Introduction to Industrial Marketing and Organisational Procurement

Table of Contents

History

General Marketing

Industrial Marketing

Organizational Procurement

1. History

Marketing in every which way has been around for a long time. Modern marketing as we know it was born in the period 1900-1940, especially between the years 1910 - 1925, when several practical and theoretical marketing aspects came together. During the 20th century it made its most rapid development and consolidated itself as an important business function and as a way of doing business. The majority of this development took place in the United States. A big contribution came also from Britain due to the industrial revolution. By the late 1990s, all types of organizations in the USA and Western Europe had adopted a marketing orientation and looked for a way to become even more customer focused (i.e. through relationship marketing).

The development of marketing

The roots of marketing lie back in the time when people began to produce crops or goods which were surplus to their own requirements. They bartered for other things they wanted.

In the early days, the late 19th and early 20th centuries, goods were scarce and competition sufficiently underdeveloped so producers did not really need marketing. In the words of an anonymous author in Scientific American in 1923; 'When our grandfathers wore homespun clothes, raised most of the food they ate and chopped the wood for their home fires, the cost of distributing the essential commodities was practically nil.'

They could, without a problem, sell whatever they produced. Most communities were self-sufficient, and even when they were not, goods were shipped only short distances and sold on local markets where the buyer and seller knew each other. As markets and technology developed, competition became more serious and companies began to produce more. Therefore they would have surplus to sell and usually at a profit.

In the British Victorian times because of dramatic advances by scientists railways, steam power, electricity, the internal combustion engine, the telephone and telegraph and flight were all developed in a relatively short time. Even the computer has only recently been developed.

With the improvement of transport links, especially railways, it gave firms wider access to industrial markets. They then had more opportunities to sell different goods to different organizations. This was a very important factor in America, because of the vast landscape.

The rapid growth of industrial marketing meant they could no longer directly sell to organizations due to the increased distances, and marketing developed a method of managing longer distribution channels.

Historically, marketing has not developed uniformly across all markets or products.

At times and in various parts of the world there has been considerable resistance to introducing the 'American-style' marketing methods. In recent years, rapid growth in communications technology has opened up new channels for Industrial marketing.

Marketing history and business orientations

Orientation Focus Characteristics and Aims Eavesdropping Main era (generalized)

USA Western EU Eastern EU

Production Manufacturing *Increase production

*Cost control and reduction

*Make profit through volume 'Any colour you want - as long as it's black' Up to 1940s Up to

1950s Up to

1980s

Product Goods *Quality is all that matters

*Improve quality levels

*Make profit through volume 'Just look at the quality of the paintwork' Up to 1940s Up to 1960s Largely omitted

Selling Selling what's produced - seller's needs *Aggressive sales and promotion

*Profit through quick turnover of high volume 'You're not keen on the black? What if I throw in a free sun-roof?' 1940 - 1950 1950 - 1960 Early 1990s

Marketing Defining what customers want - buyer's needs *Integrated marketing

*Defining needs in advance of production

*Profit through customer satisfaction 'Let's find out if they want it in black, and if they would pay a bit more for it' 1960s onwards 1970s onwards Mid-1990s onwards

General Information

Marketing is about exchange processes, i.e. identifying what potential customers need and want or even what they may want in the future then offer them something that will hopefully fulfill those needs. Something must be offered that the buyer values and in return, hopefully, they offer you something that you value, this can be money or goods. Most organizations are in business to make profits, therefore customers' needs and wants are fulfilled in a cost-effectively, efficiently and profitable manor. This implied that the marketing function had to be planned, managed and controlled.

Because of the expanding seller and buyer market externally, the organization has to take into account the needs, demands and influences of different groups such as customers, competitors, suppliers or intermediaries (these exist within a dynamic business environment). Internally, the organization has to coordinate the different function, acting as a middle man between them and the customer. The organization must accept that the customer is 'the bee all and end all'. Therefore all functions within the organization must contribute to customer satisfaction, only then has the marketing philosophy been adopted.

Marketing's main tasks are centered around identifying and satisfying customers' needs and wants, to be able to offer something that has a competitive edge or differential advantage on the market and more attractive than the competing product(s).