An Advertising agency is an organisation whose business consists in the acquisition of the right to use space of time in advertising media and the administration of behalf of the advertisers of advertising appropriations made by them. It renders advice and creative services for its clients. It does not sell any tangible products, but sells creative talents and past experience. Thus it is an organisation specially created for rendering services in advertising.
The services of an advertising agency in general can be summarized as follows:
- It makes the advertisements pleasant and serves the purpose.
- It can get the advertisements published at the appropriate times.
- It can help the advertiser in the preparation of the advertising budget.
- It can free the advertiser from the botheration of contacting the media owners of all types as and when necessary.
- It can do market research for the advertiser at a lesser cost.
- It can also help the advertiser in designing the trade mark, packages and labels and wrappers for the goods to be sold. It can do all types of jobs connected with the printing work.
- It can do sales promotion work.
- It can design window displays and arrange for a systematic change in the arrangement of the things in the windows from time to time.
Advertising Agencies in Industrial Marketing Scenario
Manufacturers cannot look after all the promotional activities especially under the principle of specialization. Organisations with adequate financial resources set up a separate department for this purpose. Such an arrangement would be beyond the reach of medium or small scale producers.… Read the rest
While the basic principles of marketing planning apply in both markets, many organizations have found that what works well in the consumer market fails to do so in the industrial market. Two significant differences between these markets appear to account for this phenomenon. First, unlike the consumer market where products are normally’ marketed through one or two channels, most industrial marketers face diverse markets that must be reached through a multiplicity of channels-each requiring a different marketing approach. A producer of communication equipment, for instance, may market to such diverse segments as the commercial, institutional, and governmental market, each of which will require a unique marketing plan. Second, in contrast to consumer marketing, successful industrial marketing strategy depends more on other functional areas. Where the elements of planning in consumer marketing can often be contained within specific areas of marketing, such as advertising, selling, and product management, planning in the industrial market is largely dependent on, or constrained by, the activities of other functional areas-for example, engineering, manufacturing, and technical services. When marketing emphasizes tailor-made products and fast deliveries, for instance, manufacturing must be prepared to follow through with product output. Planning, then, in the industrial marketing arena requires a higher degree of integrated effort across functional areas and a closer relationship with overall corporate strategy than in the consumer market.
While planning in the industrial market is as sophisticated as it is in the consumer arena, too often industrial firms concentrate planning efforts in the marketing department, failing to recognize the inter-dependency between marketing and other functional areas.… Read the rest
Business services include maintenance and repair support and advisory support. Like supplies services are considered as expense items. The explosive growth of the internet has increased the demand for a range of electronic commerce services such as delivering technical support, customer training and management development programmes.
The rapid growth of business services in industrial marketing is governed by four important factors which are explained below.
- Innovations: The innovations in the field of science and technology have contributed for increasing demand in the area of business services. Advancement in computer security systems, computer enabled services, environmental control systems for office and factory buildings are examples for the effect of innovations on business services.
- Out Sourcing: It is a common phenomenon that the present day organizations are getting the services done from outside services provide. In an area where the company is not expertised such as management information functions, HR, Payrolls, Warehousing etc, the trend is towards going for outsourcing these activities. As a result more and more small and large service providers have entered the business services sector, therefore resulting in the wide opening up of business service sector.
- E-Business: The internet is creating new business opportunities and directing the organizations to do the business in different forms and ways. Services like supply chain management, customer service and support are done through internet apart from other usual ITES.
- Growth of Manufacturing Sector: Despite the decline in the number of manufacturing employees, manufacturing out put is continued to growing. With this growth the demand for services like information processing, advertising etc, are in an increasing trend.
… Read the rest
Industrial product is defined as a complex set of economic, technical, legal, and personal relationship between the buyer and the seller. A product is a combination of basic, enhanced, and augmented properties. Basic properties are included in the generic product, with fundamental benefits sought by customers. Generic products are made differentiable by adding tangible enhanced properties such as product features, styling and quality. The augmented properties include intangible benefits such as technical assistance, available of spare parts, maintenance and repair services, warranties, training, timely delivery, and attractive commercial terms. The product package as expected by the prospective customers should be well understood by the industrial marketer.
Industrial product development is the process by which the product ideas are generated, assessed, directed and converted into products. There are seven stages in the process of industrial product development.
- Idea Generation: The Industrial marketer should be consciously search for new product idea and to their sources both inside and outside the company. Internally the new product ideas may come from sales staff that is close to customers, R&D experts, from top management. An external source of ideas includes channel members such as distributors or customers. An industrial marketer can get good ideas by using techniques like brainstorming and attribute listing. In attribute listing technique, important attributes of existing products are listed. Ideas are invited from a group of employees to search for an improved product by modifying each attribute. An industrial firm should encourage the employees to present innovative and creative ideas by offering recognition or rewards to the employees submitting the best ideas.
… Read the rest
Industrial marketing firms have to adopt the following three important steps for developing long term product strategies for existing individual products and products lines.
- Assessing the performance of all the existing products or product lines by using product evaluation matrix.
- Examining the relative strengths and weakness of the firm’s products in comparison to competitors’ products by using perceptual mapping technique.
- Deciding the product strategies for the existing products based on the above analysis.
Product Evaluation Matrix
Yoran Wind & Henry Claycamp have developed a technique called product evaluation matrix to be used to assess the product performance. Performance parameters of a product such as industrial sales, company sales, market share and profitability are combined in the matrix. Industry sales are represented on vertical axis and are grouped as growth, stable or decline. Company sales are assessed on horizontal axis and are grouped as growth, stable or decline. In the same manner profitability is classified as below target and above target and market share as dominant, average or marginal. These classification need to be defined by the marketing manager depending on the situation prevailing in the industry. For example, if the market share is less than 10 percent, it is evaluated as marginal, market share between 10 and 30 percent is considered as average, and more than 30 percent as dominant. Let us apply the same classification of market share to a company having two products. Product P has a dominant market share of 50 percent. The average growth of company sales in the past three years is 40 percent.… Read the rest
Pricing strategies vary as the industrial product moves through its life cycle. The industrial pricing strategy is a key factor in each of the four cells of product life cycle.
- Introductory Stage Pricing Strategy: There are two pricing strategies available for a new product which is in the introductory stage of its life cycle. These are: (a) Penetration Strategy, and (b) Skimming Strategy. An industrial marketer must analyze the price from the angle of the buyers. How soon the firm should try ton recover the investment on the new product is another important factor to be considered by the industrial marketer.
- Penetration Strategy: When the price elasticity of demand is high or the buyers are highly price sensitive, strong threat exists from potential competitors and opportunity exists to reduce the unit cost of production and distribution with increase in volumes the penetration strategy is effective. The firm can draw on experience curve effect and can also achieve the economies of scale. This would give the company a strategic advantage of cost leadership over the competitors. The firm can adopt the pricing objective of long term profit through large market share instead of short term profit objectives.
- Skimming Strategy: For distinctly new product meant for a market segment that is not sensitive to the initial high price the skimming strategy can be adopted. The greatest advantage of this strategy is that it focuses on recovering the investment at an early stage by generating more profits. The price will be reduced at the latter stages to reach other market segments that are more sensitivity to price.
… Read the rest