Industrial marketing

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Marketing

Key concepts

Product • Pricing
Distribution • Service • Retail
Brand management
Account-based marketing
Marketing ethics
Marketing effectiveness
Market research
Market segmentation
Marketing strategy
Marketing management
Market dominance

Promotional content

Advertising • Branding • Underwriting

Direct marketing • Personal Sales
Product placement • Publicity
Sales promotion • Sex in advertising
Loyalty marketing • Premiums • Prizes
 Promotional media

Printing • Publication
Broadcasting • Out-of-home
Internet marketing • Point of sale
Promotional merchandise
Digital marketing • In-game
In-store demonstration
Word-of-mouth marketing
Brand Ambassador • Drip Marketing

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Industrial marketing is the marketing of goods and services from one business to another. Industrial
goods are those which are used in Industry for producing a Different end product from one or more raw
materials. The word "industrial" means machinery run by power to produce goods and services. But
"industrial marketing" is not confined to these types of business activities. Broadly, marketing could be
split into consumer marketing (B2C "Business to Consumer") and industrial marketing (B2B "Business to
Business").

Contents
[hide]

• 1 B2B Business to Business (or "Industrial")

• 2 B2C Business to Consumer (or "Consumer")

• 3 Blurring between the definitions

• 4 Competitive tendering

• 5 Bidding process

• 6 Non-tender purchasing

• 7 Developing a sales strategy/solution selling/technical

selling

• 8 From cannon fodder to preferred tenderer

• 9 The key features of a successful industrial sales

organisation

• 10 The internet and B2B marketing

 • 11 See also

• 12 References

[edit]B2B Business to Business (or "Industrial")

Typical examples of a B2B selling process are...

 An organization is seeking to build a new warehouse building. After

carefully documenting their requirements, it obtains three proposals from
suitable construction firms and after a long process of evaluation and
negotiation it places an order with the organization that it believes has
offered the best value for money.

 An organization has significant need for legal services and obtains

submissions from two law firms. Analysis of the proposals and subsequent
discussions determines that there is no price advantage to placing all of
the work with one firm and the decision is made to split the work between
the two firms based on an evaluation of each firm's capabilities.

 A sales representative makes an appointment with a small organization

that employs 22 people. He demonstrates a photocopier/fax/printer to the
office administrator. After discussing the proposal with the business owner
it is decided to sign a contract to obtain the machine on a fully maintained
rental and consumables basis with an upgrade after 2 years.

The main features of the B2B selling process are...

 Marketing is one-to-one in nature. It is relatively easy for the seller to

identify a prospective customers and to build a face-to-face relationship.

 Highly professional and Trained people in Buying processes are

involved.In many cases two or three decision makers have to be
considered in purchasing industrial products.

 High value considered purchase.

 Purchase decision is typically made by a group of people ("buying team")

not one person.

 Often the buying/selling process is complex and includes many stages (for
example; request for expression of interest, request for tender, selection
 process, awarding of tender, contract negotiations, and signing of final
contract).

 Selling activities involve long processes of prospecting, qualifying, wooing,

making representations, preparing tenders, developing strategies and
contract negotiations.

See also B2B definition.

[edit]B2C Business to Consumer (or "Consumer")

Examples of the B2C selling/buying process are...

 A family are at home on a Sunday night and are watching television. An

advertisement appears that advertises home delivered pizza. The family
decides to order a pizza.

 Walking down a supermarket aisle, a single man aged in his early 30's
sees a hair care product that claims to reduce dandruff. He picks the
product and adds it to his shopping cart.

 A pensioner visits her local shopping mall. She purchases a number of

items including her favourite brand of tea. She has bought the same brand
of tea for the last 18 years.

The main features of the B2C selling process are...

 Marketing is one-to-many in nature. It is not practical for sellers to

individually identify the prospective customers nor meet them face-to-face.

 Lower value of purchase.

 Decision making is quite often impulsive (spur of the moment) in nature.

 Greater reliance on distribution (getting into retail outlets).

 More effort put into mass marketing (One to many).

 More reliance on branding.

 Higher use of main media (television, radio, print media) advertising to

build the brand and to achieve top of mind awareness.

See also B2C definition.

[edit]Blurring between the definitions

As in all things, the definitions are not clear cut. For example, an organisation that sells electronic
components may seek to distribute its products through marketing channels (see channel (marketing)),
and be selling relatively low value products. However, the final purchaser is still a business. Equally there
are big ticket items purchased by non-business consumers (houses and motor vehicles being the obvious
examples). However, even though these definitions are blurred, sales and marketing activities aimed at
B2B are distinctly different from B2C (as outlined above).

[edit]Competitive tendering
Industrial marketing often involves competitive tendering (see tender, tendering). This is a process where
a purchasing organization undertakes to procure goods and services from suitable suppliers. Due to the
high value of some purchases (for example buying a new computer system, manufacturing machinery, or
outsourcing a maintenance contract) and the complexity of such purchases, the purchasing organization
will seek to obtain a number of bids from competing suppliers and choose the best offering. An entire
profession (strategic procurement) that includes tertiary training and qualifications has been built around
the process of making important purchases. The key requirement in any competitive tender is to ensure
that...

 The business case for the purchase has been completed and approved.

 The purchasing organization's objectives for the purchase are clearly

defined.

 The procurement process is agreed upon and it conforms with fiscal

guidelines and organisational policies.

 The selection criteria have been established.

 A budget has been estimated and the financial resources are available.

 A buying team (or committee) has been assembled.

 A specification has been written.

 A preliminary scan of the market place has determined that enough

potential suppliers are available to make the process viable (this can
sometimes be achieved using an expression of interestprocess).

 It has been clearly established that a competitive tendering process is the

best method for meeting the objectives of this purchasing project. If (for
example) it was known that there was only one organisation capable of
supplying; best to get on with talking to them and negotiating a contract.
Because of the significant value of many purchases, issues of probity arise. Organisations seek to ensure
that awarding a contract is based on "best fit" to the agreed criteria, and not bribery, corruption, or
incompetence.

[edit]Bidding process
Suppliers who are seeking to win a competitive tender go through a bidding process. At its most primitive,
this would consist of evaluating the specification (issued by the purchasing organization), designing a
suitable proposal, and working out a price. This is a "primitive" approach because...

 There is an old saying in industrial marketing; "if the first time you have
heard about a tender is when you are invited to submit, then you have
already lost it."

 While flippant, the previous point illustrates a basic requirement for being
successful in competitive tendering; it is important to develop a strong
relationship with a prospective customer organization well before they
have started the formal part of their procurement process.

(more needed)

[edit]Non-tender purchasing
Not all industrial sales involve competitive tendering. Tender processes are time consuming and
expensive, particularly when executed with the aim of ensuring probity. Government agencies are
particularly likely to utilise elaborate competitive tendering processes due to the expectation that they
should be seen at all times to be responsibly and accountably spending public monies. Private companies
are able to avoid the complexity of a fully transparent tender process but are still able to run the
procurement process with some rigour.Beneficial

[edit]Developing a sales strategy/solution selling/technical selling

The "art" of technical selling (solution selling) follows a three stage process...

 Stage 1: Sell the appointment: Never sell over the telephone. The aim of
the first contact with a prospective purchaser is to sell the appointment.
The reason is simple; industrial sales are complex, any attempt to sell
over the phone will trivialise your product or service and run the risk of not
fully understanding the customer's need.
  Stage 2: Understand their needs: The best method of selling is to
minimise the information about your goods or services until you have fully
understood your customer's requirements.

 Stage 3: Develop and propose a solution. The solution is (of course)

developed from your (or the firm that you represent's) product or service
offerings.

The important point about solution selling is that it is essential not to sell the solution before you
understand the customer's requirements; otherwise you are highly likely to unwittingly sell them on how
ill-suited your solution is to meeting their requirements. To illustrate; imagine a couple seeking the
services of an architect start their first meeting with the inevitable "we want to build a house." If the
architect leapt in at that point and proceeded to show them his favourite design influence "the
Mediterranean look" only to discover that they hate "Mediterranean" and wanted something "a bit more
Frank Lloyd Wright" he will have gone most of the way toward alienating the sale. You can see that if he
had "kept his powder dry" for a bit longer and first discovered what they were looking for, he could have
better understood which way to skew his pitch. He was equally capable of designing in a Frank Lloyd
Wright style.

The marketing function is able to support this solution sell through tactics like account-based marketing –
understanding the requirements of a specific target organization and building a marketing program around
these. As research shows, sales success is heavily weighted towards suppliers who can understand their
audience before selling to them (in UK research, 77 per cent of senior decision-makers believe that the
marketing approaches made by new suppliers are poorly targeted and make it easy to justify staying with
their current supplier).[1]

Sales force management has a critical function in industrial selling, where it assumes a greater role than
other parts of the marketing mix. Typical industrial organisations are highly dependent on the ability of its
sales people to build relationships with customers. During periods of high demand (economic boom) the
sales force often become mere order takers and struggle to respond to customer requests for quotations
and information. However, when economic downturn hits it becomes critical to direct the sales force out
selling.

[edit]From cannon fodder to preferred tenderer

The term "cannon fodder" derives from the World Wars and refers to the massing of undertrained and
recently recruited troops sent to the fronts to face the enemy. It was noted that such troops invariably had
a short survival rate but provided the tactical advantage of distracting the enemy while professional
soldiers mounted a flanking manoeuvre and came around from the side or from behind the enemy. In
 adopting the term to Industrial Marketing it means those bids being submitted that have no chance of
winning but are involved to make up the numbers (you can't have only one bid in a "competitive" tender
process; that wouldn't satisfy the requirements of probity) (for example in government tenders, or for
private enterprise the requirement to "truly test the market" and to "keep them honest"). The reader might
be wondering why anybody would go to all of the work of submitting a tender when they had no chance of
winning; for the same reason that troops were sent in to battle to die; they thought they had a real chance.

[edit]The key features of a successful industrial sales organisation

In industrial marketing the personal selling is still very effective because many products must be
customized to suit the requirements of the individual customer. Indicators such as the sales tunnel give
information on the expected sales in the near future, the hit rate indicates whether the sales organization
is busy with promising sales leads or it is spending too much effort on projects that are eventually lost to
the competition or that are abandoned by the prospect.

[edit]The internet and B2B marketing

The "dotcom" boom and bust of the late 90's saw significant attempts to develop a new retailing business
model; on-line shopping. Many entrepreneurs (and their investors) discovered that merely having a
website (no matter how innovative) was insufficient to generate sales; the amount of conventional main
media advertising required to promote the sites burnt cash at a faster rate than they could generate
through on-line sales. They also presumed that consumers would eschew the irksome shopping
experience (driving, parking, poor service etc.) for the wonder and convenience of shopping on-line.
Some did; but not in sufficient numbers. There were many unforeseen problems and apart from some
notable exceptions (Amazon.com and others) the B2C online model was a spectacular failure. However,
the same cannot be said of B2B selling where some quite impressive results have been achieved.

[edit]See also
Hit rate

[edit]References

1. ^ The Marketing Practice Decision Maker account-based marketing

research

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