Industrial marketing

INDUSTRIAL ADVERTISING:

Industrial advertising is aimed at industrial users, it refers to advertisements for raw materials, semi-manufactured products, equipment, spare parts and services to the agricultural and extraction industries, as well as to manufacturing.

One of the primary functions of industrial advertising is to inform customers about the products that the manufacturer produces.

Advertising plays an extremely important role in industrial marketing, as purchases are made based on quality standards and specifications. The buyer receives all kinds of professional, technical and specialized publications on each of the different industrial products, since advertisements are one of the main sources of information on the availability of products, these include precise data such as:

• Production capacity.

• Product qualities.

• Design.

• Versatility.

• Additional benefits.

• Services.

However, buyers may be prompted to request additional information and even require product demonstrations or samples for testing. Advertising prepares potential customers and also facilitates sales work; This is achieved if there is constant advertising in specialized media.

The producers of these industrial items who sell through distributors must convince them to dedicate enough time to the proper sale of their products; is achieved through advertising stimuli, such as:

• Financial aid for shelves.

• Luminous signs.

• Advertising in magazines, brochures, flyers, etc.

• Advertising gifts.

• Painting of the premises and signage.

• Shared advertising.

Within this advertising, the systems commonly used are direct mail, specialized magazines and shared advertising.

Direct advertising:

This type of advertising includes methods used in market segmentation to focus advertising on each of them and distribute it with the message that each one requires.

Printed material such as:

• Informative circulars.

• Institutional brochures.

• Brochures by products and their characteristics.

• New products.

• Innovations to existing products.

• New uses and applications.

• Catalogs.

• Operations manuals.

Newspapers and specialized magazines:

This is the most suitable medium for advertising industrial products. Should consider:

• Circulation of the magazine (local, national or international)

• Number of printed copies.

• Dates of publication.

• Type of market you are targeting.

• Costs for publication, time, etc..

The magazines have a high degree of mechanical re-productive quality due to the type of paper used that allows excellent photographic reproductions and the use of color. The life of the magazines is probably the longest of all the media as well as the life of the message that can be prolonged, well to preserve the magazine.

INDUSTRIAL PROMOTION:

It should be taken into account not to apply the same types of promotional initiative with industrial users as with consumers. In order to establish what the company needs to do to ensure success with industrial customers, marginal doubts about capital goods must be clarified, and fundamental requirements defined, as well as comparisons between consumer goods and industrial goods.

To indicate what industrial goods are, we will use the following definition that they are all products destined for industry and that they are used both in company facilities and in producing or transforming goods and services.

Fundamental characteristics of industrial goods:

A) Its nature is technical with perfectly defined characteristics from a technical and use point of view.

B) They correspond to defined needs and uses, industrial products are acquired after being declared essential for business activity.

C) They directly condition the company's market, its future development and, consequently, its profits.

D) They constitute an element of production costs and, for this reason, the price of the industrial product.

E) Mainly, it is in the field of industrial products where the product is worth only based on the quality and services it offers.

To develop any policy, whether for distribution, sale or promotion of industrial products, the aforementioned factors must be taken into account.

The promotion of industrial products should be based on two points that are taken for granted, in a study of the market and another of the situation. The market study has to define the following:

• The clientele (ie their actual needs)

• The correspondence of the characteristics of the industrial product with those needs.

The study of the situation should inform about the current situation and its market prospects.

With industrial users, companies can use various means to better publicize the offer, means that complete advertising efforts:

1. Fixed documentation and information centers. They consist of a permanent organization, in one or several cities, of exhibitions of all the company's products.

2. A well located place. It must be easily accessible and have a comfortable environment, where the products and materials are presented as part of their use. It is about explaining and demonstrating the possible uses of the product, in its special characteristics of use and explanation.

3. The informative documentation consists of catalogs and news necessary for the sale and advertising; it is material that is prepared to convey broad and objective information to industrial users. Informational documentation includes:

a) The information brochure. It must be written in accessible terms, typical of the clientele for which it is intended, and it is necessary to indicate in it mathematical bases of comparison, comparative data and reference of the different possible cases. These can be mailed directly or given to distributors for distribution to their customers. Do not forget to attach a response bulletin in which the client can expose their problems to the company.

b) Magazines or business newspaper bulletins. They make it possible to periodically collect the detailed and objective presentation of very different materials and products with concrete examples of solved cases and the most recent news.

c) Documentary articles. These are sent in the technical and professional press or in specialized magazines and newspapers, they are a means of knowledge and information widely used within the promotion of industrial products.

d) The audiovisual media. Normal format documentary films are information media available to production companies.

FAIRS AND COMMERCIAL EXHIBITIONS:

When making plans for a commercial exhibition of industrial products, the location, date and general conditions of national businesses should be taken into account primarily. A commercial exhibition requires to be prepared by many months of careful study of the cost, location, current conditions and predictions of the businesses, layout, decoration, information, and so on.

Many industries and professions hold trade fairs and exhibitions at the national, international and regional levels, and with them trade and industrial exhibitions or exhibitions. The activities carried out are of a different nature because they allow the product to be examined and comparisons made with those of the competition.

They are intended to prepare the ground for future sales, promote public relations, gather information on the industrial reaction. The cost of these fairs is high since it is necessary to rent the necessary equipment, hire personnel and cover costs of transport, installation and rental of furniture. Although this is primarily an industrial medium, it provides industry and consumers with an opportunity to get a closer look at the product with advances in technology.

They have one characteristic in common: to gather potential clients in a certain place, at regular or even irregular intervals of time.

BOOK: MARKETING AND INDUSTRIAL PUBLICITY.

AUTHOR: SLEE SMITH

WHO INFLUENCES SHOPPING?

Motivational forces greatly influence the purchase decision for consumer goods but not to such a high degree for modern industry. In cases such as the purchase of raw materials, advertising has no influence on decisions. Purchases are controlled by specialists who base their decisions on technical considerations: quality, price and delivery time. Many times advertising can reduce the opportunities of the supplier since it may be thought that the money spent on sales promotion could be used to lower the price of the product. The industrial buyer is more rational, economically speaking, than the buyer of consumer goods and more weighted in his valuations and judgments.

DEFINITIONS:

Purchase: generally considered as the simple exchange of merchandise for an agreed amount of money.

Provisioning: it is an exchange for a negotiated amount of money.

The difference between the two words is negotiation. Vital function of a procurement manager, whose responsibility is to buy under the most advantageous conditions, taking into account factors such as technical knowledge of the merchandise to be purchased, markets, prices, discounts and price trends.

Procurement: mainly used as a contractual term. It is the rate that a company pays to an agent which includes purchase expenses, inspection and follow-up of orders, the agent assumes the risks of quality, delivery times and suitability of the items supplied. This occurs when an agent acts in accordance with the rules dictated with your company to buy equipment or materials.

WHO MANAGES THE PURCHASING POLICY:

In small companies, the commercial director can develop the function of head of supplies. In medium-sized companies the procurement function is generally separate from that of sales, although there is an intimate link between the two functions. In large companies the purchasing function is delegated to a central procurement department. The management of the company is responsible for spending on raw materials and other products, and in general, for checking whether more money comes in from sales than what comes out from materials, labor and general expenses. Although senior management is responsible for purchasing expenses, the material procurement work corresponds to the technicians, who can work alone or as a member of a team.

Generally, the procurement manager is in constant contact with the sections of the company that can use the goods he purchases.

The buyer on whom the purchase of materials depends, must ensure that they comply with the rigid specifications established by manufacturing and that they meet the needs of their company in terms of quality, design and capacity. You also need to make sure that the supplier has an exact idea of what is being asked of him.

The choice of the provider is carried out taking into account the following factors:

1. The reputation and financial stability of the supplier and its category in the corresponding industrial sector.

2. The quality of your project office and the suitability of your facilities to produce the items in the desired quantity and quality.

3. The effectiveness of its quality control system and the means of inspection and testing and the degree of autonomy of the inspection staff.

4. Other supplies from the supplier and detailed knowledge of the technical capacity of their goods.

5. Terms of sale offered by the supplier and its ability within its own sector to offer special discounts.

6. The delivery of the products in the places and dates fixed in advance and properly packed.

In addition to these "tangible" factors, there are others that we will call "intangible" for example: the personality of the supplier represented by its seller and the image of the company represented by its advertising.

PURCHASE INVESTIGATION:

It is "the systematic and in-depth research carried out by a staff group to perfect the results of the provisioning"

This research is carried out by researchers who are considered gray brains from the purchasing department, which occurs mostly in the chemical industry, and their job is to study the manufacturing process in reverse.

THE APPROVED LIST OF SUPPLIERS:

Procurement departments operate according to these vendor lists and it is the potential vendor's ambition to be included in such lists.

On the list are the suppliers of the company with a recognized guarantee whose merchandise comply with the indicated standards and whose delivery times, prices, inspection and after-sales service are satisfactory in addition to offering acceptable payment conditions. The list can include standby suppliers who have a high reputation but are not selling to the company in the time the list is made.

If a supplier does not maintain the standards or does not meet the delivery deadlines or in some way their service is not satisfactory, measures are taken against them and if they continue to cause bankruptcies after being notified, their name is deleted from the list. Therefore this list is of vital importance to a supplier and can mean success or failure.

THE ROLE OF THE HEAD OF PROCUREMENT:

The procurement manager's job is much broader than purchasing the right goods at the right price.

Before establishing a long-term contract, the buyer must be able to foresee price movements and trends so that he buys in the best conditions for his company. If you want to be successful, the buyer must predict with reasonable certainty when the main fluctuations will occur and thus buy on the precise date and under the most favorable conditions.

The industrial buyer is normally considered as a person little influenced by others, but in any case he is susceptible to a form of advertising and adopts a hostile attitude towards this, but in any case he is susceptible to a form of informative advertising that is offered to him. alternative sources of supply or new technical information.

WHAT DO BUYERS READ?

The buyer as a specialized reader is primarily interested in commercial and financial readings, such as:

- Market magazines.

- Company reports.

- Review of the level of wages and bonuses.

- Business unions and mergers.

- Productivity trends: new processes, inventions and ideas, such readings are found in financial newspapers on the financial pages of newspapers.

MARKET INVESTIGATION OF INDUSTRIAL PRODUCTS:

Industrial product research is aimed at knowing the size and market conditions for a given product. Industrial product research is more an exercise in objective reasoning than scientific investigation.

The success of an industrial market study depends largely on the structuring of the questionnaire and how the responses are interpreted. A point in favor of the market research of industrial products is that the determined person can be trusted to ask for information since their reasons for purchase are justifiable and they are looking for a good price and good quality.

Before doing research it is important to analyze the market. This analysis will provide the researcher with a work plan describing the market to be studied, and according to the objectives set, limit the extent of any investigation.

AIMS:

It is difficult to define the type of market research most suitable for the industrial sector, for this reason the following objectives should be established:

1. Assessment of the size of the market.

2. Determination of the location and number of consumers.

3. Study of your needs.

4. Know who, specifies the materials and why it buys the company's products instead of those of the competition.

5. Specify why some of the consumers prefer products manufactured by competitors.

6. See what kind of price structure is preferred by the industrial sector in question.

7. Find out what kind of promotional material most influenced the commercial relations of an industrial sector.

BOOK: MARKETING AND SALES ADDRESS.

ANALYSIS OF THE PURCHASE BEHAVIOR OF INDUSTRIAL MARKETS AND ORGANIZATIONS:

Companies not only sell, they also buy a large amount of raw materials, manufactured products, facilities, equipment, supplies and office services. There are 13 million organizations that purchase goods and services worth more than $ 3 trillion a year. Companies that sell steel, computers, nuclear plants, and other goods need to understand the needs of business buyers, political resources, and purchasing procedures.

They must take into account several considerations that are not found in the consumer goods market.

- Organizations buy goods and services to satisfy various objectives: to make profits, reduce costs, satisfy the needs of employees and comply with legal obligations.

- More people participate in business purchasing decisions than in consumer decisions.

- Buyers must respect formal purchasing policies, limitations and requirements established by their organizations.

- Purchase instruments such as sales proposal request and purchase contracts, etc… add dimensions that are not found in consumer marketing

The purchase of the organization: (according to webster and wind) »the decision process through which organizations formally establish the need to acquire products and services, their assessment and choice between alternative brands and suppliers. No two companies buy in the same way, yet the salesperson hopes to identify enough commonalities in organizational buying behavior to improve their strategic marketing planning task.

Industrial markets acquire goods and services to produce other goods and services.

WHO FORMS THE INDUSTRIAL MARKET:

The industrial market or market for products and businesses: it is made up of all individuals and organizations that acquire goods and services to use them in the production of other products and services that they sell, rent or supply to third parties. The main industries that are part of the industrial market are: agriculture, livestock, fishing, mining, manufacturing, construction, transportation, communication, public utilities, banking, finance and insurance and service. More monetary units and items are exchanged in the industrial market. As compared to consumption, each party in the production and distribution chain has to buy many other goods and services and this explains why the industrial market figure is higher than that of the consumer market.

Industrial markets have characteristics that contrast strongly with consumer markets:

- Fewer buyers: The industrial marketer typically deals with much fewer buyers than the consumer marketer.

- Larger buyers: industrial markets are characterized by a high concentration of purchasing power so that only a few buyers make most of the purchase.

- Closer relationship between the supplier and the customer: given the small number of customers and their great purchasing power, there is a close relationship between customers and vendors in industrial markets, suppliers prepare offers on demand to adjust to needs of each specific client. The supplier attends special seminars conducted by the industrial customer, to familiarize himself with the quality level of the buyer.

- Geographically concentrated buyers: more than half of the industrial buyers in the US are concentrated in 7 states: New York, California, Ohio, Pennsylvania, Illinois, New Jersey and Michigan, industries such as oil, rubber and steel, among others They show a greater geographic concentration that helps reduce sales costs.

- Derivative demand: the demand for industrial goods is ultimately derived from the demand for consumer goods. If the demand for these goods fell, the demand for the raw materials on which their production depended would fall in the same direction. For this reason, the industrial marketing specialist must be attentive to the purchasing patterns of the final consumer and those environmental factors that affect them.

- Inelastic demand: total demand for many industrial goods and services is not greatly affected by price changes. Demand is inelastic especially in the short term because producers cannot make rapid changes in their production methods, as well as for those industrial goods that represent a small percentage in the final cost of the product at the same time, manufacturers can change their supplier in response to differences in price.

- Fluctuating demand: the demand for industrial goods is more changeable than the demand for consumer goods, this is especially true in relation to the demand for new plants and equipment. A given percentage increase in consumer demand can lead to a much larger percentage increase in demand for the plants and equipment needed to produce the additional demand. Economists refer to this as the 'acceleration principle', sometimes a 10% increase in consumer demand can lead to up to 200% in industrial demand and a 10% drop in consumer demand can lead to a crash. full on demand for investment goods.This volatility of sales has led industrial marketers to diversify their products and markets to achieve more balanced sales over the business cycle.

- Professional purchase: industrial goods are acquired by well-trained professionals who spend their time learning how to buy better. There are even associations that seek to improve the effectiveness and status of professional buyers. His professional approach and greater ability to value technical information, leads to higher purchase costs. Industrial marketers must possess a high degree of technical knowledge of both their products and that of their competition.

- Various purchasing influences: in the purchase and sale of industrial goods it is usually the purchasing committees that include technical experts. Industrial marketers have to hire well-trained salespeople and representatives, using sales teams to serve teams of buyers. Advertising and promotion play an important role, personal selling is the main selling tool.

OTHER CHARACTERISTICS OF THE INDUSTRIAL MARKET:

Direct purchase. Industrial buyers buy especially from producers rather than through intermediaries, especially complex and expensive items. Reciprocity. Industrial buyers often select those suppliers who also buy from them. Reciprocity is illegal if there is a coercive use of pressure by one of the parties resulting in a reduction in competition. It is legal as long as it is supported by elaborate records of purchases and sales to and from other interested parties. Many industrial buyers acquire their equipment via leasing instead of buying it, this happens with computers, shoe machines among others.The lessor often gets a significant amount of income and the opportunity to sell to customers who could not make direct purchase, obtaining advantages for the tenant such as: Maintenance of capital, Obtaining the latest products from the seller, Reception in a better service and Tax advantages.

WHAT PURCHASING DECISIONS THE INDUSTRIAL BUYER MAKES.

The industrial buyer must face many decisions when making a purchase. The number of them depends on the type of purchase situation.

Main types of purchasing situation. There are 3 types of purchase situation called "purchase class":

Direct buyback: consists of a purchase decision in which the competent department repeats a purchase order on a routine basis. The buyer chooses the suppliers from an «approved list» weighing the situation and satisfaction in the previous purchase supplied by the different suppliers, these in turn make an effort to maintain the good quality of the product and service «within the list from providers". There is an automatic ordering system so that the purchasing department saves time "off-list suppliers" try to win over the buyer to obtain a small order in order to increase their purchase quota over time. Modified buyback: the buyer wants to modify the orders product specifications, prices, delivery requirements or other terms.It involves additional people who participate in the decision of both the buyer and the seller. There is an option for the "disregarded supplier" opportunity for a better offer. New Purchase: This is the situation where a product is purchased for the first time. The higher the cost and / or risk, the greater the number of agents participating in the decision, the more options there are, the longer they take to make a decision, this constitutes for the marketer the greatest challenge and opportunity to try to achieve The greatest number of influences, key to purchase and provide advice and useful help, in these companies use the so-called MISSIONARY SALES FORCE formed by their best salespeople.There is an option for the "disregarded supplier" opportunity for a better offer. New Purchase: This is the situation where a product is purchased for the first time. The higher the cost and / or risk, the greater the number of agents participating in the decision, the more options there are, the longer they take to make a decision, this constitutes for the marketer the greatest challenge and opportunity to try to achieve The greatest number of influences, key to purchase and provide advice and useful help, in these companies use the so-called MISSIONARY SALES FORCE formed by their best salespeople.There is an option for the "disregarded supplier" opportunity for a better offer. New Purchase: This is the situation where a product is purchased for the first time. The higher the cost and / or risk, the greater the number of agents participating in the decision, the more options there are, the longer they take to make a decision, this constitutes for the marketer the greatest challenge and opportunity to try to achieve The greatest number of influences, key to purchase and provide advice and useful help, in these companies use the so-called MISSIONARY SALES FORCE formed by their best salespeople.The longer they take to make a decision, this constitutes for the marketer the biggest challenge and the opportunity to try to get the greatest number of influences, purchase key and provide advice and useful help, in these companies use the so-called FORCE OF MISSIONARY SALES formed by its best salespeople.The longer they take to make a decision, this constitutes for the marketer the biggest challenge and the opportunity to try to get the greatest number of influences, purchase key and provide advice and useful help, in these companies use the so-called FORCE OF MISSIONARY SALES formed by its best salespeople.

MAIN SUB-DECISIONS INVOLVED IN THE PURCHASE DECISION.

The buyer makes the least number of decisions in the direct purchase and the greatest number in the situations of new purchase, in the new purchase the buyer determines the specifications of the product, the time limits, the terms and forms of delivery, the services, the forms of payment of the requested amounts, the accepted suppliers and the selected ones. The different participants in decision making influence each decision and the order varies depending on the decisions made.

THE ROLE OF THE PURCHASE AND SALE SYSTEMS:

Many buyers prefer to buy a global solution to their problem and not have to make separate decisions. This phenomenon is called the "purchasing system" and it originated in government purchases of weapons. The government requests an offer from the first contractors who in turn assemble their package or system. The first winning contractor will be responsible for the tender and the assemblies of the components becoming the "turnkey" solution, this is one way and they have adopted the practice of sales systems. As a marketing tool. The supplier can sell a series of related products, it can also sell a production system, stock control, distribution and other services that meet the needs of the buyer in order to carry out a good operation.Another variant is made up of contracting systems, in which the only supplier offers the buyer all the MRO requirements and supplies (maintenance, repair and operations) the customer benefits since the stock is kept by the seller. Savings also occur as a result of time savings in choosing the provider and by protecting the contract terms. The seller will benefit from lower costs due to a uniform demand and a reduction in labor and administrative bureaucracy. Sales systems are a key industrial marketing strategy in the bidding of key scale projects, such as reservoirs, steel factories, irrigation systems, sanitation systems, pipelines, public services and even new cities. Engineering project companies must share in price, quality,reliability to get awards.

WHO PARTICIPATES IN THE INDUSTRIAL PURCHASE PROCESS?

Engineering personnel typically have a greater say in product choice, while purchasing agents dominate the supplier's choice of decision. In recommended situations and at the time of supplier selection, they should contact the purchasing agents. The purchasing decision of an organization the "purchasing center" is defined as: "all those individuals or groups that participate in the purchasing decision-making process and who share common objectives and the risks that may arise from the decisions"

Members of the purchase center:

• Users: those who will use the good or service. Users initiate the purchase proposal and help define product specifications.

• Influencers: those who will influence the purchase decision, provide information to evaluate, alternatives. Technical staff is important.

• Decision makers: they are the ones who decide the requirements and / or suppliers of a product.

• Approvers: authorize the actions proposed by decision makers or buyers.

• Buyers: they are people with formal authority to select the supplier and mark the terms of purchase help to outline the specifications of the product, but play an important role in the selection of sellers in the negotiation. In complex purchases, buyers can initiate certain high-level people to participate in negotiations.

• Gate keepers: they are people who have the power to prevent sellers or information from reaching the shopping center. For example: purchasing agents, receptionists, can prevent sellers from contacting users or decision-makers

Response within an organization varies the number and type of participants for different classes of product. More participants will be involved in the decision-making, than buying a computer, than buying paper clips, for paper. The industrial marketing specialist has to calculate:

• Who are the main agents in decision-making.

• What decision they influence.

• What is your level of influence.

• What evaluation criteria uses each participant.

• When