MODULE-I

Consumer Goods Vs Industrial Goods

Consumer Goods

The goods which are bought for household use, personal use, or family use from retail stores are
called “consumer goods.” These are not meant for any further business transaction.

Industrial Goods

Goods which are bought by companies to produce other products which are sold later are called
“industrial goods.” These goods can be directly or indirectly used in the production of goods which
are sold at retail.

B2B Vs B2C Marketing

1.B2B Marketing: Business Marketing refers to the sale of either products or services or both by
one organization to other organizations that further resell the same or utilize to support their own
system where as B2C Marketing: on the other hand refers to the transaction of goods and services
between organizations and potential customers.
The above definitions of business marketing and consumer marketing highlight the difference
between the two commonly used terms in marketing (B2B and B2C).Business marketers do not
entertain consumers who purchase products and services for their end-use. They deal only with
other businesses/firms to sell their products.
In consumer markets, products are sold to consumers either for their own use or use by their family
members.
2. In business marketing, marketers deal with lesser number of individuals as compared to
consumer marketing where one has to deal with the mass market.

3. Business marketers need to be extremely careful about their mode of communication.

4. Technical specification is more important than that of emotion and sentiments in b2b marketing.

Factors affecting industrial buying behaviour

Industrial buying behavior is the pattern of actions by a company involved in manufacturing,

processing and other heavy industry. Many of these companies are required to make regular
purchases as a means of supplying their businesses. Although each company and each industry
will have buying behavior affected by its own set of factors, there are several main variables that
can affect industrial buying as a whole.

Demand

Perhaps the main driver of industrial buying is demand. The amount of buying that an industrial
concern will do is directly depended on the amount of business that the company can expect in the
near future. Generally, if a company expects higher demand, then it will stock up on raw materials
as a means of ensuring that it will be able to meet consumer demand and maximize revenue.
Price

Buying patterns are also affected by the price of the materials the companies are purchasing.
When prices are higher or the company expects a decrease in the near future, the company may
choose to hold off making purchases, so as to save money.

Economy

In addition to current demand and the current prices for a product, industrial companies may look
to the economy as an indication of the future availability of materials relative to the consumer
demand for them. If the economy is trending upward, the company may purchase more based on
the expectation of a future rise in sales, while a downward trending economy may push it to the
opposite course of action.

Technological Changes

In addition, industrial companies are heavily influenced by changes in technology that affect both
the provision of goods and their own requirements. For example, if purchasing a piece of
technology means that a raw material becomes cheaper to use, then the company may choose to
invest in the new technology. Similarly, the acquisition of new technology will often change the
company's buying habits, as the technology will have different raw material requirements to run.

The business buying decision process involves five distinct stages. At each stage, different decision
makers may be involved, depending on the cost and strategic importance of the purchase. To
navigate the buying decision process successfully, you need to provide the right type of information
and ensure that your sales representatives are contacting the right decision makers. You can also
strengthen your position by offering customers advice and guidance at each stage – a process
known as consultative selling.

Organization buying behaviour and decision making process

Awareness and Recognition

The process begins when a company identifies a need for a purchase. It may want to replace an
existing item, replenish stocks or buy a new product that is just available on the market. You can
also stimulate a need that the company may not be aware of by advising them of issues and
challenges that other companies in their industry face.
The buying team next works with the requesting department to firm up on the requirement. Your
sales team can provide advice and guidance at this stage by offering discussion papers or inviting
decision makers to workshops or seminars on the topic.

Specification and Research

When the buying team has agreed requirements, it prepares a detailed specification that sets out
quantities, performance and technical requirements for a product. Your sales team can support
this stage by advising the buying team on best practice or collaborating with the buying team to
develop the specification. Buying teams then use the specification to search for potential suppliers.
They may search the internet to find products or companies that provide a match to their
specification, so it is important that your website features keywords that match your customers’
product or service needs.

Request for Proposals

When the buying team has identified potential suppliers, it asks for detailed proposals from the
suppliers. The team may issue a formal document known as a request for proposal, or it may
outline requirements and invite potential suppliers to make a presentation or submit a quotation. If
the product or service has a precise specification, the buying team may simply ask for price
quotations. If the product is more complex, it may ask for proposals on how a supplier would meet
the need.

Evaluation of Proposals

The buying team evaluates suppliers’ proposals against criteria such as price, performance and
value for money. As well as evaluating the product, they assess the supplier on factors such as
corporate reputation, financial stability, technical reputation and reliability. You can influence
decisions at this stage by providing company information, case studies and independent reports that
review your company and products.

Order and Review Process

Before the buying team places an order with the chosen supplier, they negotiate price, discount,
finance arrangements and payment terms, as well as confirming delivery dates and any other
contractual matters. When the order is complete and delivered, the buying team may add a further
stage by reviewing the performance of the product and the supplier. This stage may include
imposition of penalty charges if the product fails to meet the agreed specification.

Buying Grid
Buying grid framework is a conceptual model for buying processes of organisations. The industrial
buying is not a single event, but an organisational decision-making processes where multiple
individuals decide on a purchase. Their framework consists of a matrix of buyclasses and
buyphases.

The BUYCLASSES are:

 
1. New Tasks
The first-time buyer seeks a wide variety of information to explore alternative purchasing solutions
to his organisational problem. The greater the cost or perceived risks related to the purchase, the
greater the need for information and the larger the number of participants in the buying centre.
 
2. Modified Rebuy
The buyer wants to replace a product the organisation uses. The decision making may involve plans
to modify the product specifications, prices, terms or suppliers as when managers of the company
believe that such a change will enhance quality or reduce cost. In such circumstances, the buying
centre proved to require fewer participants and allow for a quicker decision process than in a new
task buyclass.
 
3. Straight Rebuy
The buyer routinely reorders a product with no modifications. The buyer retains the supplier as long
as the level of satisfaction with the delivery, quality and price is maintained. New suppliers are
considered only when these conditions change. The challenge for the new supplier is to offer better
conditions or draw the buyer's attention to greater benefits than in the current offering.
 
Based on field research, Robinson, Faris and Wind divided the buyer purchase process into eight
sequential, distinct but interrelated BUYPHASES:

1. recognition of the organisational problem or need;

2. determination of the characteristics of the item and the quantity needed;
3. description of the characteristics of the item and the quantity needed;
4. search for and qualification of potential sources;
5. acquisition and analysis of proposals;
6. evaluation of the proposals and selection of suppliers;
7. selection of an order routine;
8. performance feedback and evaluation.

Buying Center

A buying centre is comprised of all those individuals and groups who participate in the buying
decision-making process, who share some common goals and the risks arising from these decisions.
Before identifying the individuals and groups involved in the buying decision process, a marketer
must understand the roles of buying centre members. Understanding the buying centre roles helps
industrial marketers to develop an effective promotion strategy.

But on an average a buying center of an organisation has the following seven members or a
group of members who play these roles:
1. Initiators:
Usually the need for a product/item and in turn a supplier arises from the users. But there can be
occasions when the top management, maintenance or the engineering department or any such
recognise or feel the need. These people who “initiate” or start the buying process are called
initiators.
2. Users:
Under this category come users of various products. If they are technically sound like the R&D,
engineering who can also communicate well. They play a vital role in the buying process. They also
act as initiators.
3. Buyers:
They are people who have formal authority to select the supplier and arrange the purchase terms.
They play a very important role in selecting vendors and negotiating and sometimes help to shape
the product specifications.
The major roles or responsibilities of buyers are obtaining proposals or quotes, evaluating them and
selecting the supplier, negotiating the terms and conditions, issuing of purchase orders, follow up
and keeping track of deliveries. Many of these processes are automated now with the use of
computers to save time and money.
4. Influencers:
Technical personnel, experts and consultants and qualified engineers play the role of influencers by
drawing specifications of products. They are, simply put, people in the organisation who influence
the buying decision. It can also be the top management when the cost involved is high and benefits
long term. Influencers provide information for strategically evaluating alternatives.
5. Deciders:
Among the members, the marketing person must be aware of the deciders in the organisation and
try to reach them and maintain contacts with them. The organisational formal structure might be
deceptive and the decision might not even be taken in the purchasing department.
Generally, for routine purchases, the purchase executive may be the decider. But for high value and
technically complex products, senior executives are the deciders. People who decide on product
requirements/specifications and the suppliers are deciders.
6. Approvers:
People who authorise the proposed actions of deciders or buyers are approvers. They could also be
personnel from top management or finance department or the users.
7. Gate Keepers:
A gatekeeper is like a filter of information. He is the one the marketer has to pass through before he
reaches the decision makers.
Understanding the role of the gatekeeper is critical in the development of industrial marketing
strategies and the salesperson’s approach. They allow only that information favourable to their
opinion to flow to the decision makers.
By being closest to the action, purchasing managers or those persons involved in a buying centre
may act as gatekeepers. They are the people whom our industrial marketer would first get in touch
with. Hence, it so happens that information is usually routed through them.
B2B Marketing Environmental Factors