New products pricing

Penetration pricing in the introductory stage of a new product's life cycle involves accepting a lower profit margin and pricing relatively low. Price skimming involves setting the price relatively high to generate a high profit margin. A premium product generally supports a skimming strategy. Penetration pricing The introductory stage of a new product's life cycle means accepting a lower profit margin and to price relatively low. Such a strategy should generate greater sales and establish the new product in the market more quickly. Price skimming This involves the top part of the demand curve. The price is set relatively high to generate a high profit margin, and sales are limited to those buyers willing to pay a premium to get the new product. push strategy communication demanded by the buyer

pull strategy communication not demanded by the buyer

Definition of 'Competitive Pricing' Setting the price of a product or service based on what the competition is charging.

Competitive pricing is used more often by businesses selling similar products, since

services can vary from business to business while the attributes of a product remain similar. This type of pricing strategy is generally used once a price for a product or service has reached a level of equilibrium, which often occurs when a product has been on the market for a long time and there are many substitutes for the product.

Investopedia explains 'Competitive Pricing' Businesses have three options when setting the price for a good. They can set it below the competition, at the competition or above the competition. Above the competition pricing requires the business to create an environment that warrants the premium, such as generous payment terms or extra

features. A business may set the price below the market - and potentially take a loss - if it thinks that a customer is more likely to buy other products as well.

Market sgementation as people and communities grow more diverse, it becomes risky for an organization to offer the same marketing mix to such different consumers. Market segmentation provides businesses with the possibility of customizing a unique set of elements known as the 4Ps (product, price, place, and p romotion) for specific target markets. Therefore, it allows them to satisfy their customers needs in a more effective way; through a value proposition that is potentially superior to that of any other competitor. Market segmentation refers then to the process of defining and breaking down a wide market into clearly identifiable and homogeneous groups of consumers with similar characteristics, wants, and needs. Few organizations are big enough to satisfy the needs of an entire market. Most companies are forced to split the total demand into several segments and select only those that they are best equipped to handle.

Market segmentation can help businesses of all kinds and sizes to make better decisions.

Experts suggest that a market segment should be:

Easily and clearly identifiable Measurable Accessible by promotion, communication and distribution channels Different in its response to a marketing mix Stable (not changing too quickly) Appropriate for the companys policies and resources Substantial enough to be profitable

The basis for segmentation is a factor that varies among the groups of a certain market, but is consistent within each group. All markets can be broken down in different ways, and although many of the bases used to segment a consumer market can also be applied to businesses and organizations, the sheer nature of these eventually leads to other specific segmentation bases. The following is a comparative chart of the criteria or basic strategies to segment both market types: Consumer market Type of segmentation Variables Geographic Region, climate, population density, and population growth rate Age, gender, ethnicity, nationality, education, occupation, religion, income, and family status Values, attitudes, opinions, interests, activities, and lifestyles Usage rate and patterns, price sensitivity, brand loyalty, and pursuit of benefits Business market Variables Location, customer concentration, regional industrial growth rate, and international macroeconomic factors Size of the organization, its industry and position in the value chain Loyalty to suppliers, usage patterns, and order size

Type of segmentation Geographic

Demographic Psychographic Behavioral

Customer type Buyer behavior

The identified segments are profiled and the attractiveness of each one must be evaluated before choosing a target market. However, a question that stands after selecting the criteria to break down the market is: what methodologies are followed to build up a segment in the first place? There are rigorous analytic techniques used to organize consumers into groups with related needs, wants, and attitudes. With these, the size and potential market of each segment can be determined, along with the positioning and the appeal that will be used to cover it. For example, a K-Means Cluster Analysis attempts to identify relatively similar groups of interviewees based on selected characteristics using an algorithm capable of handling large amounts of people. Essentially, this method tries to separate n observations into k clusters, and each observation belongs to the cluster with the closest mean. A very well-known industry in which this sort of analysis is frequently used is the mobile telecommunications industry, where competition is becoming stronger around the globe. Customers are demanding a higher quality at a lower price, and carriers profits and average revenue per user are facing tremendous challenges. In this case, the aim of clustering is to categorize prospective customers into unique groups for distinctive contact strategies and new offerings, by managing billing system data and information. This data, along with call records, describe customer utilization and spending behavior, allowing operators to approach customers in a more effective way. China Mobile Limited, the largest mobile carrier in the world with over 600 million subscribers, is well known for using this analytic technique. Apart from playing a major role in developing new marketing efforts to attract new customers, market segmentation can also help a business to discover ways to reinforce existing customer loyalty. For instance, a firm may request some kind of feedback through questions specifically addressed to a certain group with the purpose of obtaining practical suggestions on how to make a product better. The customer will then know that the company is truly aware and the bonds between them will grow stronger .What is Industrial Distribution? It's simple: Industrial Distribution involves moving products from multiple manufacturers to multiple users. Industrial Distributors:

Are found in every major city and most small ones, as well as near major agricultural and natural resource production centers.

Sell a broad range of products for use in almost every industry. Range in size from single-location firms that sell less than $2 million annually to multi-billion, multinational companies with hundreds of locations.

Primarily include privately-held corporations (over 95%), many family-owned and operated. Serve as a one-stop resource for a wide range of industrial products and value-added services.

Offer local technical expertise, product knowledge and product promotion.

What Do Industrial Distributors Do? Industrial distributors are highly trained professionals who help manufacturers get their products into the hands of the customers who use it. Customers, from your local pizza parlor to a jet engine manufacturer, all depend on distributors for products and services to help them improve productivity and profitability. As an industrial distributor you:

Call on customers and take orders. Introduce new products. Describe features Demonstrate benefits Solve problems. Manage territory accounts. Make presentations. Purchase and inventory goods. And much more.

Industries Industrial products are used in almost every industry:

For natural resource extraction and processing in agriculture, forestry, petroleum and mining. To process and package food and beverages. As components in equipment manufactured for businesses and consumers. To maintain and repair machinery used in production processes. In commercial and residential construction and facilities maintenance. At public utilities and in heating, ventilation and air conditioning systems.

Why Industrial Distribution? Industrial distribution is one of the fastest growing segments of our economy: In the United States alone, industrial distributors:

Represent over 5% of total gross domestic product ($750 billion). Operate almost 83,000 companies, with over 113,000 branch locations.

Industrial Marketing Communications Should Not Cost

If your marketing communications arent effectively communicating your value proposition to your target market shelve them. If, due to their cost, you are reluctant to shelve them consider this: ineffective printed communications also make a handy way to stoke the fireplace on those cold January evenings. I know that sounds a trifle extreme but it isnt.

If you had a totally incompetent and inarticulate employee would you willingly give this employee a podium? Of course you wouldnt. This would be a very destructive course of action. Yet this is precisely what you do when you send ineffective printed or web communications out into the world. When you do this your communications are not creating value they are costing.

Your marketing communications must clearly articulate the value your prospects will receive as a result of purchasing your products or services. A well thought out message should accurately demonstrate true value to those who may never have even heard of your company.

This value must be tied into a logically and attractively arranged array of benefits and a positive call for action. Sounds simple, doesnt it? Dont Visit A Dentist For A Nose Job

There is an old saying that you dont visit a dentist for a nose job. While humorous it is still sage advice. As no one does everything well you need to consider what parts of your business you are willing to entrust to others.

Business professionals are dedicated to providing the highest level of expertise in their given fields. We, all of us, rely on a high degree of interdependence to grow our businesses. We need to profit from the experience of others. We rely on our Chartered Accountants to give us good financial advice and guidance. We rely on our lawyers to keep us on the right side of the law. Our customers rely on our expertise.

Industrial marketing communications are far too important to get anything but the most careful attention.

In order to increase the effectiveness of your corporate communications you need to have the a high degree of copywriting skill. Do you have this copywriting skill present in your company? If so thats great, get writing. If you do not you should consider outsourcing your communications needs to professionals. One of the best definitions of advertising is Salesmanship in Print. This definition applies to all forms of marketing communications. Perhaps you could define your website as Salesmanship in Electrons. Regardless of the communications channels that you utilize make sure that your e putting your best face forward.

My advice is to leave the communications to the communications professionals. Do this and your communications wont cost but will reveal your value and ultimately increase the value of your bank account. 3.7 MODELS OF ORGANISATIONAL BUYING BEHAVIOUR The buying decisions of industrial buyers are influenced by many factors. Usually, these are influenced by organisational factors or task-oriented objectives viz. best product quality, or dependable delivery, or lowest price and personal factors or non-task objectives viz. like promotion, increments, job security, personal treatment, or favour. When the suppliers proposals are substantially similar, organizational buyers can satisfy organisational objectives with any supplier, and therefore personal factors become more important. When suppliers offers differ significantly, industrial buyers pay more attention to organisational factors in order to satisfy the organisational objectives. There are two models available to provide a comprehensive and integrated picture of the major factors that combine to explain organisational buying behaviour. These are: The Webster and Wind Model The Webster and Wind Model of organisational buying behaviour is quite a comprehensive model (Figure 3.1). It considers four sets of variables: environmental, organizational, buying center, and individual, which, affect the buying-decision making process in a firm. The Webster and Wind Model of Organisational Buying Behaviour Source: R.E. Webster, Jr and Y Wind, journal of Marketing, 36, pp 12-17, April, 1972. The environmental variables include physical, technological, economic, political, legal, labour unions, cultural, customer demands, competition and supplier information. For example, in a recessionary economic condition, industrial firms minimize the quantity of items purchased. The environmental

factors influence the buying decisions of individual organisations. The organizational variables include objectives, goals, organisation structure, Environmental Variables Physical Technological Economic Political and legal Labour unions Cultural Customer demands Competitive practices moreover pressures Supplier information Organisational Variables Objective/goals Organisation structure Purchasing policies and procedures Evaluation and reward systems Degree of decentralization in purchasing Buying Centre Variables Authority Size Key influencers Intepersonal relationship Communication Organisational Buying Decisions Choice of Suppliers Delay decision and search for more information Make, or lease, or buy Do not buy

Individual Variables Personal Goals Education Experience Values Job position Lifestyle Income purchasing policies and procedures, degree of centralization in purchasing, and evaluation and reward system. These variables particularly influence the composition and functioning of the buying center, and also, the degree of centralization or decentralisation in the purchasing function in the buying organisation. The functioning of buying center is influenced by the organisational variables the environmental variables, and the individual variables. The output of the group decision-making process of the buying center includes solutions to the buying problems of the organisation and also the satisfaction of personal goals of individual members of the buying centre. The strengths of the model, developed in 1972, are that it is comprehensive, generally applicable, analytical, and that it identifies many key variables, which could be considered while developing marketing strategies by industrial marketers. However, the model is weak in explaining the specific influence of the key variables. 3.7.2 The Sheth Model In 1973, Professor Jagdish N Sheth developed the Sheth model. This model highlights the decision-making by two or more individuals jointly, and the psychological aspects of the decision-making individuals in the industrial buying behaviour (Figure 3.2). It includes three components and situational factors, which determine the choice of a supplier or a brand in the buying decision making process in an organization. The differences among the

individual buyers expectations (Component 1) are caused by the factors: background of individuals; information sources; active search; perceptual distortion; and satisfaction with past purchases. The background of individuals depends upon their education, role in the organization, and life style. The factor perceptual distortion means the extent to which each individual participant modifies information to make it consistent with his existing beliefs and previous experiences. It is difficult to measure perceptual distortion, although techniques AcroPDF - A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license.MBA-Marketing Industrial Marketing such as factor analysis and perceptual mapping are available for this purpose. In Component (2), there are six variables, which determine whether the buying decisions are autonomous or joint. According to the Sheth Model, larger the size of the organization and higher the degree of decentralization, more will be possibilities of joint-decision making. Figure 3.2: The Sheth Model Source: Jagdish N. sheth, A Model of Industrial Buyer Behaviour, journal of Marketing, 37, pp 50-56, October, 1973. The methods used for conflict resolution in joint-decision making process are indicated by the Component (3) in the model. Problem-solving and persuasion methods are used when there is an agreement about the organizational objectives. If there is no such agreement, bargaining takes place. Conflict about the style of decision-making is resolved by politicking. Situation factors can be varied like economic conditions, labour disputes, mergers and acquisitions. The model does not explain their influence on the buying process. Component (1) Component (2) Component (3) Situational Factors Differences among individual buyers caused by

factors: Background of individuals Active search Perceptual distortion Satisfaction with past purchases Variables that determine autonomous or joint buying decision: (A) Product specific factors, including Time Pressure Perceived risk Type of Purchase (B) Company specific factors, including Company size Company orientation Degree of centralisation Methods used for conflict resolution in joint-decision making process: Problem-solving Persuasion Bargaining

 Politicking Supplier or brand choice b2b:.

Business marketing is the practice of organizations, including commercial businesses, governments and institutions, facilitating the sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer, or use them to support their operations. Also known as industrial marketing, business marketing is also called business-to-business marketing, or b-to-b marketing,

distribution: 1. INTRODUCTION: When a company or a manufacturer produces goods or services, it has the immediate responsibility to distribute and sell them to the industrial and institutional customers. The industrial customers generally constitute of wholesalers, retailers, manufacturers, educational institutions, governments, hospitals, public utilities, and other formal organizations. There are various intermediaries who are involved in a distribution and selling process helping the manufacturers to make their goods reach the end users. Thus, a network or channel that helps to flow the goods from the producer to the consumer through a set of interdependent organizations (intermediaries) is called distribution channel or trade channel or marketing channel. Channels are the tools used by management to move the goods from the place of production to the place of consumption. In the progression, the title of goods gets transferred from sellers to buyers. 2. OBJECTIVES:

By studying this chapter, we will try to - Understand the nature and structure of the industrial distribution system - Understand the types of industrial middlemen, their role and importance in the distribution channel - Appreciate the functions performed and the responsibilities undertaken by distributors. - Understand the reasons why distributors are preferred by industrial buyers. THE NATURE OF INDUSTRIAL DISTRIBUTION CHANNEL: The nature of industrial distribution channel is quite different from the consumer goods distribution channel. The intermediaries stock the products they are distributing thereby assuming part of the burden of marketing the product and maintaining close contact with customers. There are various factors that affect the distribution of industrial goods. Geographical Distribution: The industrial distributors are concentrated highly in the industrial markets they serve and certain other places that have large number of industries like large towns and cities. Size: Unlike consumer markets, the industrial markets tend to have fewer channels of distribution. Even the industrial channel is shorter in size as organizational buyers expect immediate product availability, technical expertise and prompt after-sales service. This indirectly demands investment in training and physical facilities for the industrial organizations. Intermediary characters: The intermediaries involved in industrial marketing are technically qualified who maintain very close relationship with industrial organizations. Industrial manufacturers tend to depend more heavily on each member of the channel and may do more to support that channel member. Industrial distributors, brokers and agents are some types of intermediaries used by industrial marketers to reach customers. Mixed channels: A combination of direct and indirect channels is used by some

industrial marketers to cater to different market segments or when they have some resource constraints. To cater to large-volume customers, industrial firms generally use their own sales force, and to cover small scale organizations, they use independent distributors. In case of large geographical territories, due to resource constraints they use their agents called as manufacturers representatives.

industrial selling 1. Web definitions all forms of personal selling to organisational and industrial buyers of products for resale, or for use in manufacture, or for use in the operation of their businesses.

There are basically three levels of buyer/seller relationships. The first and most common relationship level is Adversarial. This is the traditional win-relinquish relationship where you, the buyer, squeeze your supplier for the very last bit of a discount. You are determined to get the last drop! You are not focused on the cost of doing business with one another, just what you believe to be the lowest cost. This is a transactional only relationship. Next is the Barometric relationship. In a Barometric buyer/seller relationship you are always checking the atmospheric pressure. This relationship is still being monitored and measured closely. Generally you have not yet developed a high level of trust with one another. It could be a single source relationship, but with a short length contract. While this relationship can grow and flourish, it can also sour quickly. Few people thrive with others constantly peaking over their shoulder. In this type of relationship, each side must still engage in CYA (cover your assets). The highest-level buyer/seller relationship is Complementary. This level is where true integral Partnering takes place. At this level the visions and values of each overlap with one another. There is a true alignment of values in place. Each understands the needs of their alliance partner and works hard to help their partner get what they need while likewise serving their own organization.

Value-based purchasing, Sole-source relationships, Vendor Managed Inventorying (VMI), Just-in-time (JIT) shipments are made successful through trust and Electronic Data Interchange (EDI) at this relationship level. Complementary Contractor/Distributor Relationship

An example of Complementary buyer/seller Partnering is the relationship Universal Systems developed with Graybar through Graybars local branch. Universal is an electrical contracting company and Graybar is a distributor of electrical supplies. In 1996, Gene Dennis, President at Universal Systems realized his company had a problem. His supply inventory was out of control. Through the assistance of Parviz (Perry) Daneshgari, Dennis set out to make a change. Daneshgari is president at MCA, (an implementation company in Michigan), an adjunct professor of automotive engineering science at the University of Michigan-Dearborn and Oakland Universitys School of Management and the

author of The Chase, (1998, Black Forest Press, San Diego, CA) a business novel about process implementation. Dennis decided he wanted to be a construction company without owning and handling any material. This was a lofty goal as traditionally the stocking of electrical supplies was a cornerstone of the business. He needed a supply partner. His choices were a local supplier and Graybar, a national supplier with a branch in his community. He leaned toward the local supplier until he showed up at their place of business unannounced. We were held hostage, said Dennis (Electrical Contractor Magazine, July 1998). The problem was that the president was not in and the employees didnt know what to do so they put Dennis and his team in a conference room. In contract, when he showed up at Graybar unannounced and the branch manager was out, all the employees knew about Universal looking for a supply partner. The staff at Graybar showed him and his team around at once. Upon closer inspection, Dennis learned that Graybars on -time deliveries had been 29 percent higher than their competitor. Graybar was selected for the sole-source arrangement. Graybar agreed to take ownership of Universals existing in -site inventory. An on-site inventory was maintained and orders were placed via Graybars EDI system and invoices were generated from Graybars St Louis headquarters monthly. Universal realized approximately $60,000 the first year through eliminating delivery trucks, inventorying and other personnel savings. Graybar offered additional benefits as the relationship progressed. Before the partnership, Universal had to pay extra for shipping their frequent emergency orders. In the partnership Graybar maintains a standard list of commodity items at the local branch and if they dont have it, Graybar pays the shipping. Whats in it for Graybar? Instead of wondering how to get the order, now we sit in on job meetings, try to find ways we can help, and look for cost and process savings, says Jim Estis, a local Graybar account representative (Electrical Contractor Magazine, July 1998). Chatting with Dennis late October 1999, he said, Partnership is covering the backside of each othereach looks out for one another. The following are Daneshgaris steps to form a vendor partnership and criteria for selection, which Universal th Systems used. Dennis and Daneshgari outlined these when they presented their success story at the 97 Annual National Electrical Contractors Convention in Las Vegas, Nevada, October 1998. Steps to form a partnership: 1. 2. 3. 4. 5. 6. 7. 8. Develop a scope of work. Send out requests for proposal and interview potential vendors. Review proposals. Create a short list. Make unannounced tour of vendors facilities. Evaluate finalists. Selection. Negotiate an agreement with your selected vendor.

Criteria for Vendor Selection: 1. 2. 3. 4. Purchase existing stock at retail value. Establish a branch at Universal Systems. Have an inventory management system. Work toward continuous improvement process.

5. 6. 7. 8. 9.

Use EDI for billing. Have a delivery process. Use periodic evaluation process. Contract termination clause. Product warranty and liability.

10. Maintain property damage insurance. 11. Aggressive pricing strategy. 12. Maintain stocking inventory. 13. Maintain workers comprehensive insurance. 14. Offer single point of contact. (Used with permission of Parviz (Perry) Daneshgari) Researching your market | Market research & statistics

Market research is a valuable tool for all businesses. Statistics and other market research data help you make informed decisions about the marketing of your business. Using market research, you can understand your potential customers and their needs, as well as what your competitors are doing. It's also useful to understand market trends so you can make the most of your business opportunities. Look for information in market reports, government statistics, trade publications and industry association publications to find out new developments and possibilities both in your industry and in the commercial environment. There are two types of market research: Primary research This is information you collect firsthand through surveys, interviews, and talking to customers and businesses. This kind of direct research can help you discover what your customers' needs are, how your business can improve, what you excel at and what practices other businesses are using. Secondary research You can also research your market by using information that has already been gathered, such as government statistics and trade publications. A prime point of contact for your secondary research is the Australian Bureau of Statistics (ABS) - Australias official statistical agency. The ABS provides statistics on a wide range of economic and social matters. There are also a number of other federal and state governments that provide statistics you can use in your research.

Industrial Services Marketing The module "Industrial Services Marketing" aims to provide a basic understanding of services marketing in an industrial market setting. Industrial markets involve certain idiosyncrasies such as resource dependencies among industry members, powerful buyers, and sellers and team buying and selling, to name a few, which pose a number of challenges on industrial service firms in developing and implementing their marketing strategies. Services comprise a crucial dimension of industrial marketing regardless of the fact that firms produce goods or services, because of the close interaction between buyers and sellers, the position of buyers as co-producers, and value-creation in relationships. Learning outcomes of the module are determined as follows: (1) to provide essential theoretical and managerial concepts of industrial services marketing; (2) to understand the industrial purchasing process of services; (3) to identify critical elements of value offerings for industrial services; (4) to gain insight into behavioral interactions among industrial service buyers and sellers; (5) apply your knowledge to case studies.