Strategy formulation in the industrial markets Industrial marketing depends on identifying promising market segments to serve, understanding their needs, and then developing marketing strategy and plans to satisfy those needs better than competitors in such a way as to achieve organizational objectives. It is not easy to accomplish in todays dynamic environment.

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Strategy formulation in the industrial markets Strategic planning in the industrial market

Planning in the industrial marketing arena requires a higher degree of integrated effort across functional areas and a closer relationship with overall corporate strategy than in the consumer market.

Functional Isolation: Failing to recognize the interdependency between marketing and other functional areasFunctional Conflict: Potential conflicting areas between Marketing & Engg

Alleviating Conflict: Understanding the reasons: rises due to differences in perception of their prestige, power and knowledge, budget constraint, rapid company growth, rapid technological change etcOrganizational design for interfunctional cooperation.: Hierarchy of authority or through committee work and liaison roles. Co-ordination, broader organizational goals obtained etc.

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Strategy formulation in the industrial markets Design for competitive advantage: What major task groupings are feasible design alternatives?What linkages are needed essary(attempt) between groupings? What support systems are needed?

Task force: Tackle a specific group problem

Team: To respond recurring problems that cross over groups

Integrating role: An individual is charged with formal responsibilities to coordinate b/w groupings

Integrating department: Ensure coordination b/w different functions

Matrix: Reports to two bosses simultaneously

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Strategy formulation in the industrial markets Decision support systems: DSS contributes much towards integrating personnel in different departments, enabling a firm to use its competitive advantages better and to overcome interdepartmental conflict.DSS are computer systems developed to aid managerial decision making by employing state of the art quantitative models that analyze proposed actions by evaluating how those actions would affect all primary areas of an organization. Ex: for product price reduction, its analysis such considerations as effects on amount sold, inventory levels, mfg scheduling, input availabilities, capital expenditure, additional revenues, anticipated computer reactions.

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Assessing Market opportunities

Understand the role of marketing research in strategic decision making

Understand how secondary and primary data are collected and used

Become aware of the vast changes taking place in the area of secondary research

Appreciate the industrial applications of decision support systems and the software for them

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Difference between Industrial Marketing Research and Consumer Marketing ResearchSample Size: Small sample due to small universe(population) & Concentration of buyers as well as information concernMore diff to get data, time constraint Accessibility is limited to working timeMore diff as buying decisions are made by several membersManagers perform less Marketing research activitiesTechnical background should requiredDescriptive (survey method) used commonlyMore reliance on secondary data

Large sample due to large universe, & ind or house hold buyers.Geographically dispersed of buyers as well as informationLess difficult to obtain data, accessibility is easierSimple as individuals or house hold users are generally buyersManagers perform more Marketing research activities

Since not techy product no need of much techy backgroundExperimental or Observation methodOn primary data

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Assessing Market opportunities

Defining the problem and research objectives

Developing the information sources

Collecting the information

Analyzing the information

Presenting the findings

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*Industrial Marketing SegmentationTargeting and Positioning

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Market SegmentationMarket segmentation perhaps defined as the sub dividing of a heterogeneous market into groups of homogeneous customers so as to facilitate effective target marketing.

Market segmentation is a strategy of selecting customers, for differentiating customers according to differences, choosing among alternative market opportunities, tailoring marketing strategies to those distinctive opportunities.

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*STP Framework MarketSegmentation

1. To Carry Out Market Research

2. To Identify SegmentationVariables

3. To prepare Profile of theResulting Segments

Positioning

1.Identify Target CustomersAttributes

2. Select Matching Benefits

3. CommunicateChosenPosition Target Marketing

Evaluate TheResulting Segments

Select the

TargetSegment(s)

3. DecideTarget MarketingStrategies

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*Benefits Dividing in to Distinct Group of Buyers for Product or Service

To Facilitate Targeting

To Decide Strategic Positioning

To Determine Product, Pricing, Distribution and Promotion Policies

To Organize Sales Force

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*BenefitsEnables to Develop Separate Marketing Plans or programmes

To Meet the Needs of Different Small Firms Could also helps to Survive

Succeed by Focusing in few SegmentsMake Efficient and Effective Allocation of ResourcesCompare Marketing Opportunities in Different Market seg by Analysing Customer Needs

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*Limitations Not Always Beneficial or Practical Market Consists of Few Customers Or a

Single Large Customer Many Persons with Different Background

involved in Decision Making

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*Limitations

Great Differences in

- Buying Practices, - Customer Characteristics, - Product Applications - Benefits Sought by Different Members of Buying Centers

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*CharacteristicsSegmentation Variables Measurable Differentiable Substantial (Sales Potential And Profits) Accessible Actionable Sustainable

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*Market Targeting Evaluate Various Segments Segments Size and Growth Current Segments Sales Future Growth Potential Growth Rate Expected Profitability

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Selection process of Target Market

Analyse Market and Customer Characteristics

Identify Relevant Variables for segmentation

Segment the Market draw up profiles of the segments

Evaluate segments

Select the target segments

*Profitability Analysis Market Potential Estimate of Quantity and Value of a Product That the Total Market Will Purchase in a Specified Time Period Sales Forecast for the Company Profitability Difference Between the Estimated Revenue and Marketing Cost

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*Purchasing Approach Purchasing Orientation / Function Power Structure Buyer-Seller Relationship Purchasing Policies Purchasing Criteria

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Self (Swot) Analysis Manufacturing Capability Technical Competency R & D Investments Financial Strength Product Quality Delivery Performance Sales Force, Advertising Brand Equity

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*Competition Analysis Segments Structural Attractiveness Strength and Weaknesses of Existing and

Potential Competitors both Domestic and Foreign Actual and Potential Substitute Products Relative Bargaining Power of Buyers Powerful Suppliers

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*Competition Analysis Identifying Key Factors for Competitive Success

- Technology - Innovative Capability - Organizational Resources Strength and Weaknesses of Existing and Potential Competitors both Domestic and Foreign Predicting Rivals Move

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*MICHAEL PORTERS FIVE-FORCES MODEL OF COMPETITIONCOMPETITIVE RIVALRY AMONGEXISTING FIRMSThreat of New EntrantsBargainingPower ofSuppliersThreat of SubstituteProducts orServicesBargainingPower ofBuyers

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*Company Objective and Resources In Line With Companys Long Term Objective Skill and Resources (Strengths) Superior to Competitors Capacity to offer Superior Value Strength in Success Factors For Targeted Segment

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*Target Market StrategiesDifferentiated Marketing: A firm may also choose to offer its products or services to a number of diverse segments whose needs, product usage. This strategy to meet the differences among target markets, however increases over all costs to such areas as product doep, modification, production, marketing, & administration. Undifferentiated Marketing: It refers to the fact that the file ignores segment differences & develops a single marketing program that will focus on what is common to all buyers within the market. Ex: Lubricants may market their products to all types of mfg facilities

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Target Market Strategies

Concentrated Marketing: This strategy can be applied when company resources are limited, the firm may choose to go after a large share of one or a few markets. When marketing strategy is well conceived, its possible for the firm to achieve a strong market position with in the chosen markets as well as operating economies.

Niche Marketing: Niche marketing is a process by which a firm segments the market into finer, more homogeneous clusters than that which is normally approached tradition segmentation strategies.

*Undifferentiated MarketingCompanysMarketingMix

MarketB. Differentiated Marketing

Mass Marketing Strategy Ignores Market Segment Difference Based on Common Needs of Buyers Mass Distribution and Mass Advertising Difficulty in Satisfying All Buyers Cant Compete Focused Firms

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*Differentiated MarketingCompanys MarketingMix - 1Companys MarketingMix - 2Companys MarketingMix - 3Companys MarketingMix - 1Companys MarketingMix - 2Companys MarketingMix - 3

Target Several Marketing Segments Design Separate Offer and Plan Increases Cost of Doing Business Extra Marketing Research, Sales Analysis

Promotion, Planning and Channel Mgt.

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*Concentrated MarketingCompanysMarketingMix

Segment - 1Segment - 2Segment - 3

Low Cost of Setting up Large Share of One or Few Segments

or Niches

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*Positioning Identifying Major Attributes for Differentiation - Product Variable - Service Variable - Personnel Variable - Image Variable Selecting The Differentiating Attributes

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*Essentials of Differentiation Distinctive Superior Communicable Sustainable Economic Profitable

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*Positioning StrategiesAttribute Positioning: Based on the certain attributes.Benefit Positioning: Any distinctive benefit becomes coreCost Positioning: low cost meanwhile worth for the costSegment Positioning: May be positioned with reference to specific segmentsApplication / Use / User Positioning: Use/ Application is importantProduct Category: sometimes associated with product class or category Quality Positioning: A product quality can also use for positioningCompetitors positioning: directly against the competitors

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*Thank You

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