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Industrial Marketing Is Not Consumer Marketing

Tue, 05/31/2011 - 11:23am

Of all the strategies that American manufacturers could use today to grow their businesses, industrial marketing is perhaps the most important, yet least understood strategy.

One of the reasons industrial marketing is not very well understood is that it is not taught in most universities. Of the 2,500 business schools in the U.S., I found 26 (on the internet) who offer industrial marketing or industrial selling courses. I am really not sure why more schools don’t teach these courses, but some professors have told me that their students are only interested in consumer products. Other professors believe that the principles of consumer marketing can be applied to any kind of products and industrial marketing is not needed. But I think the real reason is that academics know very little about industrial products and services and that marketing them requires very product-specific strategies. The strategies must be customized to the products and general strategies that can be applied to consumers won’t work.

Knowledge Gap

“Most students who graduate from university marketing courses are not ready to go to work in industrial companies,” says Jack McNally, Dealer Sales Manager of a midsize casting company. “The methods for marketing industrial products are substantially different from consumer marketing. Our industry has to invest considerable time in on-the-job training to teach these people industrial sales and marketing. It would be helpful if college professors went out into the manufacturing sectors to see for themselves how industrial products are bought and sold.”

Mr. McNally’s experience is much like my own experience training salespeople to sell industrial equipment. For years we had to take technical people who were very familiar with the equipment (like engineers and technicians) and try to make them salespeople. This only worked part of the time and the on-the-job training was very extensive because these people had never had any education or training in industrial sales or marketing. I would much rather have had non-engineering college graduates who were people-oriented, and had some education in industrial marketing and industrial sales—and train them to understand the technical products.

Consumer vs Industrial

This problem has been around for years and costs industrial manufacturers a great deal of time and money relative to training. And even after they have become good salespeople, they still don’t know anything about industrial marketing. We need to develop college courses that teach industrial marketing as well as industrial sales. Let me explain some of the differences between consumer marketing and industrial marketing and why this is a problem that needs a solution:

Product complexity. First and foremost, industrial products are very complicated and require a lot of technical knowledge to sell. Industrial and technical products range from off-the-shelf bearings to custom-engineered machines of incredible complexity. The more custom the product, the more custom the marketing strategy. All salespeople must learn all technical aspects of the product to be able to sell it.

Industrial buyers. Consumer marketing presupposes powerful sellers and passive, inexpert buyers who can be influenced to purchase by a variety of advertising techniques. In contrast, industrial markets consist of very knowledgeable buyers (and often buyer teams) who analyze products and purchases in terms of user benefits often measured in dollars or as return on investment. In the case of capital equipment, the salespeople do not get to talk to the final decision-makers—the board of directors.

Bids and quotations. Consumers either buy or don’t buy from listed prices. On the other hand, industrial products are often sold by request for quotes (RFQs) that may require a quotation with elaborate specifications to define the product. Specifications can be hundreds of pages long and can specify a machine right down to the type of fastener and wire colors.

Advertising and promotion. It is relatively straightforward to develop a newspaper ad for impulsive shoe buyers, but it is very difficult to even identify the buying influences of dragline machines or material-handling robots. Inquiries produced by industrial advertising are only the beginning of a long, expensive selling process, sometimes lasting years before the sale occurs.

Market information. There is a lot of database information available on consumer products and an enormous amount of consumer demographic information that can identify the customer profile and market segment. On the other hand, information on industrial market niches is very difficult to acquire and is generally qualitative and requires considerable industrial experience to gather. For instance, if you are a manufacturer of a machine that stacks 50lb sacks of cheese whey, you will have to identify the market niches to succeed. The food industry has 23,000 plants in the U.S., but the buyers who would be interested in your machine are a niche of a niche, of a niche, of a niche. How you find these buyers is totally different then selling cell phones to young adults using television.

Industrial market research. Consumer market research methods generally do not work for industrial products, because the samples are too small and the buyers are not a homogeneous group that can be considered a valid sample. Because of these two problems, statistical techniques for projecting the sample cannot be used as a representative of a larger market. Because of these issues, questions on market share and market size must be found using qualitative techniques requiring field research and personal interviewing. Suffice it to say, this can only be done by an interviewer who has a strong background in technical and industrial products and knows how to get invited into the prospect’s plant. 

Product range. Marketing strategies change drastically with the type of product, length of the sales cycle, product size, and the number of decision-makers. For example, the selling, promotion, and pricing strategies used to sell low-unit-price standard motors to known accounts are fairly straightforward. On the other hand, capital equipment designed for production lines is usually large, complex in design, and has high unit prices that must be justified in terms of returns to the company and approved by the board of directors.

Summary

Manufacturers of industrial products, large and small, need help with industrial marketing. Therefore large companies have to train new employees on the job and small companies hope to hire people with industrial marketing experience. There is definitely a need for college courses, seminars, and training on industrial marketing and industrial selling.

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Mike Collins is the author of Saving American Manufacturing. He can be reached at mpcmgt@att.net.

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