Chapter 13 Marketing Industrial Products and Services

Major Categories U.S. Exports Category Percentage Services Total 28.5 Travel (hotels, etc) 8.7 Transportation (fares, freight, and port services) 7.5 Commercial, professional, and technical services (advertising, accounting, legal, construction, engineering) 1.7 Financial services (banking and insurance) 1.5 Education and training services (most foreign student tuition) 1.0 Entertainment (movies, books, records) 0.8 Other categories (telecommunications, information, health care) 7.3 Irwin/McGraw-Hill 13-2 Source: U.S. Department of Commerce, http://

Major Categories U.S. Exports 13-3 Irwin/McGraw-Hill Source: U.S. Department of Commerce, http:// Category Percentage Merchandise Total 71.5 Food, feeds, and beverages (wheat, fruit, meat) 4.8 Industrial supplies (crude oil, plastics, chemicals, metals) 15.1 Capital goods (construction equipment, aircraft, computers telecommunication) 32.1 Automotive vehicles, engines, and part 7.7 Consumer goods (pharmaceuticals, tobacco, toys, clothing) 8.2 Other categories 3.6

Marketing Industrial Products and Services I.Easier Standardization 1)Consumed by Businesses 2)Industrial Buyers seek profit II.Volatility of the Industrial Market 1)Buyers Act in Concert 2)Derived Demand

Time Period Consumer Demand for Premolded Fiberglass Shower Stalls Demand for the Machine Number of Machines in Use to Produce the Shower Stalls Year Current Year Previous Year TotalNewReplacement Net Change Previous Year Current Year Net Change 1 100, , , , , , ,000 +5, , ,000 +3, , , , , , SOURCE: Adapted from R.L. Vaile, E.t.Grether, and R. Cox, Marketing in the American Economy (New York: Ronald Press, 1952), p.16. Appears in Robert W. Hass, Business Marketing, 6th edition (Cincinnati, OH: Southwestern, 1995) p.115 Derived Demand

Marketing Industrial Products and Services Managing Volatility - Maintaining broad product lines - Raise prices faster - Reduce advertising expenditures - Stability as a goal

Marketing Industrial Products and Services III.The Industrial Product-Market 1)Stages of Economic Development 2)Technology and Market Demand 3)Attributes of Product Quality 4)Quality Defined by the Customer 5)Service & Replacement Parts 6)Lack of Universal Standards

Pre-Industrial or Commercial Primary Manufacturing Concerned With The Partial Processing of Raw Materials and Resources Growth of Manufacturing Facilities for Non-Durable and Semi-Durable Consumer goods Well Industrialized Economy Complete Industrialization Stages of Economic Development

ISO 9000 ISO 9000 is the registration and certification of a manufacturer’s quality system. It relates to generic system standards that enable a company through a mix of internal and external audits, to provide assurance that it has a quality control system. It is a certification of the production process only, and does not guarantee that a manufacturer produces a “quality” product or service Irwin/McGraw-Hill

American airlines are falling all over themselves to capture greater shares of the fast expanding Latin American travel market through investments in local carriers. Insurance sales are also burgeoning in Latin America with joint ventures between local and global firms making the most progress. Banking in China is about to undergo a revolution with National Cash Register ATMs popping up everywhere. Service Opportunities in Global Markets

Merrill Lynch is going after the investment- trust business expected to take off after Japan allows brokers to enter that business for the first time in Foreign students spend some $7 billion a year in tuition to attend American universities and colleges. American engineering consulting firms will provide services to design and manage construction of more than $1 trillion worth of infrastructure development worldwide during the next decade. Service Opportunities in Global Markets

Currently phone rates in markets such as Germany, Italy and Spain are so high that American companies cannot maintain toll-free information hotlines or solicit phone-order catalogue sales. “Xena,” “Hercules” and comparably “dumbed-down” (i.e, heavy on action, violence and sex) video-game heroes are conquering electronic screens worldwide.

Marketing Industrial Products and Services IV.Relationship Marketing in Industrial Markets

Reading Industrial Customers  Print Advertising  Catalogs  Websites  Direct Mail  Trade Shows/Fairs 13-9 Irwin/McGraw-Hill

Percentage of Media Budget Spent on Participation in Trade Events U.S. Europe 5% 22% Irwin/McGraw-Hill