Industrial Marketing

The prequel of modern B2B Marketing

Industrial marketing is to market a good or service to another company within an industrial market, which is in contrast to consumer marketing that aims to market to consumers. Defining marketing by the type of market was established decades ago and is still a valid and important concept.

Modern industrial marketing is called business-to-business or B2B marketing. B2B marketing strategies put the customer first and are of utmost strategic relevance for the whole company. The nature of an industrial good has distinct differences from a consumer good. This article addresses these differences and outlines why industrial marketing is the prequel of modern busines-to-business marketing.

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Industrial Marketing
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3 Key Topics this article covers

  • The history of B2B Marketing in the form of Industrial Marketing

  • Industrial Goods and Industrial Markets

  • A Definition of Industrial Marketing

The history of industrial marketing

The term “industrial marketing” originates way back to when Philip Kotler created today’s marketing discipline. With his popular marketing mix concept and the “Four Ps of Marketing”, Kotler linked marketing to products and distribution. The very nature of a product and to whom it is sold is still an important concept. It is important because the buyer, the seller and the good defines a market. Hence, the definition of a market is inseparably linked to the definition of marketing itself.

An industrial good sold to another company defines the discipline of marketing as industrial marketing. Industrial marketing happens within an industrial market.

On the contrary, a consumer good sold to an end customer defines consumer marketing strategies and actions on a consumer market.

With the rise of globalization and the derived marketing internationalization, the terminology industrial marketing was replaced by business-to-business marketing. At the same time, consumer marketing started to be known as business-to-consumer marketing.

Another aspect that has put “business” in the distinction of different marketing disciplines is that marketing affects the whole business, not only the product or service. Modern marketing management aims to focus all business areas on the market and customer. In other words, a modern marketing strategy puts the customer first. All other business disciplines follow.

Philip Kotler - B2B Marketing World

P. Kotler  (c) Jack11 Poland, CC BY-SA 3.0 , via Wikimedia Commons

Industrial marketing definition

The history of the term already indicates vital aspects for a proper definition.

Industrial marketing, also known as business-to-business marketing or B2B marketing, aims to market an industrial good or service to another company.

The used marketing strategies and actions cover the classic four 4Ps of the marketing mix:

  • Industrial product or service
  • Place, which is the distribution of the product or service to another company
  • Price
  • Promotion and communication on an industrial market

Naturally, modern marketing disciplines such as online marketing, search engine marketing (SEM), social media marketing (SMM), eCommerce and content marketing are also used as industrial marketing methods.

However, the basic definition, derived from the market definition, remains untouched and still has its value. Not only in literature but also in daily marketing practice. The article differences between B2B and B2C marketing provides a comprehensive overview of the mentioned aspects of Business-to-Business Marketing and Business-to-Consumer Marketing.

What are industrial goods? What are B2B goods?

There are three types of goods: products, services, and digital products. The term industrial goods apply to them all. There are industrial products (e.g. steel), industrial services (e.g. engineering of a furnace that melts steel) and digital industrial products (e.g. software controlling the steel melting temperature).

As already explained, the market definition implies different goods: industrial or consumer goods. An industrial good is sold and bought on an industrial market, and a consumer good is traded on a consumer market.

This is also very clear when looking at the value-added chain that covers all steps from a raw product to a final, end customer ready, product.

Value Added Chain B2B vs B2C_highres

Value Added Chain in B2B Marketing (c) B2B Marketing World

Based on the value-added chain perspective, an industrial good has these characteristics:

  • An industrial good is less differentiated at the beginning of the value-added chain
    For example, the raw material cotton has fewer differentiation criteria (e.g. quality, origin) than a T-shirt (color, size, brand, style, price, distribution channel, etc.)
  • The complexity of an industrial good typically increases with every manufacturing step.
    This is linked to the increasing differentiation of intermediate products on its way to the final product.
    For example, the chassis of a vehicle is more complex than the mining of iron ore, which is the raw material for steel production.
  • Working principles and/or physical properties are often essential for the buyer.
    This is a distinction to a consumer good that mainly is sold because of its uses for the buyer.
    For example, the working principle of a mobile phone is less important than battery time, size, and camera resolution. The camera module’s mechanical, electro-optical, and electronic details are of utmost interest when Foxconn works with Apple on the iPhone camera specifications.
  • Due to their complexity, industrial goods have a higher explanatory effort towards the end of the value-added chain.
    This affects marketing actions drastically.
    For example, think of the endurance against UV radiation of a synthetic plastic of which your garden table is made. This aspect is harder to understand and explain than the crude oil quality from which the plastic originates.
    On the consumer market, the customer only wants to know if the table looks the same after years of nice garden parties in the sun—a comparably easy task for marketers.

Business-to-Business Market

This article has outlined the definition of a market and the basic difference between a consumer (B2C) and an industrial market (B2B). For a more precise view, some further principles are helpful.

Business to Business B2B Meaning

B2B Marketing (c) B2B Marketing World

  • Supply and Demand
    The trade of a product between supplier and buyer (=market), based on supply and demand. In B2B markets, the free market economy is typically globally. Raw materials are traded around the globe. These materials are also listed on the stock exchange. This makes the marketing for many raw materials a global one.For example, sugar is made of cane sugar cultivated and harvested in Brazil, the USA, South Africa, Australia, and many other countries. The aim of B2B marketing is also a global target group.
  • Online transaction and market size
    The transaction or purchasing process on an industrial market is largely done in a classical sense, offline. However, major online pure players enter the market. Amazon Business, Alibaba or Global Sources are just three examples of eCommerce B2B marketplaces. Judged by market size, the B2B eCommerce market is already five times bigger than the B2C market and is valued at US$ 14.9 trillion in 2020 (Statista, 2021).
  • B2B buyer definition
    A buyer has the aim to purchase a defined good from a seller. Therefore, the buyer creates a demand fulfilled by the seller.In B2C markets, a buyer is an individual person. In B2B markets, the buyer acts via a person or a group of people. The common term to describe objectified buying decisions is Buying Center. A group of people with different roles aims to make an objective purchasing decision to fulfill the companies demand.B2B purchasing decisions are typically process-oriented and secured by approval steps. That makes a B2B buyer less vulnerable to emotional decisions. “Point of Sale” decisions common on a consumer market is almost non existing in industrial markets.

Summary of: Industrial Marketing

Modern business-to-business marketing (B2B Marketing) originates from industrial marketing, defined decades ago. Industrial marketing aims to market an industrial good or service to another company, not a consumer. Philip Kotler established the basis for this definition by introducing the “4Ps of marketing”: product, price, promotion, and place. The product and promotion are two aspects of how to define a market itself. That makes the marketing definition inseparable linked to the market itself.

Industrial marketing happens on an industrial market marked by the purchasing process between two companies. Modern definitions of an industrial market use the terminology business-to-business or B2B market. The reason for putting “business” in the center of things is important. Modern marketing strategies affect the whole business, not only the classic 4Ps. In other words, the strategic foundation of a business is the marketing strategy, focusing on the customer above all others.

Center of attention of B2B Marketing is industrial goods, namely industrial products, industrial services, and digital industrial products. These goods are created throughout the whole added-value chain. From raw material till the final product. Only the last step is part of the B2C marketing: market the final product to the end consumer.

Examples of industrial marketing are activities of raw sugar producers to increase their sales volume on the global sugar industry market. Or the engineering and production of a vehicle chassis by being served by the steel and aluminum manufacturing industry.

Continue to read further details on the differences between B2B marketing and B2C marketing.

Written by: Stephan Wenger

Published: 17. November 2021

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