Page 351 - Marketing Management

328 PART 5 SHAPING THE MARKET OFFERINGS

nature gives rise to special marketing practices, whereas their commodity character results in
relatively little advertising and promotional activity, with some exceptions. At times, commodity
groups will launch campaigns to promote their product—potatoes, cheese, and beef. Some
producers brand their products—Dole salads, Mott’s apples, and Chiquita bananas.
Natural products are limited in supply. They usually have great bulk and low unit value and
must be moved from producer to user. Fewer and larger producers often market them directly to
industrial users. Because users depend on these materials, long-term supply contracts are common.
The homogeneity of natural materials limits the amount of demand-creation activity. Price and
delivery reliability are the major factors influencing the selection of suppliers.
Manufactured materials and parts fall into two categories: component materials (iron, yarn,
cement, wires) and component parts (small motors, tires, castings). Component materials are usu-
ally fabricated further—pig iron is made into steel, and yarn is woven into cloth. The standardized
nature of component materials usually makes price and supplier reliability key purchase factors.
Component parts enter the finished product with no further change in form, as when small motors
are put into vacuum cleaners, and tires are put on automobiles. Most manufactured materials and
parts are sold directly to industrial users. Price and service are major marketing considerations,
with branding and advertising less important.
Capital items are long-lasting goods that facilitate developing or managing the finished product.
They include two groups: installations and equipment. Installations consist of buildings (factories,
offices) and heavy equipment (generators, drill presses, mainframe computers, elevators). Installations
are major purchases. They are usually bought directly from the producer, whose sales force includes
technical personnel,and a long negotiation precedes the typical sale.Producers must be willing to design
to specification and to supply postsale services.Advertising is much less important than personal selling.
Equipment includes portable factory equipment and tools (hand tools, lift trucks) and office
equipment (personal computers, desks). These types of equipment don’t become part of a finished
product. They have a shorter life than installations but a longer life than operating supplies.
Although some equipment manufacturers sell direct, more often they use intermediaries, because
the market is geographically dispersed, buyers are numerous, and orders are small. Quality, fea-
tures, price, and service are major considerations. The sales force tends to be more important than
advertising, although advertising can be used effectively.
Supplies and business services are short-term goods and services that facilitate developing or
managing the finished product. Supplies are of two kinds: maintenance and repair items (paint,
nails, brooms) and operating supplies (lubricants, coal, writing paper, pencils). Together, they go
under the name of MRO goods. Supplies are the equivalent of convenience goods; they are usually
purchased with minimum effort on a straight-rebuy basis. They are normally marketed through in-
termediaries because of their low unit value and the great number and geographic dispersion of
customers. Price and service are important considerations, because suppliers are standardized and
brand preference is not high.
Business services include maintenance and repair services (window cleaning, copier repair) and
business advisory services (legal, management consulting, advertising). Maintenance and repair
services are usually supplied under contract by small producers or from the manufacturers of the
original equipment. Business advisory services are usually purchased on the basis of the supplier’s
reputation and staff.

Product and Services

Differentiation

To be branded, products must be differentiated. At one extreme are products that allow little varia-
tion: chicken, aspirin, and steel. Yet even here, some differentiation is possible: Perdue chickens,
Bayer aspirin, and India’s Tata Steel have carved out distinct identities in their categories. Procter &
Gamble makes Tide, Cheer, and Gain laundry detergents, each with a separate brand identity. At
the other extreme are products capable of high differentiation, such as automobiles, commercial
buildings, and furniture. Here the seller faces an abundance of differentiation possibilities, includ-
ing form, features, customization, performance quality, conformance quality, durability, reliability,
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repairability, and style. Design has become an increasingly important means of differentiation and
we will discuss it in a separate section later.