BBA 3006

INDUSTRIAL MARKETING

TAN WAH TIONG

940928-14-5531
201565

LOH YONG CHIANG

DECEMBER 2014
NO
1.0
2.0
3.0

DETAIL
Content
Introduction
Body
-

TASK 1

TASK 2

PAGE
1
2
3-16

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TASK 3

TASK 4

TASK 5

4.0

References

17

5.0

Coursework

18-25

2.0 Introduction
Industrial marketing (or business to business marketing) is the marketing of goods and
services by one business to another. Industrial goods are those an industry uses to

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produce an end product from one or more raw materials. Industrial marketing, also
known as business-to-business (B2B) marketing, is a branch of communications and
sales that specializes in providing goods and services to other businesses, rather than to
individual customers
Example of a B2B selling process is an organization seeks to split the work between the
two firms based on an evaluation of each firm's capabilities.
A sales representative makes an appointment with an organization that employs 22
people. He demonstrates a photocopier/fax/printer to the office administrator. After
discussing a proposal, the business owner signs a contract to obtain the machine on a
fully maintained rental and consumables basis, with an upgrade after 2 years. Main
features of the B2B selling process are marketing is one-to-one in nature. It is relatively
easy for the seller to identify a prospective customer and build a face-to-face
relationship.
Highly professional and trained people in buying processes are involved. In many cases,
two or three decision makers must approve a purchase plan. Often the buying or selling
process is complex, and includes many stages (for example, request for proposal,
request for tender, selection process, awarding of tender, contract negotiations, and
signing of final contract).
Selling activities involve long processes of prospecting, qualifying, wooing, making
representations, preparing tenders, developing strategies, and contract negotiations

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3.0 Body
3.1 Task 1
Types of Product Lines Defined
First of all, proprietary or catalog products. These items are offered only in certain
configurations and produced in anticipation of Orders. Product-line decisions concern
adding, deleting, or repositioning products in the line
Besides, the custom-built products are items that offered as a set of basic units, with
numerous accessories and options. For example, NCR offers a line of retail
Workstations used by large customers like Wal-Mart and 7-EIeven stores as well as by
smaller businesses. The basic Workstation can be expanded to connect to scanners,
check readers, electronic payment devices, and other accessories to meet a business's
particular needs. The firm's wide array of products provides retailers with an end-to-end
Solution, from data warehousing to the point-of- service Workstation at checkout. The
marketer offers the organizational buyer a set of building blocks. Product-line decisions
center on offering the proper mix of options and accessories.

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In addition, custom-designed products are items are created to meet the needs of one or
a small group of customers. Sometimes the product is a unique unit, such as power plant
or a specific machine tool. In addition, some items produced in relatively large
quantities, such as an aircraft model, may fall into this category. The product line is
described in terms of the company's capability, and the consumer buys that capability.
Ultimately, this capability is transformed into a finished good. For example, after
canvassing airlines around the World, Airbus detected enough interest in a super jumbo
jet to proceed with development.
Furthermore, industrial services are also one of the business product lines. Rather than
an actual product, the buyer is purchasing a company's capability in an area such as
maintenance, teehnie.il Service, or management Consulting. (Special attention is given
to services marketing in Chapter 10.)
In Conclusion, all types of business marketing firms confront product policy decisions,
whether they offer physical products, pure services (no physical product), or a productservice combination. Each product Situation presents unique problems and
opportunities for the business marketer; each draws on a unique capability. Product
strategy rests on the intelligent use of corporate capability.

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3.2 Task 2
Argument for and against the use of business product portfolio

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First of all, The Underdog, is a brand with a low market share and declining
share growth. The Underdog has low brand visibility and consumer top-of-mind. It
typically competes on price, promotion, or some other functional dimensions. As a
result, it is also likely to have the lowest returns and thus lacking the investment
required to compete with its stronger rivals for market share. The Underdog shall not be
missed should it disappear from the market as customer loyalty is typically low for
brands in this quadrant. In the FMCG category, The Underdog could be replaceable by
super market private labels.
In addition, The Challenger, is a brand with a low market share but positive share
growth. It is a brand that is going places. The Challenger is a niche brand that competes
by having a well-defined target market and a highly focused strategy at serving the
needs of that segment. The Challenger brand is highly creative and nimble. It often
challenges the establishment by coming up with innovative products and services and
ways to market them. The Challenger brand might exhibit the potential to become
leading brands the appeal of the brand spreads beyond its target market, often by wordof-mouth from its loyal customers.

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Furthermore, The Leader, is a brand with a high market share and positive
share growth. It is a brand that radiates energy and momentum. The Leader dominates
in perception terms the essential brand equities of the category (For example, the
essential equities in the luxury goods sector include product design, designer reputation,
quality, store dcor, image creation, and publicity). Customers are often prepared to
forgive some minor errors from The Leader due to the high regard they have for the
brand. However, to maintain its leadership position, the brand must continue to stay
relevant in its category or better yet lead the changes/innovation in the category.
Moreover, The Ex-Champ is a brand with a high market share but negative
share growth. It is a brand that is living off of its past glories. The Ex-Champ still
exhibits sufficient brand equity to retain the majority of its existing customer base, but
not enough to attract new ones. Simply put, the brand has lost its ability to innovate and
stay relevant in its category. However, as the luxury goods sector has clearly
demonstrated, The Ex-Champ could be resurrected as there might still be inherent
equities in the brand.

3.3 Task 3
Key characteristics and types of business buyer

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Innovators are the pursuing of new technology products aggressively. They sometimes
seek out these products before the company has launched a formal marketing program.
Technology is a central interest in their life, regardless of what function it is performing.
Although they represent less than 3% of all customers, winning them over at the outset
of a marketing campaign is essential, because their endorsement reassures the other
players in the marketplace that the product does in fact work.
Early Adopters are buying into new product concepts very early in their lifecycle, but,
unlike Innovators, they are not technologists the kind of people who like new
technology or inventions for their own sake. Rather, they are people who find it easy to
imagine, understand, and appreciate the benefits of a new technology, and to relate these
potential benefits to their other concerns. Because they rely on their own intuition and
vision, they are key to opening up any high-tech market segment.

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Early Majority is sharing some of the Early Adopters ability to relate to technology, but
ultimately they are driven by a strong sense of practicality. They want to see wellestablished references before investing substantially. Because there are so many people
in this segment roughly one-third of the whole adoption lifecyclewinning their
business is essential for the manufacturer to realize any substantial profits and growth.
Late Majority is share all the concerns of the Early Majority, plus one major additional
one whereas people in the Early Majority are comfortable with their ability to
successfully learn and use a technology product; members of the late majority are not.
They wait until a product has become an established standard, and they tend to buy
from large, well-established companies. Like the Early Majority, the Late Majority
comprises about one-third of the total buying population.
Laggards are simply dont want anything to do with new technology, for a variety of
reasons, some personal and some economic. Companies often dismiss laggards as not
worth pursuing.

The first crack is a relatively small one between Innovators and Early Adopters. It
occurs when a new technology or innovation cannot be translated into a beneficial
product. Moore offers Esperanto the international language and neural networks the
computer representation of the human brain as examples. Both are technically

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fascinating, but neither offers any proven usefulness to the buyer. Esperanto was never
widely used, and neural networks have still not provided the promised advances in
artificial intelligence. These products only appeal to Innovators because they tend to
love technology for technologys sake.

The second crack occurs between the Early Majority and the Late Majority. Simply put,
the Late Majority may not be willing to tolerate or work around product deficiencies
and therefore may not buy the product. Moore uses programmable VCRs and desktop
scanners as examples of products that struggled at this stage. Both were relatively
mature products that offered features the Late Majority didnt necessarily value or care
to learn to use. Devising a strategy to bring utility to this group by investing in the right
things simplification, integration, repackaging, whatever is vital to a products
success.
In contrast to these relatively minor gaps, the chasm represents a formidable obstacle to
companies looking to leap from the Early Adopter to the Early Majority. The Early
Adopters look to technology and innovative new products as a change agent. They are
willing to be champions in the face of opposition. In short, they are willing to go out on
a limb and tolerate product flaws for a jump on the competition. By contrast, the Early

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Majority are looking for an incremental benefit, an evolutionary approach. In short, the
product needs to be more complete and mature to jump this chasm.

3.3 Task 4
New Product development process

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First of all, the generation of idea is utilizing basic internal and external SWOT
analyses, as well as current marketing trends; one can distance them from the
competition by generating ideologies which take affordability, ROI, and widespread
distribution costs into account. Lean, mean and scalable are the key points to keep in
mind. During the NPD process, keep the system nimble and use flexible discretion over
which activities are executed. You may want to develop multiple versions of your road
map scaled to suit different types and risk levels of projects.
Besides, screening the Idea is Wichita, possessing more aviation industry than most
other states, is seeing many new innovations stop with Step 2 screening. Do you
go/no go? Set specific criteria for ideas that should be continued or dropped. Stick to
the agreement upon criteria so poor projects can be sent back to the idea-hopper early
on. Because product development costs are being cut in areas like Wichita,

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prescreening product ideas, means taking your Top 3 competitors new innovations
into account, how much market share theyre chomping up, what benefits end
consumers could expect etc. An interesting industry fact: Aviation industrialists will
often compare growth with metals markets; therefore, when Boeing is idle, never
assume that all airplanes are grounded, per se.
In addition, testing the concept as Aura Akrani has said, Concept testing is done after
idea screening. And it is important to note, it is different from test marketing. Aside
from patent research, design due diligence, and other legalities involved with new
product development; knowing where the marketing messages will work best is often
the biggest part of testing the concept. Does the consumer understand, need, or want
the product or service?
Business Analytics are also one of the processes. During the New Product Development
process, build a system of metrics to monitor progress. Include input metrics, such as
average time in each stage, as well as output metrics that measure the value of launched
products, percentage of new product sales and other figures that provide valuable
feedback. It is important for an organization to be in agreement for these criteria and
metrics. Even if an idea doesnt turn into product, keep it in the hopper because it can
prove to be a valuable asset for future products and a basis for learning and growth.

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Next are beta / Marketability Tests. Arranging private tests groups, launching beta
versions, and then forming test panels after the product or products have been tested
will provide you with valuable information allowing last minute improvements and
tweaks. Not to mention helping to generate a small amount of buzz. Word Press is
becoming synonymous with beta testing, and its effective; Thousands of programmers
contribute code, millions test it, and finally even more download the completed endproduct.

Moreover, Technicalities and Product Development provides the technical aspects can
be perfected without alterations to post-beta products; heading towards a smooth step 7
is imminent. According to Akrani, in this step, The production department will make
plans to produce the product. The marketing department will make plans to distribute
the product. The finance department will provide the finance for introducing the new
product. As an example; In manufacturing, the process before sending technical specs
to machinery involves printing MSDS sheets, a requirement for retaining an ISO
9001 certification (the organizational structure, procedures, processes and resources
needed to implement quality management.) In internet jargon, honing the technicalities
after beta testing involves final database preparations, estimation of server resources,
and planning automated logistics. Be sure to have your technicalities in line when
moving forward.

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Furthermore, Commercialization is the one of processes. At this stage, your new product
developments have gone mainstream, consumers are purchasing your good or service,
and technical support is consistently monitoring progress. Keeping your distribution
pipelines loaded with products is an integral part of this process too, as one prefers not
to give physical (or perpetual) shelf space to competition. Refreshing advertisements
during this stage will keep your products name firmly supplanted into the minds of
those in the contemplation stages of purchase.
Lastly, Posting Launch Review and Perfect Pricing. Review the NPD process efficiency
and look for continuing improvements. Most new products are introduced with
introductory pricing, in which final prices are nailed down after consumers have gotten
in. In this final stage, youll gauge overall value relevant to COGS (cost of goods
sold), making sure internal costs arent overshadowing new product profits. You
continuously differentiate consumer needs as your products age, forecast profits and
improve delivery process whether physical, or digital, products are being perpetuated.

3.5 Task 5
Three pricing strategies
First of all, skimming strategy is the skimming is the process of setting high prices
based on value. Instead of basing your prices on your competition, a skimming price
comes from within the company and the (financial) value your product represents to
your customer. This strategy can be employed in emerging markets, where certain

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customers will always want the newest, most advanced product available. It also works
well in a mature market, where customers have already realized the value of your
product and are willing to pay for what they see as a worthwhile investment.
Surprisingly, skimming also works in declining markets, as your diehard customers are
willing to pay big bucks for what they see as an older but superior product with a
dwindling supply.
In addition, neutral strategy is the prices are set by the general market, with your prices
just at your competitors prices. The major benefit of a neutral pricing strategy is that it
works in all four periods in the lifecycle. The major drawback is that your company is
not maximizing its profits by basing price only on the market. Since the strategy is
based on the market and not on your product, your company, or the value of either,
youre also not going to gain market share. Essentially, neutral pricing is the safe way to
the play the pricing game.
Lastly, penetration strategy is a penetration strategy is the price war; this strategy goes
for the deepest price cuts, driving at every moment to have your price be the lowest on
the market. Penetration strategies only work in one of the four lifecycle periods: growth.
During growth, your sales are continuing to expand, as your customers want the newest
product but still a product that has already tested by others in the emerging period. This
is when your average customer buys a product and when the sales numbers will be the
biggest. A penetration strategy works here, and only here, because youre attracting
customers to a new but proven product with cheap productions. Youre developing
relationships with new customers willing to try the new product but who will only come
for a lower price.
Three pricing methods
Breakeven pricing requires that the price of the product is set so that total revenue
earned equals the total costs of production.

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Mark-up pricing is similar to breakeven pricing, except that a desired rate of profit is
built into the price (therefore this pricing is also sometimes referred to as cost-plus, fullcost or target-profit pricing).
Peak-load pricing involves differentiated pricing which reflects differences in supply
costs, given variations in demand for the product over time.
Marginal cost pricing involves setting prices, and therefore determining the amount
produced, according to the marginal costs of production, and is normally associated
with a profit-maximizing objective
Product line pricing is the process used by retailers of
separating goods into cost categories in order to create various quality levels in the
minds of consumers. Effective product line pricing by a business will usually involve
putting sufficient price gaps between categories to inform prospective buyers of
quality differentials and also called price lining.

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Key characteristics of leasing and bidding

A lessor (the leasing company) can account for a lease in three ways which are
operating lease, direct-financing lease and sales-type lease.
Lease capitalization, which includes the direct-financing lease and the sales-type lease,
needs to be recognized when a lease meets any one of the four criteria specified for
capitalization of leases and both of the following revenues-recognition criteria is
collection of the monthly lease payments is reasonably predictable. Lessors
performance is substantially complete, or future costs are reasonably predictable. If the
lease is accounted for as a capital lease, the lessor must determine if it classifies as a
direct-finance lease or as a sales-type lease. To classify as a sales-type lease, the fair
value of the asset must be greater than the lessor's book value. If not, it is accounted for
as a direct-financing lease.

First of all is direct-Financing Lease. As its name implies, a direct-financing lease is

basically the coupling of a sale and financing transaction. In this case, the lessor
removes the leased asset from its books and replaces it with a receivable from the
lessee. The only income recognized by the lessor is the interest received. The implied
rate is taken by calculating IRR of the asset; cash inflow is equal to lease payments and
cash outflow is equal to the book value of the lease asset.

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Besides, Sales-Type Lease is a sales-type lease is accounted for like a direct-financing

lease, except that profit on a sale is recognized upon inception of the lease, in addition
to the interest income recognized during the lease term. The gross profit recognized at
the inception of the lease is the PV of all lease payments minus the cost of the leased
asset.
Competitive bidding is transparent' procurement method in
which bids from competing contractors, suppliers, or vendors are invited by
openly advertising the scope, specifications, and terms and conditions of the
proposed contract as well as the criteria by which the bids will be evaluated.
Competitive bidding aims at obtaining goods and services at the lowest prices by
stimulating competition, and by preventing favoritism. In open competitive
bidding (also called open bidding), the sealed bids are opened in full view of all who
may wish to witness the bid opening; in closed competitive bidding (also called closed
bidding), the sealed bids are opened in presence only of authorized personnel. See
also competitive negotiation.

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4.0 Reference
- http://en.wikipedia.org/wiki/Industrial_marketing
- www.google.com
- www.scribd.com
- http://www.businessdictionary.com/

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5.0 Coursework

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TAN WAH TIONG

940928-14-5531
201565
017-6853251

LOH YONG CHIANG

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Please describe the B2B decision-making process (DMP).

Its better to act too quickly than it is to wait too long.
(Welch, 2001)
Preparation period

Problem recognition

Information search procedures

Alternative valuation

Written tender

Negotiation

Preferred buyer status

Trial

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Choice

Post-purchase evaluation

Figure 3.3 the decision-asking process

As with consumer buying, most organizational purchases are made in response to a
problem or need of some kind. This will then trigger a decision-making buying process,
taking the buying centre through to product or service purchase and, hopefully, problem
solution (Figure 3.3). Although the basic structure is the same, there will be differences
in the way companies approach the process. It will also vary across the world. So sellers
will need to work hard at understanding cultural differences in whatever country the
suppliers want to sell their products and services in. It is important for the supplier to
understand the processes and the influences on them, so that this knowledge can be used
in a productive and profitable way. Many B2B decision-making process models exist
(practitioners will even develop their own). The following stages represent one such

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model. For some companies the purchasing process would start before the need arises.
This stage could be identified as the preparation period.

The preparation period

For some companies and some classes of product it would seem foolish and
unprofessional to start the buying process only when a particular need arises, especially
if time, speed, repeat purchase or product complexity are major issues. If issues like
these are concerns, then it will be profitable for the buyer to install contingency
measures so that the organization is prepared and can solve the problem easily and
quickly. This will include contacting relevant suppliers to discuss quality, value and cost
needs, as well as how much stock they are prepared to hold and delivery times. It might
be that at this stage prices are negotiated and a contract written up for ordering
throughout the year.

Problem recognition
In other circumstances the buying need arises in response to a particular problem. The
size and difficulty associated with the problem will be determined by the
product/service needed. With simple, inexpensive repeat purchases for goods such as
paint, pins or paper, the process will be straightforward, especially if there is a contract

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already negotiated with the supplier. If the purchase is a modified rebury or new
purchase, then the problem becomes more difficult.
Information search procedures
This stage involves searching around for relevant information. It could be argued that
with the introduction and development of the internet the course of action is much
easier. Now almost the first stage in looking for information to solve a problem is to go
onto the web. Other sources of information will be trade associations, existing dealer
contacts, government sources, and so on. Probably the most reliable source, depending
on the problem, would be from suppliers already used and recommendation from trusted
sources. For B2B suppliers it is crucial that they have information readily available in a
customer friendly acceptable form. This might be by inbound or outbound phone call,
fax or e-mail request, or on the company or organizational partner website, by pamphlet,
booklet or video, or by personal contact.
Companies wanting to sell into government departments will usually have to get
onto a preferred supplier list before their products and services will be considered for
purchase. This may involve quite detailed procedures (e.g. obtaining certain quality
standards) that must be followed if they are to be considered as suppliers.

Alternative valuation

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Once the source of the product or services needed has been identified, both the seller
and the products on offer will have to be evaluated to measure good value and
correctness of fit against wanted benefits. In the case of the products, the buyer will
have some kind of criteria in terms of usage, value and price. This might be informal
and only exist in the mind of the purchaser or it could be formal, written down and
consisting of strict measurement and comparison criteria. The DMU might consider
competing products or services from information gathered or, depending on the value of
the order, prospective sellers will be invited to demonstrate the goods and be measured
against predetermined benchmarks. This process might well be repeated at a given
period, for example a year, so that complacency doesn't set in.

Written tender
Again with some organizations, especially government departments, a selection of
interested suppliers will be invited to send in a written tender (now possible online)
spelling out value and costs. They will then be judged against one another and the best
value chosen (usually on price).

Negotiation
It is at this stage that some form of negotiation may take place. This might be on such
things as added benefits offered, costs and payment period, and so on. Relationships

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between buyer and seller may be adversarial or cooperative. Adversarial relationships

occur where in negotiation the seller tries to sell at the highest value (price?) and the
buyer tries to buy at the lowest value (cost?). This tends to happen with low value
products or one-off purchases. Such competition is thought by some to lower the prices
while increasing the level of the service and attention paid to the buyer account. Others
argue that the level and amount of power held by the two participants will mean that
advantage will be taken by one side to the detriment of the other. Cooperative
relationships involve agreements to work together over the long term with both buyer
and seller concerns taken into consideration. We will discuss this further when we talk
about customer relationship management and long-term supplier chain interaction.

Preferred buyer status

In some instances the buyer might have to be elected to 'preferred buyer' status before
any order can be given. This will probably mean that certain conditions must be met, for
example, achieving investment in people or industry quality standards awards, as part of
the process. This tends to be obligatory in some sections of the public sector. Buyers
seek to place suppliers on a preferred status basis so as to maximize the benefits that can
come from such collaboration. Preferred status relationships are more likely where the

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products are specialized, high volume and/or of strategic importance or information and
training is needed for the buyer staff because of product or service complexity.

Trial

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In some cases products or services will be taken on for a trial period to see if they match
the benefits promised. This will especially happen if the product is strategically
important, a long-term contract, and/or is going to cost a great deal of money. Sellers
may not like this arrangement, as it can be costly if the product is not taken up, but they
might have to concur depending on the need for the order. It may well be that the buyer
will instigate trial from different companies at the same time and it can be an expensive
business for organizations whose products and services are not accepted Choice
The choice will be eventually made and the order placed or the contract signed. The
deal might be for a one-off order, allowing the buyer to measure the level of service
before more orders are given, promises of a series of repeat purchases, or a longer term
contract of some kind. In some cases a probationary period might be demanded so as to
test out the promises of the new supplier.

Post-purchase evaluation
All suppliers will be judged on the promised level of service and some type of postpurchase evaluation will be bound to take place. This might be by comparing actual
benefits to those that were promised or measurement against predetermined standards.
In the former case salespeople who over-promise on benefits, or benefits that don't
match up to expectations, can cause customer loss of faith and no more purchases, thus
bringing the company into disrepute. In the latter case, not meeting standards can lead

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to penalties and fines, depending on the terms and conditions built into the contract.
Whatever the situation, loss of a customer can be disastrous in B2B where buyers might
be few, whereas in B2C, although unfortunate, the customer will be only one among
millions.

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