industrial marketing

Definition:
The marketing of INDUSTRIAL GOODS. Although basic marketing principles are believed to apply equally to all categories of goods and services it is usual to recognize differences in emphasis according to the specific type of product/service. In the case of industrial goods these may be summarized as: (a) Derived demand: the demand for industrial goods, and raw materials, is derived from the demand for consumer goods in the sense that any expansion or contraction in the latter will be reflected by a corresponding shift in the former. The more distant the manufacturer is from the production of a specific consumption good, the less direct will be the impact of a change in demand for that good. (b) Rational buying motives dominate the industrial market. This is frequently misinterpreted in one of two ways: (i) there is an absence of emotional motives in the industrial purchasing situation, or, (ii) consumer purchasing behaviour is irrational. Neither of the above statements is correct: consumers are rational and industrial buyers are influenced by emotional factors, but there is a difference in degree, i.e. the industrial buyer will emphasize objective criteria to a greater degree than the average consumer. (c) Concentration of buyers: the number of potential buyers for an industrial good is generally far smaller than is the case with consumer goods. Further, industrial buyers tend to be concentrated geographically, e.g. the cotton and woollen industries. One must be careful not to overstate the importance of this distinction for its validity clearly depends upon the precise nature of the product. For example, the market for office supplies is both large and dispersed, whereas the market for some consumer goods may be both small and concentrated, e.g. specialty goods produced on a purely local basis. It is also important to remember that although a national brand may have millions of users, the producer may concentrate his direct sales and distribution efforts upon a limited number of major buyers, e.g. wholesalers and grocery chains. (d) The scale of industrial purchasing is greater. In absolute money terms this is generally, but not always, true. In a proportionate sense, i.e. size of purchase, vis-à-vis disposable assets, the reverse may often be true. (e) Industrial products are technically more complex. Again this is true absolutely but not relatively. The purchaser of a car or television set is faced with a similar degree of technical complexity as the buyer of a computer: in both instances the buyer evaluates performance rather than construction, and is dependent upon the seller for both advice and service. (f) Industrial buying is a group process. The same might also be said of the household as a decision-making unit for consumer purchases. It is unlikely that the latter will have formalized evaluation and decision procedures, however, both of which are common in the industrial buying context. (g) The role of service is greater. Again this depends upon the nature of the product and the type of service. Immediate availability is a prerequisite for sale of a CONVENIENCE GOOD - this is rarely the case with even the most common of industrial goods - and CONSUMER DURABLES need after-sales service just as much as many industrial goods. (h) Leasing, renting, and the extension of credit are important. This is increasingly true of consumer goods.

Cross-References:
[consumer durable] [industrial goods] [business-to-business marketing] [organizational marketing] [convenience goods]

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