2. Channel Characteristics
Inventory or stock control is very much important factor in the business organizations' therefore the distribution channels are needed more direct from the manufacturer to the customer in industrial marketing.
There are a few channel alternatives, which are feasible in the industrial market than the consumer market

3. Distribution Channel

4. Nature of Demand in Industrial Markets
The demand for industrial products and services does not exist by itself. It is derived from the ultimate demand for consumer goods and services.
Industrial demand is therefore, called derived demand.

5. Derived Demand:– Industrial Customer buys goods and services for use in producing other goods and services.
Ultimately whatever is finally produced will be sold to the consumers. Hence the demand for Industrial goods and services is derived from consumer goods and services.

6. Joint Demand;– Joint demand occurs when one industrial product is useful if other product also exists.
For eg: a computer cannot be operated without the monitor.

7. Cross Elasticity of Demand:–
Elasticity is simply the change in demand from a change in price. Demand is “inelastic” if the % change in quantity demand is less than the % change in price.

8. Complementary Goods
Complementary goods are those that are often used together, such as motor vehicles and gasoline or DVDs and DVD players.
Complementary Illustration
When the price of one good declines (or increases) and the demand for a related good increases (or decreases), then the two goods are considered complementary.
For example, if the price of computers increases and the demand for software declines, computers and software can be considered complementary.

9. Substitute Goods
Substitutes are goods that are used in place of each other. Examples include CDs and digital music files, such as MP3s or ice cream and frozen yogurt.
Substitute Illustration
If a price increase for one good leads to an increase in demand for a related good, then the two goods are considered substitutes. An increase in beef prices, for example, followed by higher demand for chicken or pork, indicates that chicken or pork represent substitutes for beef.

10. Purchasing orientation & Practice of business customers
purchasing department occupied a low position in the management hierarchy, in spite of often managing more than half the company’s costs.
Recent competitive pressures have led many companies to upgrade their purchasing department and elevate administrators to vice presidential rank.
Today’s purchasing departments are staffed with MBAs who aspire to be CEOs-like Thomas Stallkamp, Chrysler’s former executive vice president of procurement and supply, who cut costs and streamlined the automaker’s manufacturing processes.

11. Procurement Orientation:
Here buyers simultaneously seek quality improvements and cost reduction. Buyers develop collaborative relationships with major suppliers and seek savings through better management of acquisition, conversion, and disposal costs. They encourage early supplier involvement in materials handling, inventory levels, just-in-time management, and even product design.
They negotiate long-term contracts with major suppliers to ensure the timely flow of material. They work closely with their manufacturing group on materials requirement planning (MRP) to make supplies arrive on time.

12. Types of Purchasing Processes:
Four product related purchasing processes are distinguished,
1. Routine product: These products have low value and cost to the customer and involve little risk (e.g. office supplies). Customers will seek the lowest price and emphasize routine ordering. Suppliers will offer to standardize and consolidate orders.
2. Leverage products: These products have high value and cost to the customer but involve little risk of supply (e.g. engine pistons) because many companies make them. The supplier knows that the customer will compare market offerings and costs, and it needs to show that its offering minimizes the customer’s total cost.

13. 3. Strategic products: These products have high value and cost to the customer and also involve high risk (e.g. mainframe computers). The customer will want a well-known and trusted supplier and be willing to pay more than the average price. The supplier should seek strategic alliances that take the form of early supplier involvement, co-development programs, and co-investment.
4. Bottleneck products: These products have low value and cost to the customer but they involve some risk (e.g. spare parts). The customer will want a supplier who can guarantee a steady supply of reliable products. The supplier should propose standard parts and offer a tracking system, delivery on demand, and a help desk.

14. Buying Orientation:
The purchaser focus is short term and tactical. Buyers are rewarded in their ability to obtain the lowest price from suppliers for the given level of quality and availability.
Buyers use two tactics namely commoditization, where they imply that the product is a commodity and care only about price; and multi-sourcing where they use several sources and make them compete for share of the company purchases.

15. Environmental analysis in industrial/business

16. Economic What economic trends might have an impact on business activity? (Interest rates, inflation, unemployment levels, energy availability, disposable income, etc)
Technological To what extent are existing technologies maturing? What technological developments or trends are affecting or could affect our industry?
Government What changes in regulation are possible? What will their impact be on our industry? What tax or other incentives are being developed that might affect strategy development? Are there political or government stability risks?
Socio cultural What are the current or emerging trends in lifestyle, fashions, and other components of culture? What are there implications? What demographic trends will affect the market size of the industry? (growth rate, income, population shifts) Do these trends represent an opportunity or a threat?

17. Future What are significant trends and future events
Future What are significant trends and future events? What are the key areas of uncertainty as to trends or events that have the potential to impact strategy?
Internal Analysis Understanding a business in depth is the goal of internal analysis. This analysis is based resources and capabilities of the firm.
Resources A good starting point to identify company resources is to look at tangible, intangible and human resources.
Tangible resources are the easiest to identify and evaluate: financial resources and physical assets are identifies and valued in the firm’s financial statements.
Intangible resources are largely invisible, but over time become more important to the firm than tangible assets because they can be a main source for a competitive advantage. Such intangible recourses include reputational assets (brands, image, etc.) and technological assets (proprietary technology and know-how).
Human resources or human capital are the productive services human beings offer the firm in terms of their skills, knowledge, reasoning, and decision-making abilities.

18. TERIMAKASIH