Industrial Marketing (also industrial goods marketing) describes the marketing of production factors (potential and repeating factors), selling it not to consumers, but to private or public organizations. It is often called B2B Marketing.

What makes B2B marketing different

The needs of organizations are derivative, i.e. it is derived from the demand of the organization’s customers. The manufacturer of capital goods should therefore consider not only direct customer, but also customers of downstream stages. The multi personality of organizations (buying center) hast to be considered. The buying behavior of organizations is substantially different from the purchasing behavior of consumers. Compared to other products and services, capital goods are more durable products. This results in longer-term business relationships. Contractual or constructive customer loyalty is extremely high (spare parts, maintenance contracts).

Consulting engineers are called in by buyers in all phases of the procurement process, e. g. to create the request documentation to evaluate the offers made by suppliers and monitor performance of the contract. The procured services are often in need of explanation (such as a chip factory), highly individual and customized. Moreover, high capital costs such as training decisions, maintenance, and energy consumption have to be taken into consideration, so that any decision connected with purchasing is a long-term commitment of the procuring company.

Ultimately, market participants should be mentioned as a criterion of the Industrial Marketing: In contrast to consumer goods marketing, neither the demand nor supply side can act anonymously. Often, even small producers of capital goods are forced to market their goods globallybecause of quite small target groups. This leads to relatively high distribution costs.

Consequences for the B2B marketing mix

In the area of product policy, the integration of customers in the innovation management is important. Because of the lack of test markets, new products can only be tested by pilot customers. The communication policy has to satisfying the different information needs of individual buying center members. Direct marketing, trade fairs and exhibitions are important as media advertising.

The Customer Relationship Management (CRM) is of great importance, e.g. to inform customers through newsletters with the aim to invite to fairs and generally to increase customer loyalty. Online marketing serves primarily as information and presentation platform and is important as a distribution channel for standardized products. When communicating with prospects and customers, different procurement situations (Buyclass Framework) have to be considered.

Many highly specialized suppliers of capital goods are active worldwide, as there are only few potential buyers in each country. In this respect cultural differences and country specific regulations must be observed, for example in the field of occupational safety. Companies with worldwide sales activities will often work with local distributors for the core markets abroad, as well as with independent sales representatives for less important markets.

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