Industrial marketing - business to business marketing

" Sales begin long time before the salesman picks up the phone "

Features of organizational buying

Features of organizational buying

What is organizational buying/selling?
Companies need different materials, equipments, services or products to maintain their activity. We talk about business to business or industrial marketing when:
–    a manufacturer sells to another manufacturer, for ex. Equipments
–    a manufacturer sells to a trader
–    or a trader (en-gross) sells to a retailer.
Reporting to consumer goods selling this business is usually more quite, almost invisible for large public. Anyway there is about fat cash.
What are the main features?
–    big volume and fat cash
–    industrial equipments, machines or products for reselling
–    low number of buyers, but with great capacity
–    special services
–    intensive relationship between seller and buyer
–    professional procurement
–    large number of factors to influence decisions
–    the importance of sales forces
–    derived demand – it depends on consumer goods demand
–    unstable demand
–    geographical concentration of the buyers

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Buying center in industrial marketing

Buying center

When selling to companies the first question is who has the decision to buy?
Is it one person or a group?
When we sell to one person it can be easier, but not necessarily. When selling to a group we call it buying center.
What is a buying center and how it works?
Buying center is a group of professionals, employees of the company who are involved in the decision making for a specific buying.
We can meet different roles:
–    Promoters: they make the first step or proposal
–    Users: they will use it effectively, they help to make a choice on technical/ professional level
–    consultants / influencers: they can offer advices
–    buyers: they will select the supplier, they negotiate and sometimes make even the decisions
–    approvers: financial department
–    decision maker: they approve the big value buying
–    gate keeper: they can have (negative) influence on the selling/buying process.

Let us see an example: a regional trade company wants to buy It and communication equipment to his sales force. The promoter could be the sales manager or an It manager. Users will be the sales forces. Consultants/ influencers the It and communication professionals, who knows different equipments and technology: laptop, palmtop, wi-fi, LAN, mobile net etc. The buyers will be the employees of the procurement department. The decision maker could be the CEO, if its about a large investment. Gate keeper could be the assistant manager/ secretary when observes some negative behavior on the selling team.

Why is important to analyze all these information? If we want to have a successful selling campaign we have to focus on every member of the buying center, offering the optimal sales argument for each member. Let’s see some sales argument for each:
–    for the final user: we have to convince them that the machine, equipment etc. will be perfect for their work: easy to use, handy, comfortable, they can have faster information from the market, faster and easier communication with the company etc.
–    for the sales manager: he will have a bigger control on his team, easier communication etc.
–    for the financial department: the new equipments will save costs, etc.
–    for the decision maker: his whole company will benefit from the purchasing: growing selling, closer control on sales forces and market and finally bigger profits.

So, the first step when selling to a buying center is to define the partners and their roles and influence in the decision making, then to offer the optimal sales argument for decision makers.

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Business to business sales forces

Personal selling is the oldest way to marketing. Ancient China, Egypt, Phoenicia, Rome was helped to develop by the traders, who based their profit mostly on personal selling.

In the last 150 years the market changed, and new forms of selling were introduced. We can mention self-service shops, catalogue selling. Most of them decreased the importance of personal selling. The products’ presentation and buying became more and more impersonal. Anyway in the beginning 21st sales forces are still the major factor of a company’s success on market.

Sales forces in industrial marketing are the major communication and selling channel. The key to success or failure.

We must not forget anyway, that the various marketing functions—sales force, advertising, customer service, product policy, market research—must work together. All of these functions must be parts of a focused marketing strategy and coordinated from the customer’s point of view.

Sales forces in business to business fields are in permanent contact with the customers, they are the company’s “eyes and ears”.  This is very important that they pick up information missed by other means and do this systematically. Marketing department must coordinate their effort to gather every significant data of the market: new product, new trends, prices, customers’ behavior and needs, competitions’ moves. And the most important thing is to analyze these INFORMATION and USE IT.

In order to achieve all the objectives (including sales target) a professional sales representative must have the following characteristics: very good communication skills (personal, technical), professional competence in his specific field (steel products, high tech, building or real estate, machinery etc), courtesy, reliability and responsiveness.

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Features of industrial marketing

What are the main features of industrial marketing?
Let’s start analyzing the way that a company makes a decision in industrial procurement. Sales arguments, objective and subjective influencing methods have their purpose, too. A buyer manager can be easily convince by an old business friend, a professional salesman from a partner company maybe only for old time‘s sake, but… But he has to offer some solid sales/ buying arguments, with number and facts to convince his bosses and colleagues about the opportunity of the procurement. These sales arguments can be numbers, information about the products, its capacity, commercial terms, logistics and support.
We cannot pretend from a purchasing manager, even the most correct and loyal one, who (influenced emotionally by some happy food TV ads) just bought some snacks or desert for his child at 8 am, when taking him to school, and in half an our to take a major decision regarding a procurement only based on numbers and technical data. And don’t forget the personal influence of the highly trained sales force.
Sales forces’ importance in business to business marketing. Let’s make a comparison FMCG market vs. b to b market. On FMCG markets the most useful and efficient communication channel (till now) is mass advertising. On the industrial markets personal relationships, personal selling is very important. You can have the perfect product, at very low price, but if the sales forces don’t work properly and don’t build long term partnerships you’ll never have success. We cannot forget that salesmen or sales engineers who offer high tech product or special business services at high value for procurement managers or executives need special skills, product and technological knowledge and wide experience. Their profile could be very different from an “avon lady”, salesman offering food and beverage for small neighborhood shops or a simple salesman who sales for the population.
Other features of business to business market:
– less buyers, but with high impact
– closer seller – buyer relationships
– professional procurement (decision making)
– more sales visits
– indirect demand influenced by the consumer markets
– unstable demand, geographically focused

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