expenses, freight, and raw material. The cost of reaching large numbers of buyers through personal contact cannot only be prohibitive, but unjustifiable. The industrial buyers buy the item for the first time in this situation. I take that responsibility of the purchasing agent's back, and in my opinion, he is glad to be rid of it.". This is another common source of conflict that generally happens where the manufacturer tries to cater to large customers directly and makes the distributors serve the small customers thus making them earn less profit and hampering their business growth. Will suppliers raise their prices when they see the company's price? Generally, users play the role of the initiators. Adaptability, flexibility, speed, aggressiveness and innovativeness are the keys to remaining competitive today. Some of the pricing objectives which industrial firms can pursue are discussed below. Lawyers, accountants, and other professionals typically price by adding a standard markup to their costs. It says that the company should Price at a level that captures what the buyer thinks the product is worth. The firm might charge the same, more, or less than its major competitor(s).

The decision on the amount of quantity discount depends on demand, costs, and competition analysis. The industrial marketers depends on intermediaries to offer services to customers who are either giving less business or are located at far-off places and prefers to serve the nearby or high potential customers by themselves. Consumer intends to consume or benefit for an outcome of satisfaction, but not to make a profit. Pure services are very significant from business point of view as they constitute the major portion of the total corporate purchases. use this technique as a major expenditure. Example; Caustic soda in some industry would be used as lye ( Liquid) form, in some other in powder form and in again some other in flax form. If, on the contrary, the probable volume of sales in a market area is small, the direct method may be too expensive. Selling skills -This is very important for the sales people. Farris and Reibstein examined the relationship between relative price, relative quality, and relative advertising for 227 consumer businesses and found the following results this however could be extrapolated to Industrial market as well. This involves probing into the past product usage and pattern of usage, the present product use and the pattern of use, competition or competitors and the firm's image regarding the product to be offered. This helps the company to change itself accordingly and keep upto the expectations of its target audience. .

They make use of in-house technical expertise when required. This is a probabilistic method of sampling. The designing of sales territory comprises of following steps - First a basic geographic location that controls the entire operations is selected. In the former instance there are two basic alternatives: selective distribution is one in which the firm sells through one or a limited number of outlets in each market area or segment, or intensive, is one in which all outlets in a given market segment will be utilized. In this strategy, standard products that are purchased more frequently and have less unit value like raw materials and other convenience goods are distributed intensively i.e. One -time ads are generally ineffective as several exposures are necessary before a message has an impact. For instance, delaying the delivery of products will result in intermediary trying to avoid the manufacturer's products and searching for another company. In designing an effective publicity program, the industrial marketer must be aware of the fact that publicity is most effective when it is used to complement the total promotional program. In this process, prospective customers are contacted through telephone and provided with all the required information and then converted to sales lead depending on their interest towards the company product. It is strictly a case of derived demand. Promotional novelties are offered according to the type of customerscostly for senior management, medium for middle management and low cost for junior management positions. The aspects where the middlemen score less during the evaluation process are analyzed and discussed with them where they are motivated to improve upon those areas. They are called variable because the total variable cost varies with the number of units produced. These places could be reached easily through advertising.

For example, let us consider the marketing strategy of a large furnace manufacturer intending to directly sell its furnaces to the industrial buyers. The industrial marketers ought to realise that it is important to satisfy the purchasing objectives of an industrial firm as well as the personal objectives of the buying members. Competitive-oriented pricing is common where firms bid for jobs. According to the Product Life Cycle theory, products tend to go through different cycles of stages that begin when they are launched in the market and ends when they are eliminated from the market. Cause marketing has become a very powerful marketing tool (this is discussed in my notes). The fundamentals of consumer marketing are equally applicable to the industrial marketing. It should be designed, then, to enable the company and its sales people to become favorably known to current and potential customers, to convey specific and technical information regarding the characteristics of a particular product(s), to help sales people in their selling effort, to motivate distributors of industrial goods, and to reach those who either directly or indirectly influence the buying of industrial goods. A particular customer might ask to forego the free delivery and training in order to get a lower price. For closed tenders or limited tenders, the tender opening procedure of reading out the prices and other terms are not followed. Only a handful of counties in California, Oklahoma,. It is the published statement of basic prices which is sometimes quoted or informed to the customers.

Message strategy specifies how advertising objectives are to be achieved by defining the theme for the communication program and the company image (positioning) desired in the marketplace. Audience participation is a unique way to get readers involved in the advertising message. Where market coverage is limited geographically, consumer media may also provide an excellent Way of reaching a market. (University students/local residents). For example, the consultation services associated with the sale of computers is as important as computer itself. At our company, the offensive aspect is more important. As upgrades become available, adoption of these upgrades causes the least internal upheaval if they are backward compatible with the leader's product that they have bought. It helps him to modify the size of his sales force, make changes in the sales territories, deciding in the allocation of the sales calls. This calls for well-organised marketing planning. For example, in many small businesses there is only one geographical market and a limited number of products (perhaps only one product!). (goals may be unrealistic) Need to probe beneath the superficial symptoms. Services are consumed at the time of production, but there is a time gap between the production and consumption of products. They must be formulated on the basis of the firm's overall corporate and marketing objectives. The main objectives of industrial marketing channel are enumerated below: The channel participants must feel motivated to be part of the network. If so explain such a trend. Usually growth stage brings profit.

Cooperative Sugar Mills) or non-manufacturing organisations (e.g. A firm contemplating a price change has to worry about competitors' as well as customers' reactions.

Usually, these are influenced by organizational factors or taskoriented objectives viz. They are designed to perform in the general type of operations as well since such machines can perform more than one function. Fragile-Market-Share Trap. This is the most difficult task for any industrial organization as. Like supplies services are considered as expense items. The financial lease is for a basic term during which the lease is noncancellable. Advertising messages can be developed around case histories, testimonials, short stories, audience participation, or straight exposition. Buyers are Jess price sensitive when the product is assumed to have more quality, prestige, or exclusiveness. Secondly, a market survey is conducted by the marketing manager to determine the sales potential of each control unit. When it Notes 225 was discovered that the average sales call cost $200, he began to advertise heavily on television, and backed it with direct mail and classified ads in local newspapers and a 24-hour, toll-free answering service. Course Hero member to access this document, Jaramogi Oginga Odinga University Of Science And Technology School, Jomo Kenyatta University of Agriculture and Technology, Nairobi, University of Economics Ho Chi Minh City BUSINESS 101, Jaramogi Oginga Odinga University Of Science And Technology School MARKETING MISC, Jomo Kenyatta University of Agriculture and Technology, Nairobi BSS 2116, Jomo Kenyatta University of Agriculture and Technology, an investigation into printing industry trends by romano, Jomo Kenyatta University of Agriculture and Technology BUSINESS MBA, D.Ross Jaunty Coffee Company Balance Sheet Analysis.docx, Question 16 Medical examiners help determine the time of death by studying the, making process will allow maximum effect to meet the patients end of life needs, 10 Trade restrictions usually benefit a small minority of the in the nation at, Explanation An earthquake occurred on 29 March 1999 in the Chamoli district in, to resolve the issue should the member report it to legal authorities or leave, Required Calculate Ms Heymans Pension Adjustment Reversal PAR for 2019 Reyes, Question 3 Correct Mark 100 out of 100 Flag question Question text Absolute, Question 23 08 out of 08 points A motion for summary judgment is Selected Answer, SOLUTIONS TO CHAPTER 8 SELF TEST QUESTIONS FROM TEXTBOOK 1 b 2 a c d 3 a 8 140, Higher government deficits the supply of bonds and shift the supply curve to the, 1 2 3 4 Whats New Direction Read and Analyze Mr Garcia bought an illustration, Copyright 2022. Industrial buyers tend to purchase on the basis of a few specifics. Always, the buyers like to buy at the lowest price consistent with availability and quality of the product. Products comprised of ubiquitous materials will usually be produced near market locations to reduce transportation costs. Discriminatory pricing takes several forms: Here different customer groups are charged different prices for the same product or service. Service aspect is the other half of the total cost approach. The industrial marketer has to integrate the various communication tools so that the communication plans of the company are clear, consistent and cost effective. Pricing strategies vary as the industrial product moves through its life cycle. The compensation is offered taking into account the expenses incurred and the services provided by the intermediaries. They stimulate sales without costing the company as much as would cutting the price.

Buyers are less price sensitive the lower the expenditure is to the total cost of the end product. Companies often raise their prices by more than the cost increase in anticipation of further inflation or government price controls; this is called anticipatory pricing. Thus, this method ignores all other business conditions that might be suggesting to totally opposite strategy. Hence, total cost approach has to be considered to manage such inconsistency. But it also involves decision-making about production and operations, finance, human resource management and other business issues that affect the marketing response to combat the external and competitive environment. In order to avoid any future disagreements, there should be clarity in the roles of both the industrial marketers and the channel partners. Many of the principles that are followed in developing consumer advertising programs are not only applicable but are necessary in developing an effective industrial promotional program. Then the final sales territories are decided. The universally recognized difference between goods and services is intangibility. The Internet is creating new business opportunities and directing the organizations to do the business in different forms and ways. The costs involved in implementing the bases for appropriating advertising funds.

Lecture 4: Segmentation, Targeting And Positioning In Industrial Markets. The cost of such items therefore, becomes part of the buying firm's Capital structures than as current expense. The job of personal selling starts after determining the target segment in the organization's market. The tools used are direct mail, telemarketing and online marketing. Many commercial organisations have established a separate purchasing department to enhance the status of purchasing in manufacturing organisations; because, on an average fifty to seventy per cent of sales revenue is spent on purchase in these organisations. This has the probability of leading to new needs, additional purchases, and also referrals and testimonials which can be used as sales tools. Advertising messages must be formulated on the basis of how the supplier's product(s) can assist in solving customer problems and relate to the needs of the particular target audience. The extreme point of the structured being memorized and the other non-structured the need-solution. Focus groups-observe group interaction when members are exposed to an idea or concept, informal, less structured. The objectives of the purchasing function are as follows: The prime objective of the purchasing department is to ensure that purchased goods and services are available or delivered when and where they are needed. Business services include maintenance and repair support and advisory support.

All the channel members jointly set the goals they wish to achieve by coming to a common agreement. The performance of the product in the users' firm, any problems confronted when the product is under use should be checked and addressed properly with the marketing and technical team, also they should interact with the user firm's technical team. It would make little sense to pay the higher costs of advertising in publications read in several industries than the lower costs charged by publications directed at only those few industries in which the advertiser's product is used. Let us understand each of the stages of design process in detail: When a marketer designs a marketing channel, he must understand the service output levels desired by the target customers. leads Engineers, production, purchasing How wide is the market, how often must the message be repeated to have impact, and how long will it be necessary to run the campaign to achieve the desired results. would be taken up at this stage. Higher-priced cars were perceived to possess (unwarranted) high quality. Most will probably already be under consideration, but he introduces the specific view point of trade relations in to buying process. The formal committee changes based on the specific type of product to be purchased. One benefit is that it may help improve a company's image. In Component (2), there are six variables, which determine whether the buying decisions are autonomous or joint. There are various advantages of personal selling that help an organization to promote the products effectively and increase the sales. Companies are looking beyond traditional assumptions and adopting new frameworks, theories, models and concepts. Customers' assessment of unique product features in the company's offer establishes the ceiling price. It is essential to understand the roles of buying-center members or decision-making units (DMUs) before identifying the individuals and groups involved in the buying-decision process. The divisions are not necessarily universal. There are several differences and problems that still exist between the manufacturers and the distributors due to various simple and intricate reasons like.