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In this chapter, students will be able to understand: The importance of derived demand in industrial markets, how demand is affected by technology levels, characteristics of an industrial product, the importance of ISO 9000 certification, the growth of business services and nuances of their marketing, the importance of trade shows in promoting industrial goods.
International Marketi ng 14th Edition P h i l i p R C a t e o r a M a r y C G i l l y John L Graham Products and Services for Business Chapter 13 McGrawHill/Irwin InternationalMarketing14/e Copyrightâ2009byTheMcGrawưHillCompanies,Inc.Allrightsreserved What Should You Learn? The importance of derived demand in industrial markets • How demand is affected by technology • Characteristics of an industrial product • The importance of ISO 9000 certification 13-2 What Do I Need to Know? • The growth of business services and nuances of their marketing • The importance of trade shows in promoting industrial goods • The importance of relationship marketing for industrial products and services 13-3 Global Perspective Intel, the Boom and the Inescapable Bust • In industrial markets, including global ones, what goes up must come down • Issues of standardization versus adaptation – Less relevance to marketing industrial goods than consumer goods • Factors accounting for greater market similarities in customers of industrial goods versus consumer goods – The inherent nature of the product – The motive or intent for the user differs 13-4 Major Categories U.S Exports Exhibit 13.1 13-5 Demand in Global Business-to-Business Markets • Demand in industrial markets is by nature more volatile • Stages of industrial and economic development affect demand for industrial products • The level of technology of products and services make their sales more appropriate for some countries than others 13-6 The Volatility of Industrial Demand • Cyclical swings in demand – Professional buyers tend to act in concert – Derived demand accelerates changes in markets • Derived demand can be defined as demand dependent on another source • Minor changes in consumer demand mean major changes in related industrial demand – Boeing ► ► Worldwide demand for travel services related to demand for new airplanes Commercial aircraft industry one of the most volatile 13-7 Derived Demand Example Exhibit 13.2 13-8 Stages of Economic Development • Stage – the traditional society • Stage – preconditions for takeoff • Stage – take off • Stage – drive to maturity • Stage – the age of mass consumption 13-9 Technology and Market Demand • Trends spurring demand for technologically advanced products – Expanding economic and industrial growth in Asia – The disintegration of the Soviet empire – The privatization of government-owned industries worldwide • The companies with the competitive edge will be those whose products are: – Technologically advanced – Of the highest quality – Accompanied by world-class service 13-10 Quality is Defined by the Buyer • How well a product meets the specific needs of the buyer • The price-quality relationship • Product design must be viewed from all aspects of use – Climate – Terrain 13-12 Quality is Defined by the Buyer • Total Quality Management (TQM) • Lack of universal standards • Country-specific standards • The metric system 13-13 ISO 9000 Certification – An International Standard of Quality • Positively affects the performance and stock prices of firms • Certification of the existence of a quality control system a company has in place to ensure it can meet published quality standards – Describes three quality system models – Defines quality concepts – Gives guidelines for using international standards in quality systems • Generally voluntary 13-14 ISO 9000 Certification – An International Standard of Quality • EU Product Liability Directive • Now a competitive marketing tool in Europe and around the world • The ACSI approach 13-15 Business Services • For many industrial products the revenues from associates services exceed the revenues from the products – Cellular phones – Printers • Leasing capital equipment • Services not associated with products – Boeing at-sea-satellite-launch services – Ukrainian cargo company space rental on giant jets – Professional services (advertising, banking, healthcare, etc.) 13-16 After-Sale Services • Installation • Training • Spare and replacement parts – Delivery time – Cost of parts • Service personnel • Almost always more profitable than the actual sale of the machinery or product • Crucial in building strong customer loyalty 13-17 Other Business Services • Client followers • Mode of entry – Licensing – Franchising – Direct investment • Protectionism • Restrictions on cross-border data flows 13-18 Expansion of U.S Law Firms in Selected Cities Worldwide Exhibit 13.3 13-19 Trade Shows: A Crucial Part of Business-to-Business Marketing • Secondary methods for marketing: – – – – Advertising in print media Catalogs Web sites Direct mail • Trade shows have become the primary and most important vehicle for doing business in many foreign countries 13-20 Trade Shows: A Crucial Part of Business-to-Business Marketing • Total annual media budget spent on trade events: – Europeans – 22 percent – Americans – percent 13-21 Trade Shows: A Crucial Part of Business-to-Business Marketing • Trade shows – Provide the facilities for a manufacturer to exhibit and demonstrate products to potential users – Allow manufacturers to view competitors products – Are an opportunity to create sales and establish relationships with agents, distributors, franchisees, and suppliers • Online trade shows – Become useful in difficult economic and/or political circumstances – Are obviously a less than adequate substitute for live trade shows 13-22 Relationship Marketing in Business-to-Business Contexts • Not a matter of selling the right product the first time – Instead selling a continuously changed the product to keep it right over time • The objective of relationship marketing – To make the relationship an important attribute of the transaction ► Differentiating oneself from competitors • Using the Internet to facilitate relationship building and maintenance – Cisco Systems – Solar Turbines Inc 13-23 The Global Project Team • Customer • Sales engineer • Application engineer • Engineering and control systems • Project manager • Manufacturing technicians • Customer services • Suppliers 13-24 Summary • Industrial marketing requires close attention to the exact needs of customers • Industrial goods marketers must pay close attention – To level of economic and technological development of each market to determine the buyer’s assessment of quality • The demand for products and services in business-to-business markets is by nature more volatile than in most consumer markets 13-25 Summary • Demand also varies by level of economic development and the quality of educational systems across countries • Product or service quality is defined by customers • Development of ISO 9000 global quality standards • After-sale services are an important aspect of industrial sales • Trade shows are an especially important promotional medium in business-to-business marketing 13-26 ... the product – The motive or intent for the user differs 1 3-4 Major Categories U.S Exports Exhibit 13. 1 1 3-5 Demand in Global Business-to-Business Markets • Demand in industrial markets is by nature... Law Firms in Selected Cities Worldwide Exhibit 13. 3 1 3-1 9 Trade Shows: A Crucial Part of Business-to-Business Marketing • Secondary methods for marketing: – – – – Advertising in print media Catalogs... foreign countries 1 3-2 0 Trade Shows: A Crucial Part of Business-to-Business Marketing • Total annual media budget spent on trade events: – Europeans – 22 percent – Americans – percent 1 3-2 1 Trade Shows: