Industrial Marketing

Posted by Puja Walia Mann on May 18, 2010

Industrial Marketing is basically concerned with the business to business marketing, or Business marketing or organization marketing. It is the marketing of products and services to business organizations. Business Organization include:–
 Manufacturing Companies
 Dealers & distributors
 Govt Undertaking
 Private Sector Undertaking
 Edu. Institutions
 Hospitals etc
Unlike, the consumer marketing, in industrial marketing, products and services are purchased to either enter the process of production or to facilitate the process of production.
The important point in business marketing is to create value for buying organization with products and services that focus on buying needs. Business organization buy products and services to satisfy many objectives like production of goods and services, making profit, reducing costs and so on. Thus, products sold through this route and intention like Iron, Steel Machine Tools, Computers, Office Equipments etc. are called industrial products.

Differences b/w Industrial and Consumer Marketing

Though basic task of marketing management to both consumer & industrial marketing are same, yet there is a huge difference them. Unlike business/organizational marketing, consumer marketing is the marketing of products & services to individuals/households for their own consumption.
Similarities:
1) Deciding target market.
2) Finding out needs & wants of target market
3) Developing products & services to meet requirement
4) Evolving marketing programme
5) To satisfy customer faster & better than competitor
Differences: Table 4.1

Industrial Marketing Consumer Marketing
• Relatively few buyers.
• Geographically concentrated buyers
• Technically complex products & services
• Timely availability is very important.
• Purchases are based mainly on performance basis and through rational means.
• Emphasis on personal selling & consistent buyer-seller relationship
• Few intermediaries
• 0 or 1 level channel
• Negotiated pricing
• Derived demand • Mass markets
• Geographically distributed
• Standardized products

• Service delivery somewhat important
• Purchases are mainly based on psychological basis & emotional appeals
• Emphasis on advertising through mass media
• Multiple intermediaries
• 2-3 levels of channels
• List price or M.R.P
• Demand for consumption

as may be clear from the diagram shown below, there are fewer channel levels in industrial marketing as compared to consumer marketing.

Nature of Demand in Industrial Markets
The demand for industrial products and services does not exist by itself. It is derived from the ultimate demand for consumer goods and services. Industrial demand is therefore, called derived demand.

Derived Demand:–
Industrial Customer buys goods and services for use in producing other goods and services. Ultimately whatever is finally produced will be sold to the consumers. Hence the demand for Industrial goods and services is derived from consumer goods and services.
For eg: – The demand for “Rubber” does not exist in itself. It is demanded for the production of bicycles, motorcycles, scooters and furniture, which are purchased by the consumers. Thus the demand for rubber tubes is derived from the forecast of consumer demand for bicycles, scooters etc.
Joint Demand;–
Joint demand occurs when one industrial product is useful if other product also exists. For eg: a computer cannot be operated without the monitor.
Cross Elasticity of Demand:–
Elasticity is simply the change in demand from a change in price. Percentage method is used to measure the relative changes. Demand is “inelastic” if the % change in quantity demand is less than the % change in price. Demand is “unitary” if the % change in price is matched by an equal % change in quantity.
Demand is “elastic” if the % change in quantity demand is more than the % change in Price.
Conclusion:- thus, industrial marketing refers to marketing of goods & services to business organizations to facilitate the process of production. The demand for industrial products is derived from the ultimate demand for consumer goods & services. Products like ceiling fans and computer may be considered both industrial products & consumer products depending upon its usage. However, industrial marketing is more complex than consumer marketing.