Industrial goods are differentiated from the the consumer goods on the basis of the purpose for which the goods are used and the nature of the customer. The industrial goods are the purchased by business firms for processing and resale. These include rat materials, components and consumables used in manufacturing of other goods. Capital goods purchased by businesses also classify as industrial. Also purchase of finished or semi finished goods for trading or resale are classified as industrial goods. Finished goods on the other hand are purchased by individuals and household for personal use or for gifting.
The marketing of industrial goods differs from that of consumer significantly in several ways. These differences are described below.
- Number of buyers of industrial goods are fewer in number as compared to buyers of consumer goods. However the average size of buyer in terms of value of goods purchased is significantly higher for industrial goods. Because of this, marketing of industrial goods is often based on more direct and closer interaction between buyers and seller. For example mass advertising plays a less important role in industrial goods marketing as compared to consumer marketing. Also the sales persons are generally required to make multiple sales call to the customer for securing each customer order.
- The buyers of industrial goods tend to be located in small geographical. For example lot, there is concentration of auto companies in Detroit, and there s concentration of IT related companies in Silicon Valley. This kind of geographical concentration makes frequent and closer buyer seller-interaction even more preferred marketing approach.
- Bigger buyers concentrated in fewer geographical locations makes it easier for a company to sell to them directly, rather than through distributors. Frequently the industrial buyers also prefer to deal directly with the manufacturers, rather than with resellers like distributors or retailers.
- Persons assigned to do purchasing in business establishments are professional in methods of purchasing. Also, often they are more knowledgeable about the technical characteristics of goods being purchased. The marketing of industrial goods, therefor, needs to rely more on technical consideration and professional methods rather than appeal to personal or emotional considerations of individuals.
- Usually there are several different persons, with different perspective involved in taking the purchase decision. For example the purchase decision may be influenced by representatives from purchasing department, user department, finance, and design. Also, while the initial investigations, discussions and negotiations may take place at lower levels, the final decision may need to be approved by a person at higher level. The industrial marketing effort mus be designed to satisfy the requirement of all such multiple buying influences.
- The demand for industrial goods is often directly dependent on the business volume of the buyer and the specifications for their products and processes. This means that the marketing of industrial goods must concentrate on getting the maximum share of an elastic demand, rather than try to increase the total demand.