INDUSTRIAL MARKETING
(Also called: Business-to-Business (B2B) and
Organizational Marketing.)
Definition
Industrial/ B-to-B marketing involves the process of
providing goods and services to industrial market
intermediaries , as opposed to ultimate (final) consumers.
The institutional customers use purchased goods 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
• Marketing Concept
• Marketing Mix
• Market Segmentation
• Product Life Cycle
If all these apply in both B2C and B2B,
how are they different ?
3
8 Major Differences
Between B2B and B2C
• Products/Services being marketed (Product)
• Market structure
• Decision making
• Nature of demand
• Customer buying behaviour
• Distribution channel (Place)
• Communication process (Promotion)
• Economic/Financial factors (Pricing)
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Products/Services
Customer Markets
Industrial Market
* Standardized.
* Technical complexity and
customized.
* Service, delivery and
* Service, delivery and
availability is somewhat
availability is very
important.
important.
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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 major equipment.
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.
Market Structure
Industrial Market Consumer Markets
Geographically conc. Geographically dispersed
Fewer buyers (relatively) Mass markets
Big buyers Free Market
( small no. of large buyers) (large number of buyers)
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Decision Making
Consumer Market
Industrial Market
* Unobservable mental
* Distinct observable stages
stages, not very clear
pattern.
* Multiple influencers and
decision makers.
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Decision Making (Eg: Soap)
Customer
* Low involvement buying
and impulse purchase
Industrial Buyer – Soaps for (the exact choice criteria
Workers canteen difficult to identify) & varies
from situation to situation.
* Need identification, selection,
procurement etc.
* O.K. from the workers union,
agreement by contractor,
purchase departments
negotiation & placing order.
Nature of Demand
• Derived
• Joint/Shared
• Concentrated
• Inelastic
10
Buying behaviour
• Group Process
• Formal
• Lengthy
• Loyal
• Decisions based on risk and opportunity
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Buying behaviour
Consumer Market
*Social / psychological
factors are important.
Industrial Market *Family involvement & focus
more on product per se.
*Evaluated for functionality *Nor personal relationship
rational/task motive to buying. with the supplier.
*Purchasers are experts & focus * Less of formal processes.
is more on performance/service.
*Higher interaction with the
supplier.
* Formal processes.
Distribution Channel
Industrial Markets Consumer Markets
* Shorter, more direct & * Indirect and multiple
fewer linkages between seller linkages
and buyers.
Distribution Channel (Example)
Customer for Cold drinks
Hotel buying Cold Drinks
* Normal distribution style
* Supplied directly by the
of distributor to retailer to
distributor, may even be
customer. Virtually no
serviced by company
interaction with company.
employee or a regular basis.
Promotion
Industrial Markets
Emphasis on personal selling or one to one dealing.
Support sales with other promotional activities: advertising in
trade journals, catalogs, trade shows, direct mail, WWW.
Message focused on technical, factual, and descriptive content.
Consumer Markets
Emphasis on mass market promotion.
Pricing
Industrial Markets
Competitive bidding & multistage negotiation.
Bulk discounts.
Sharing of cost data & budgeting of acceptable profits in many cases.
Consumer Markets
Normally MRP & MOP
Concept of list price & its implementation.
8 Major Differences
• Products/Services being marketed (Product)
• Market structure
• Decision making
• Nature of demand
• Customer buying behaviour
• Distribution channel (Place)
• Communication process (Promotion)
• Economic/Financial factors (Pricing)
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WHO do you sell to ?
The Organisation
Consumer Products Industrial Products
Industrial customers tend to be relatively few
They buy higher volume ( Vs 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
Less emotional and more rational
