26 July 2019
What is Industrial Marketing?
Industrial marketing is another term for business to business (also know as B2B Marketing).
The term speaks directly to a branch of marketing and sales activity specialising in supplying products and services from one business to another.
While the word "industrial" would be assumed to have a connotation of the delivery of "heavy" products and services such as engineering infrastructure, steel manufacturing, bridge and road construction, steel fabrication and similar, in fact the proper definition of Industrial marketing encompasses the marketing of ALL goods and services in the business to business context.
For example the selling of cosmetics to a retailer, the supply of food and beverage products to retailers, the supply of medical supplies to hospitals would also be considered industrial marketing.
B2B Marketing versus B2C
The existence of the term B2B marketing distinguishes Industrial Marketing from B2C marketing (business to consumer).
The key features of Industrial Marketing that make it different from B2C are...
- Financial transaction from one business to another: The key discriminator is the final sales transaction is one business paying another to acquire the good or service being provided.
- Decision makers are not playing with their own money: This alters the emotional position of the people involved in the decision making. Not playing with their own money changes their view increasing their impartiality and allowing more process and logic to be applied to the decision. However, it is a mistake to think NO emotion is involved. Brand loyalty drives emotion and even having a strong personal relationship with the sales representative can have a profound influence. Sometimes egos and power plays have an influence. The higher the value of the transaction the more work is required by the selling team to investigate and understand these attitudes and motivations in order to develop a sales strategy. The aim is to avoid being "out-sold" by the competition.
- Multiple people involved in the decision: Small purchase decisions may only require the involvement of one person but typically even small purchases are approved by at least another person. Example, a clerk writes a purchase order for printing paper and the purchase order is signed-off by their manager. At this point, the manager may question the order "why aren't you buying from our usual supplier?" or "do we need to order that much?" However, larger value procurements usually involve multiple people in the decision introducing the concept of a "buying team." The role of the B2B sales person (or selling team) is to ensure they identify all members of the buying team and determine and monitor their attitudes.
- Longer sales cycles: While some B2B sales decisions can be quite swift (example, a business placing an order for office supplies) many can extend from weeks to years. High value purchasing decisions (for example Defence undertaking the procurement of a new warship) can stretch to 3 or 4 years. Large transactions become very complex with both the seller and the buyer having hundreds of people involved and the buyer is assessing offers from multiple vendors.
The overall effect of the above considerations means that industrial selling requires vastly different skill sets for marketers and sales people, hence Industrial (business to business) marketing is a specialisation.