Many consumers depict a company’s marketing approach to be solely dedicated toward consumer goods; however, institutional goods make up the other half of a company’s marketing approach. Therefore, I’ll be looking at the Industrial Marketing approach more in depth.
When we think about consumer goods, we think about the products on the shelves of our favorite brick and mortar store because consumers are constantly sold products in this typical format. Instead of consumers being conditioned to buy one product at large margins, the institutions are conditioned to buy products in bulk at lower margins. Institutions justify buying in larger quantities for the incremental discounts because they repurchase products more often than consumers like paper or toner to maintain their office supply.
The difference between the Industrial market’s buying behavior process and the consumer buying behavior process is derived from my previous example. Businesses go through the same buying behavior process I described in my last article, however the rebuying phase is much more prominent within the Industrial Market’s buying behavior process. When a company needs to reorder office supplies, they go through three possible behaviors. They will either be happy with their previous purchase and opt for a straight rebuy of the product, this is most often seen with products like paper or toner because these products don’t change unless you buy a new printer. In which the company may modify their rebuy, this is most often seen when the company likes a certain brand so they continue buying the brand but may buy a different model of toner to fit the needs of a new printer. Or a company may go through a new-task rebuy, where they decide they must buy another brand’s product to fulfill their needs better than the previous brand.
The institutions can find new companies to buy from through the North American Industrial Classification Standard (NAICS) system. This system is normally used by large companies looking for products sold within a particular market worldwide. The companies within the Industrial market are organized by the NAICS code. An example covered in class was the 4 digit NAICS code 2521 which stood for a business wood furniture manufacturing company. The first two digits make up the major group (manufacturing, wholesaling, or retailing), the third digit makes up the type of products that company offers, and the fourth digit makes up the material type. Another example is FoxConn which has the NAICS code of 334111 and stands for a business electronic computer manufacturing company.
There are many differences between the consumer and institutional market, however I’ve covered the topics my professor deemed most important for the average marketer to know. What these markets do have in common is that companies use Customer Relationship Management (CRM) software to maintain relations with customers within both markets. I will continue with CRMs in the next article.
image:http://upload.wikimedia.org/wikipedia/commons/3/3b/Ganjiaxiang_-_industrial_panorama_-_P1070643.JPG
