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Basics of Marketing - Kotler Philip

Classification of goods for industrial use

Enterprises and organizations purchase a huge variety of goods and services. Goods for industrial use can be classified on the basis of the extent to which they are involved in the production process, and by their relative value. Three groups of these goods can be distinguished: materials and parts, capital goods and auxiliary materials and services (see Figure 51).

Materials and parts are the goods fully used in the manufacturer's product. They can be divided into two groups: raw materials and semi-finished products and parts.

Raw materials include agricultural products (wheat, cotton, fruits, vegetables, etc.) and natural products (fish, timber, crude oil, iron ore, etc.). The marketing of agricultural products is somewhat different from the marketing of natural products. Agricultural products are supplied to many small manufacturers by marketing intermediaries who collect, sort, organize, store, transport and distribute them. The supply of agricultural products may to a certain extent increase, but only in the long term, and not in a short time. Agricultural products are perishable goods and, due to their seasonality, require the use of special marketing techniques. They are rarely advertised, they are rarely encouraged to sell them, but from time to time, the producers carry out propaganda campaigns to increase the consumption of their products, such as potatoes, plums or milk, and some even give them the vintage name "Sankist" oranges, "Chikita" bananas.

Fig. 51. Classification of industrial goods

The offer of natural products is extremely limited. As a rule, they are voluminous, the average price of a commodity unit is low, and transporting them from the producer to the consumer is rather complicated. Only a small part of large producers are trying to sell them directly to industrial consumers. Since consumers depend on the availability of these materials, deliveries are usually made on the basis of long-term contacts. The similarity of natural products with each other limits the scope of activities to stimulate their sale. The main factors influencing the choice of the supplier are its reliability and the price of the goods.

Semi-finished products and parts are either material components (iron, yarn, cement, wire, etc.), or components (small motors, tires, castings, etc.). Material components are usually used with subsequent refinement - for example, pig iron pigs are converted into steel, and yarn - into the fabric. The similarity of material components to each other usually means that the most important value in buying is the price of the goods and the reliability of the supplier. The components are included in the final product completely, without any changes, as happens when the vacuum cleaner is put on the motor, and on the car - the tires. Most of the material components and components are sold directly to their industrial customers, and purchase orders are often placed for a year or more ahead. The main marketing considerations in this case are price and service. The presence of branded names and advertising usually play a less significant role.

Capital property - goods partially present in the finished product. It can be divided into two groups: stationary facilities and auxiliary equipment.

Stationary structures are structures (factories, administrative buildings, etc.) and stationary equipment (generators, vertical drilling machines, computers, lifts, etc.). Stationary structures are classified as major purchases, usually carried out directly from the manufacturer. The trading apparatus of such a manufacturer consists of highly qualified specialists, among whom there are often sales engineers. The manufacturer should be ready to create products according to customers' specifications and providing after-sales services. Advertising, although used, but plays a much smaller role in comparison with the technique of personal selling.

The auxiliary equipment includes movable factory equipment (hand tools, forklift trucks, etc.) and office equipment (typewriters, desks, etc.). Equipment of this type does not become part of the finished product at all. It simply contributes to the production process. Its service life is shorter than that of stationary facilities, but exceeds the service life of working materials. Some manufacturers of auxiliary equipment sell it directly to consumers. However, more often they still work through intermediaries, because the market is geographically dispersed, there are a lot of buyers, and orders are small in volume. When choosing a supplier, the main considerations are the quality, properties and price of the goods, as well as the availability of a service system. The seller's staff is usually given more importance than advertising, although it can be used very effectively.

Auxiliary materials and services are objects that are not present at all in the finished product.

Auxiliary materials are of two types: working materials (lubricating oils, coal, writing paper, pencils, etc.) and materials for maintenance and repair (paints, nails, brushes, etc.). Auxiliary materials are for the industrial goods market the same as everyday goods for the consumer market, since they are usually bought with minimal effort by the method of repeated purchases without changes. Trade them, usually through intermediaries, because there are a lot of buyers, they are geographically dispersed, and the value of the commodity unit of auxiliary materials is low. Due to the fact that the auxiliary materials themselves are largely standardized, and the preferences for the brands are rather weak, the main considerations in the procurement are the price of the goods and the service.

Business services are divided into maintenance and repair services (washing windows, repairing typewriters, etc.) and consultative services (legal advice, management advice, advertising, etc.). Maintenance and repair services are usually delivered on a contractual basis. Small manufacturers often provide maintenance services, and original equipment manufacturers often provide repair services. Business services of an advisory nature are usually present in procurement situations to meet new challenges. In this case, the buyer from the industry usually chooses the suppliers on the basis of their reputation and the qualifications of their personnel.

Thus, it is clear that the characteristics of the product have a great influence on the marketing strategy. At the same time, marketing factors are affected by factors such as the number of competitors, the degree of segmentation of the market and the state of the economy.