The Marketing Challenge for Industrial Companies

Now-a-days most industrial managers don't seem to fully understand their environment (markets, customers, trends, industries, etc.). This is chiefly due to the current and powerful "officism" paradigm by which the real world is understood. By using unreal assumptions, most office-bound managers don't really have pragmatic answers on what the company should do. Instead, managers work endlessly in "how-to-do" tools that might have nothing to do with a company's promising future. On the other hand, "what-to-do" tools, which are fewer to begin with (e.g. the company vision), have become standardized, abstract and commonplace. The present chapter remarks that both, the business and its environment should be understood from the field. Conceptual tools such as a progress-driven company vision, the notion of the paradigm, and the difference between real and unreal business assumptions are here discussed.

The irruption of the social sciences in industrial marketing has misguided contemporary managers towards an ill-defined customer orientation paradigm. Many business courses and influencers still claim that product decommoditization can be successfully achieved by means of complementary services and B2B relationship efforts. This chapter discusses that the engineered product (or main service offer) is what delivers the functionality needed by end-user customers. Three stages are here presented to depict a customer experience with a given supplier: purchasing, integration/installation and product use. The later stage is what delivers most of the needed benefits. Thus, if a manufacturer truly aims to become customer oriented, it should do so by understanding the in-use benefits of its products. This chapter presents the Customer Orientation through the Product (COP) paradigm. COP recommends a parallel effort on behalf of the supplier: a proper selling/integration experience, and an outstanding and ever improving product use experience.

Prior to designing a market research project, the industrial marketer must familiarize him/herself with fundamental concepts that explain the benefits and shortcomings of the technical product. The differences between ingredient, component or finished products are addressed. Also, the product functionality is discussed as a major driver to formulate a business unit strategy and future product versions. Product attributes are for the first time classified according to their auxiliary or direct influence over the product functionality, the product intermediation (distribution, integration), or the product usage.

Furthermore, concepts such as product application, technical product category, solver products and positioner products are also explained.

As for commodities, two different classifications shed light to the decommoditization effort: the Periodic Table Commodity (PTC) and the Chemically Complex Compound (CCC). Decommoditization strategies for both categories are also discussed.

Industrial market research should be understood as an on-going managerial activity. Unfortunately, too many industrial companies consider market research as a costly exercise to be done once or twice a year. Worse, the conventional tools used by most companies are inadequate to obtain deep understanding of customer challenges.

This chapter addresses industrial market research by classifying different customer needs, and establishes a comprehensive discussion-list to consider when designing market or customer exploration. Furthermore, a novel industrial market research method here called The Discovery Team is presented in detail. The Discovery Team is an in-field exploration activity implemented by a multidisciplinary supplier’s team. The Discovery Team methodology has been designed to find remarkable business opportunities for both, the supplier and the customer. Discovery Team’s member profiling, tools, do’s and dont’s and a step-by-step protocol is here introduced.

Industrial market segmentation has been understood by most academics and practitioners as a customer purchasing behaviour partitioning. Little effort has been done to discuss that purchasing behaviour should be considered a ‘sales segmentation’, not a strategic one.This chapter introduces the idea that in-use product application is a more potent and impactful approach to do industrial market segmentation. Thus, application segmentation should be understood and implemented in an on-going basis at the end-user level. The chapter establishes a direct relation between application-based segmentation and product functionality and attributes. Product adaptation and specialization follows. Moreover, application niche detection and tagging is presented as pivotal tasks to design the business unit strategy. Tools such as a product-application matrix and a novel industrial segmentation protocol are described.

This chapter presents modern concepts and a fundamental protocol to understand and implement the development of new technical products. It is mainly dedicated to the industrial marketer who needs notions of R&D management and engineering.The R&D requisite for good market research is discussed, as well as the cultural and methodological requirements to carry-on effective product development. Project management tools are also revised. Additional steps include development and selection of competing product concepts, feasibility analysis, product architecture, design for manufacture, design for logistics and after-sales services, detailed design, prototyping and production scaling-up.

Designing a fitting commercial (marketing & sales) organizational structure for a business unit has been an overlooked corporate task. The consequences of a good or a wrong sales organization structure are abysmal. A proper sales organizational structure keeps customers well served and has a major economic impact for the company. On the other hand, a wrong sales structure usually goes unnoticed by the higher management, who in turn blame other reasons to explain lower sales and specification mistakes.The present chapter explores both simple and complex sales (e.g. cross-selling or complex industrial chains) and marketing organizational structures for an industrial business unit. Key requisites are company 'what-to-do' definitions and task specialization. A three-variable tool is here presented to structure global or regional sales teams. The structure of an Industrial Marketing Department is addressed on the basis of market complexity and best-practises already discussed in this volume.

The industrial sales force has evolved from being a relationship oriented profession to a technically oriented one. Praise for that! While a good Sales Engineer must still be able to manage human relations as a basic trait, there are other more important competences that customers want from them: technical expertise, time commitment and agreement fulfilment.This chapter discusses a complete industrial purchasing process from the customer point of view, as well as the sales process from the supplier's perspective. A proactive tender bid approach and two types of after-sales concepts and practises are also explained.Moreover, Capex/Opex consultative selling activities are discussed in detail, and novel tools such as the project map and its impact upon other company's departments are introduced for the first time. The reader will also obtain knowledge about the essential characteristics of modern industrial selling.

This chapter characterizes ten different types of industrial distributors, including industrial e-commerce and a new model: the 'technology specialist distributor'. Pros and cons of choosing one distribution model over the other is also discussed, as well as the efforts that both manufacturers and distributors must carry-on to increase their respective negotiation power. The text also assists industrial marketing strategists in deciding with distributors serve best according to 4 company variables: product maturity, product application specialization, MRO after-sales intensity and product technical complexity.

This chapter addresses industrial branding according to the architecture of the downstream industrial chain. This is a novel approach. Whether the chain is atomized at the end-user, atomized at intermediates or if is not atomized at all, the branding definitions change completely. The chapter describes and discusses 6 types of industrial branding: the industry brand, the corporate brand, the distribution brand, the product category brand, the product brand and the country of origin brand. The (industrial) product category brand is here described for the first time. Also, techniques such as co-branding and three types of ingredient branding are also discussed. As a summary, the chapter ends with a list of 'eight laws' of industrial branding.

Pricing of technical products is here presented as a consequence of previous managerial tasks: market research, application-based segmentation and product development. In addition to discussing other previous models (e.g. value-based pricing), this chapter describes the reference price plus a price band that contains flexible options according to customer circumstances. A pricing process is shown as a marketer's guide. Other topics discussed include common mistakes in B2B pricing, value-based pricing limitations, volume discounts, price lists and total cost of ownership.

This chapter addresses the market introduction of new technical products from a project management and operational perspective. The customer adoption process is also reviewed step by step. Three major phases of product introduction are identified and described: pre-introduction (planning), D-Day, and post-introduction (implementation). Organizational requisites, managerial tasks, budgeting, contingency plans and extensive check-lists are shown and discussed in detail.