06 September 2021
What is Industrial Marketing?
Industrial marketing is another term for business to business (also known 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.
Industrial marketing and solution selling
Solution selling is the delivery of customised products and services where first the requirements of the buyer need to be determined and then a customised solution is proposed by the selling firm. By its nature, solution selling is predominantly a B2B activity. In B2C sales, there are few examples of solution selling except perhaps in residential construction.
Good examples of solution selling are in engineering and construction where the item to be built (more properly called a project) starts with a requirements specification which is then briefed to a number of firms to design a solution. The typical response is both a speculative design accompanied with a proposed cost (typically called a design and construct project brief).
Firms involved in solution selling are taking a considerable risk because if not accepted the losing firms burn their hours invested in the design work. Consequently, most solution selling firms undertake their own assessment of risk prior to deciding to put forward a proposal. This process is called capture planning.