Industrial marketing is the type of marketing applied by companies that are dedicated to marketing goods and services, offering them to other companies that incorporate them into their processes to develop products that they take to the market.
That is, the goods and services that are marketed in industrial marketing are not intended for the final consumer. On the contrary, customers are companies that buy raw materials, machinery, furniture and other products. Thus, these are used to be converted into finished products (or are part of that conversion process).
Such finished products may be offered on a non-profit basis when it comes to government institutions that offer public services. Or they can be offered for profit when they are marketed in the consumer market.
Without a doubt, it could be said that it is a type of business B2B (Business to business) or business-to-business marketing. This type of marketing is based on establishing stable and lasting relationships with customers.
Characteristics of customers and markets within industrial marketing
The main characteristics of customers and markets that can be mentioned within industrial marketing are the following:
1. There are few demanders and few suppliers
To begin with, in the industrial market there is an oligopsony or a market structure in which there are few buyers. At the same time, it is also a market where there are few bidders or an oligopoly.
For this reason, the level of close relationship established between the companies that offer and demand the products is very important. This, given that, if a bidding company loses just one of its clients, it could lose a very important part of the market. In the same way, if a buying company loses a supplier, it can put its production at risk.
2. Customers are very loyal
Also, there is greater customer loyalty in these markets. This is because there are few and highly specialized providers. In general, the negotiation of products is carried out without a defined term due to the long-term relationship that the companies maintain. In addition, if the applicant company has many branches, it has a policy of buying from a single supplier in order to offer homogeneous products.
3. Buyers are varied and highly specialized
On the other hand, purchasing decisions are made by a team made up of specialized people. This is due to the fact that in this decision each person must have a deep knowledge about the attributes and the functioning of the products that are demanded.
4. Quality is more important than price
Now, although the quantities of product that are purchased are usually large, the price does not turn out to be an important element in decision making. This is explained because generally the elasticity of demand is inelastic, raise or lower the price, the quantity demanded is usually the same. Therefore, the quality of the product is considered more important in this decision.
5. Service and supply capacity are valued
Customers highly appreciate the service they receive. Above all, the supply capacity offered by the supplier company in the long term. They are even willing to pay a higher price if the supplier guarantees the availability of the goods and services they need.
6. The purchase decision is very thoughtful
Also, the purchase decision is usually very thoughtful. The plaintiff needs to have a lot of information before making a decision. For this reason, the purchase decision takes a long time. Certainly the buyers analyze several proposals before deciding.
7. The sales force has more influence than advertising
Similarly, the sales force assumes a very important role. Sellers must first know the needs of each consumer, to make the adaptation of each sales proposal. This implies that the products and services must meet certain specifications for each client.
8. It can cause ethical conflicts
Finally, as the sales amounts are very high, it can cause certain suppliers to resort to bribes or illegal practices to secure sales. These practices could be considered corrupt.
Types of products that are marketed in industrial marketing
Among the main products that are marketed in industrial marketing we find:
- Raw Materials: Like oil, cotton and fluid milk.
- Processed materials: Like plastic, steel and flour.
- Consumer goods: Like paper, gasoline and inks.
- Components: Such as motors, chips and transformers.
- Industrial services: As maintenance, composure and logistics services.
- Light equipment: Like air conditioning, computers, and hand tools.
- Heavy equipment: Like X-ray machines, tractors and compactors.
Marketing mix in industrial marketing
The way the four basic components work in the industrial marketing mix is:
- Product: It is about positioning the product within the market in relation to its functions and characteristics.
- Price: The price is determined according to the competitive situation within the market and based on the needs of consumers.
- Promotion: The communication process is worked especially through the sales force. Although advertising is used, it is only to inform about the product and to reinforce the institutional image of the company. Advertising is not used to encourage purchase.
- Square: The distribution is carried out especially through the direct sale of the goods and services that are offered to the clients.
In conclusion, it can be stated that industrial and consumer marketing differ fundamentally in the use made of the goods and services produced by the companies that use them. In consumer marketing, goods and services are produced for the final consumer. While in industrial marketing, goods and services are produced for the transformation and production of other products that are then offered for final consumption.