The industrial markets

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The industrial markets

• Farm and farm related
• Reseller .
• Government market
• Commonwealth
• State
• Local
• Semi government instrumentalities
• Services
• Non-profit.

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Organizational customers

• buy goods and services to
• Make other goods and services.
• Resell
• Conduct their own operations

3
Difference in buying behaviour

• functional involvement
• rational motives
• buyer serves internal clients
• formal policies and rules
• technical expertise
• stable relationships
• interpersonal relationships
• reciprocity

4
Resellers

• Buy products from suppliers and resell in the
  same form
• Break bulk
• Build assortment.
• Create time, place and possession utility
• DISINTERMEDIATION

5
What do we want a reseller to do for us?

• Maintain inventory
• Help build the brand
• Adequate levels of customer service
• Display
• Promotion

6
What do resellers want?

• Fast turnover ( get money back)
• No dead stock
• Profit per metre of shelvage
• Promotional support
• Building a more profitable business
• Fits in with retailer plans and promotional
  schedules

7
The industrial supply chain

• Firms add value by obtaining and transforming
  into outputs.
• Can we help our customers by adding value to
  their inputs?

Customer
Supplier
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THE PORTER ARROW
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Differences in demand characteristics

• Derived demand
• Inelastic demand in short term
• One part a small part of item total price
• Few available substitutes
• Price increases may be absorbed or passed on
• Demand fluctuates considerably
• Business, seasonal, fashion cycles
• Expert buyers

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Industrial market is concentrated

• Size concentration
• 80-20 rule applies with a vengeance
• Geographic concentration
• most Australian industry clustered along the
  eastern coastal strip
• Industry clusters
• steel Newcastle and Wollongong NSW
• Melbourne heavy industry - usually involving
  melting steel or other metals - in Footscray,
  Sunshine and Clayton
• advertising in St Kilda Rd and South Melbourne
• Ownership concentration
• Eg supermarket, beer, airline duopolies
• Australian Bureau of Statistics and Department of
  Labour and Industry, Dun and Bradstreet, etc.

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Australian and New Zealand Standard Industrial
Classification (ANZSIC) system
ANZIC range Industry group Division
A Agriculture, forestry mining Division
B Mining Division C Manufacturing Division
D Electricity, gas water supply Division
E Construction Division F Wholesale
trade Division G Retail Trade Division
H Accommodation, cafes and restaurants
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ANZIC codes (cont.)
ANZIC range Industry group Division I Transport
storage Division J Communication
services Division K Finance
insurance Division L Property business
services Division M Government administration
defence Division N Education Division
O Health community services Division
P Cultural recreational services Division
Q Personal other services
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BUYCLASSES
Customer information needs and number of
alternative supply sources considered

• Business customers information requirements
  depend on the type of buying problem.

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Buyphases

• Recognize the problem
• Determine requirements
• Set specifications
• Search out alternate suppliers
• Acquire proposals from suppliers
• Analyze proposals and select supplier.
• Select order routine.
• Evaluate product and supplier performance.

Creeping commitment
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Porters 5 forces model of an industry
Sources of price pressure
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BUYING CENTRES- people involved in making the
buy

• WHO ARE THE INFLUENCERS
• initiators
• influencers
• gate keepers
• decider
• purchaser
• user

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Involvement overseas

• Domestic operate exclusively within a single
  country
• Regional exporters Markets served are
  economically and culturally similar.
• Exporter Run from central office in home region,
  exporting finished goods outside the home region.
• International Regional operations are somewhat
  independent
• Global Highly decentralised organisation
  operating across a broad range of countries.

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Foreign market entry methods

• Exporting
• Licensing
• Joint venture
• Foreign direct investment

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Differences between domestic and international
markets