Industrial Marketing

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

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.

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.

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.

EVALUATING POTENTIAL SEGMENTS

MARKET POTENTIAL - The most optimistic estimate of the quantity of the product that can be sold in the market over say one year.
SALES POTENTIAL - How much market share, does the business expect to yield?
PROFITABILITY POTENTIAL - The real profit the new marketing campaign will result in, review revenue against costs.

APPLICATION OF INDUSTRIAL MARKET SEGMENTS

Define objectives.
Determine market segments.
Evaluate the attractiveness of alternative segments.
Select target markets.
Develop a positioning strategy.
Develop the marketing strategy.
Validate the strategy.

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