Industrial Marketing
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CONTENTS

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INTRODUCTION

In this section we shall be looking at marketing in relation to industrial sectors.

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WHAT ARE INDUSTRIAL GOODS?

  • Raw materials for use in building finished parts.

  • Components and sub-assemblies.

  • Construction industry - the buildings, factories, etc.

  • Heavy machinery in a factory.

  • Maintenance, Repair and Operating (MRO) - items used in the production process.

  • Services - intangible services - advice and consultancy.

  • Operating supplies.

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CHARACTERISTICS OF INDUSTRIAL MARKETS

  • The categories of goods are smaller than in consumer markets.

  • The industrial market is more concentrated than consumer markets. This is because there are often fewer final customers for products.

  • The industrial market is more supply side focused. There exists strong buyer-supplier relationships which mean that there is often a lot of negotiation to be done in terms of pricing an supply of products. 

  • There is strong importance placed upon the sales team, in the industrial sector.

  • Advertising is not used as extensively as in the consumer markets, specialist trade publications are the main advertising tools used.

  • There is elasticity of demand in the industrial market, which is particularly important in JIT systems where organisations are affected by changes in both the supply of a product and the pricing.

  • Custom built projects, ensuring the safety and reliability of machinery.

  • Distribution issues are often more direct in industrial markets.

  • There are special trading policies which exist in industrial markets such as reciprocal trading, consortia, project management, leasing, licensing, etc.

  • The role of marketing in the industrial sector is often based more on the technical features of a product. 

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BUYER-SUPPLIER RELATIONSHIPS

As industrial marketing occurs in markets with few products, the strength of buyer-supplier relationships is paramount. Strong relationships need to exist in order for new products/marketing campaigns to take place. Our Purchasing & Logistics Strategy section discusses buyer-supplier relationships in more depth.

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EVALUATING POTENTIAL SEGMENTS

  1. MARKET POTENTIAL - The most optimistic estimate of the quantity of the product that can be sold in the market over say one year.

  2. SALES POTENTIAL - How much market share, does the business expect to yield?

  3. PROFITABILITY POTENTIAL - The real profit the new marketing campaign will result in, review revenue against costs.  

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APPLICATION OF INDUSTRIAL MARKET SEGMENTS

  1. Define objectives.

  2. Determine market segments.

  3. Evaluate the attractiveness of alternative segments.

  4. Select target markets.

  5. Develop a positioning strategy.

  6. Develop the marketing strategy.

  7. Validate the strategy.

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