Jul 22, 2017

DISTRIBUTORS CHANNEL (INDUSTRIAL GOODS)


This is very simple to understand about the distributors channel for manufactured industrial goods for salespeople. Few important of them are:

Manufacturer to Industrial user

Manufacturer to Merchant Wholesales to Industrial user

Manufacturer through Agent-Middlemen to Industrial user

Manufacturer through Agent-Middlemen to Merchant Wholesaler to Industrial user

MANUFACTURER TO INDUSTRIAL USER CHANNEL: This is the most direct channel of distribution, industrial goods like locomotives, generators, boilers and turbines, heavy machineries, blast furnaces etc., are usually sold directly by the sellers to the industrial users. There are certain reasons for such a direct sale or supply. Firstly, the volume and value of individual purchases are large enough. Secondly, the buyers are limited and are located in concentrated areas. Thirdly, provision of technical service makes it quite essential for the seller to sell or supply his goods directly to industrial users. Fourthly, the seller usually establishes certain service and repairs centers at different places. To get these service facilities, the industrial user has to purchase them directly from the producers of industrial goods. Fifthly, in case of reciprocal trading, direct selling becomes beneficial. Finally, industrial users prefer to purchase these goods directly from the producers, because they are able to keep constant touch and communication with them and able provide technical and commercial service frequently.

But there are certain difficulties in the direct sale method. For example, the producer of industrial goods has to open service and repair stations at different places convenient to users. For this purpose, he has employed large personnel, which may become expensive. Moreover, he has to control and supervise various salespeople working under him. This involves a great managerial capacity. Thus, direct selling requires huge amount of capital and high degree of managerial ability. Therefore direct selling is possible only for big manufacturers/producers with huge financial resources and managerial staff.

MANUFACTURER TO MERCHANT WHOLESALER TO INDUSTRIAL USER:

Marketing of industrial goods like operating supplies and small equipment such as building materials, labor saving devices, tools, small motors, stationary articles etc., is usually done through the middlemen. The most common middlemen are the wholesalers who are available to the industrial users quickly. Click here for more Why we need Distributors?

MANUFACTURER TO AGENT TO INDUSTRIAL USERS:

Sometime the manufacturer of industrial goods appoints his own agent to act as middlemen for marketing his products. This is the case the manufacturer feels his inability to undertake marketing activities or open branches or sales offices. An agent middleman is usually appointed by a manufacturer who has newly entered the market and who does not the marketing methods. The agent sells the goods on behalf of the manufacturer to the industrial users.

MANUFACTURER TO AGENT TO WHOLESALER TO INDUSTRIAL USER:

In this case, the agent sells the goods of his principal to the wholesalers and not to the industrial users directly. The wholesalers sell them directly to the industrial users. In this case, the wholesalers make provision for the storage of the goods so as to provide a regular supply.

It should be noted that the agent who will be appointed by the manufacturer may be a commission agent, selling agent or a broker. They differ in differ in dealings from one another.

In the marketing of the most of the manufacturer industrial goods, direct sale method is very common. In the case of some manufactured industrial goods, their sale is affected through the middlemen or distributors. This is the case when the industrial users are small businessmen and their purchases are usually in small quantities. Sometimes even large industrial users also prefer to purchase through the middlemen only those goods which they require in small quantities. Finally the producers of industrial goods use both the methods of sale viz., direct sale and sale through the middlemen. They tend to sell/supply directly when the order is sufficiently large or when the buyers are concentrated in a certain regions. They tend to sell through the middlemen when the orders are small and when the buyers are scattered over a wide region.













Jul 20, 2017

CLASSIFICATION OF INDUSTRIAL GOODS




Industrial goods may be divided as, fabricating materials and past, equipments, operating supplies and raw materials. The first three are manufactured industrial goods while the last one refers to natural and agricultural goods.

FABRICATING MATERIALS AND PARTS:
They are the industrial goods which have undergone some processes but which require further processing or which require to be combined with other materials or other parts to become consumer goods. Fabricating materials are further processed and they lose their identity to become part of the finished product while the fabricating parts have gone through complete processes and are directly used in the finished products for the ultimate consumer. For e.g., pig iron which becomes steel, yarn which becomes cloth, metal sheets, bars, etc are all fabricating materials while tires, tubes, batteries bearings, spark plugs, electric motors etc are fabricating parts.
CHARACTERISTICS:

They are uniform in size and standardized in quality.

Purchases are made on the basis of size and quality.

Supply of these goods must adequate and regular.

Buyers knew what exactly they want in respect of these goods.

MARKETING FEATURES:

They are purchased rationally on large.

Contracts for the purchase of these goods are made sufficiently in advance.

Sales are made directly to their users.

Branding is not important.

Decisions to buy are made by considering not only the prices but also after sales service.

Middlemen may enter when the buyers want to purchase a small scale and at a quick delivery.

EQUIPMENT

Equipment consists of both mechanical installations such as boilers, heavy machines, blast furnaces etc and accessory equipment such as transportation vehicles accounting machines and office instruments, computers etc.

CHARACTERISTICS OF INSTALLATIONS:

As stated above installations include, boilers, turbines, engines, cranes, lathes, locomotives, grinding machines, looms, generators, heavy machineries etc

They have the following charactestics:

They are very costly but long durable.

It’s not possible to test their suitability accurately.

They are likely to become obsolete or out of date due to the invention of new ones.

They are highly technical.

MARKETING FEATURES

Highly technical experts are required to effect sales.

The marketing of installations requires a great deal of selling efforts.

Service before and after sales is very important and it influences the sales

The price of the installation is very high.

The installation is made to certain specifications. Therefore, much time is spent in buying it.

Sellers usually sell them directly to the industrial users. Middlemen are used when the sales quantity are small and are made to several buyers scattered over a wide area.

ACCESSORY-EQUIPMENT

Accessories facilitate the manufacturing processes. They do not influence either the scale of production not do they become part of the finished products. They are less durable than installations. They include accounting machines, franking machines, calculating machines, office furniture, computers and other related consumables small tools etc.

CHARCTERSTICS

They are mostly standardized and branded goods.

Their prices are relatively less than those of installations.

They require extensive sales efforts since the market for them is wide.

They are purchased frequently.

Goodwill of the sellers plays an important role in their sales.

The buyers require assistance from the sellers in making selection of suitable type.

MARKETING FEATURES

They are sold through the manufacturer’s agent or other independent distributors.

Prompt and timely delivery is important.

Direct sale is possible where the order is sufficiently large or where the product is costly.

Sales promotional activities are very effective because the accessories usually standardized and branded.

OPERATING SUPPLIES

They are the material which are used in the operation of the plant or business which do not enter into the finished products. Their life is very short. Fuel, lubricating oil, and other office consumables and necessary tools and accessories with operating supplies etc comes under this category.

CHARACETERISTICS

They do not enter into finished products but they facilitate the operations of the business or the manufacturing processes.

They are short lived.

They are generally low priced.

They are purchased without efforts.

They are purchased frequently but in small quantities.

MARKETING FEATURES

Marketing features differs from products to products. Purchases are made mostly directly on the basis of uniformity, quality, low prices and adequate supply.

Since they are required by a large number of industrial users, the market for them is wide. Therefore, they are generally marketed through the middlemen.

There is keen competition in the marketing of goods because there are competitive products which are standardized and branded. Therefore, price competition plays an important part in the marketing of these goods.

Purchases of these goods are usually made on contract basis.

RAW MATERIALS

Raw materials are industrial goods which have not undergone manufacturing processes. They are to be processed before they become ready for use. They enter into the final products. They may be natural raw materials such as minerals forests products and products of the seas or agricultural raw materials such as jute, cotton, tobacco, fruits etc.

CHARACTERISTICS OF NATURAL RAW MATERIALS

They are limited in their supply.

Their production is specialized and concentrated.

The production is carried out throughout the year.

It is possible to control the production.

They are bulky bur perishable.

They differ in quality and uniformity.

MARKETING FEATURES

Marketing problems: the marketing of natural raw materials is faced with certain problems like:

It becomes necessary to shorten the channel of distribution. May times the producer sells directly to the industrial users.

Cost of transportation them from the centers of production to the places where they are required for use becomes costly because of the bulky nature of these goods.

Natural raw materials are bulky but their price is low. Therefore, cost of transportation is large when compared to the price of these goods. Therefore, transportation cost determines whether these materials should be transported in their natural form or they should be processed nearly before such transportations.

Since the quality and uniformity of these raw materials differ, standardization and grading becomes quite essential so as to enable the manufacturer to get the materials of required quality by referring to the standards and grades. Standardization and grading will benefit both the seller and the manufacturer. The seller gets better price for the standardized and graded goods while the manufacturer ids assured of the required quality of the raw materials for his finished products.

Finally, adequate and regular supply will have to be made to the industrial users. Because of the limited supply, the manufacturers prefer to get these goods in adequate quantities and regularly so that their production is interrupted due to shortage in the supply of these goods. If production is interrupted due to non supply of these goods the manufacturer will be put to a great loss. In order to avoid this manufacturer may adopt the following measures:

He may enter into long term contracts with the suppliers of natural raw materials.

He may purchase when the supply is more in the market and keep a large stock.

He may establish a control over the supplier by affecting vertical integration. In this case, the manufacturer takes the ownership of the supplying concern, so that the entire production of the supplying concern will be at his disposal.











Jul 14, 2017

INDUSTRIAL GOODS



Industrial goods are those goods which are destined to be sold primarily for use in producing other goods or rendering services as contrasted with goods destined to be sold primarily to the ultimate consumers. In other words, industrial goods are those which are intended for making other products or for rendering services in the operations of business of private or public institutional enterprise. It should be noted that industrial goods are not meant for final consumption. They include some manufactured products and agricultural raw materials, bulk chemicals and natural raw materials.

BUYING

Buying Motives of an Industrial Goods

Industrial goods are purchased by the industrial users. Their buying motives are rational and their purchases are methodical and are based on certain objects and well planned thought.

INDUSTRIAL GOODS ARE PURCHASED FOR VARIOUS REASONS LIKE:

EFFECIENCY AND ECONOMY IN PRODUCTION: the use of machines in production increases the production, brings down the cost of production and improves the quality of the products. Therefore, the industrial users prefer to use machines in production so as to maintain efficiency and economy in production.

UNIFORM PRODUCTS: manufacturers want to buy such goods that will enable them to produce uniform and standardized goods. The standardized goods are branded goods which maintain the confidence of the buyers in respect of quality and durability. Therefore, the manufactures always desire to use such machines and raw materials which will help him to produce standardized and branded goods.

LOWER PRICE: industrial users always prefer to buy those goods which are offered at lower prices, quality, quantity and other service conditions remaining constant.

REGULAR AND ADEQUATE SUPPLY: the manufacturers desire to purchase their requirements only from those sources which supply goods of right quality regularly and adequately. This will avoid any interruptions in production, eliminates the risk of losing business and ensures production of quality and products.

PROTECTION: many industrial goods are purchased by the industrial users from the point of protection and safety. For example, steel cupboards and cabinets are purchased in preference to wooden cupboards because the wooden cupboards will be burned down by fire if it breaks opt and even the papers kept in the cupboards also become ashes but if steel cupboards are used they will be protected.

SALES PROMOTION: manufacturers sometimes use certain products in production because their use in the products promotes sales.

TECHNICAL CONDITIONS: manufacturers are tempted to go in for those goods which provide sales service and after sales service.

MARKETING OF INDUSTRIAL GOODS

The market for manufactured industrial goods is very large. It consists of large industrial users of various classes such as manufacturers, transport service, mining companies, public utilities, insurance and banking companies, government agencies, public and private institutions, health and safety, warehousing corporations, wholesale and retail firms etc.

CHARACTERISED FEATURES OF THE MARKET

Market is concentrated in some geographical areas.

The number of prospective buyers is limited.

The individual purchase is relatively large.

Technical considerations play an important role.

The demand for industrial goods is a derived demand.

GEOGRAPHICAL CONCENTRATION OF THE MARKET:

The manufactured industrial goods are purchased by the manufactures. The manufacturers are generally concentrated in certain localities. Therefore, the market for industrial good, that are demanded by the manufacturers is also concentrated n those localities. Thus the market for industrial goods is geographically concentrated whereas the market for manufactured consumer goods is wide-spread. For example, the jute industry is concentrated in Kolkata and round about. The manufacturers of machinery, equipment, spare parts and service centers must also concentrate their only to meet the demands of the jute manufacturers.

Limited Number of Buyers: The number of buyers of industrial goods is very much limited as compared to the number of buyers of consumer goods. Moreover, the market for industrial goods is not actually a single market but it consists of various types of buyers. Problems of marketing different types of industrial goods are different. Moreover, a large numbers of sell their goods only to a small part of the market. Further the buyers of the industrial goods are well informed regarding the products they purchase as compared with those of consumer goods. The task of buying of industrial goods is generally entrusted to the experts who are well trained and competent, and who have full knowledge of the products and market conditions. They always try to purchase right quality goods from right place at right time and at right prices and in right quantities.

Large Individual Purchases: Since the industrial goods are purchased by the industrial users, they usually place big orders. Every order placed with the suppliers will be large orders. Even the small order of the smallest manufacturer is also relatively large when compared with the order of consumers. Moreover, the purchases are made at long intervals. Therefore, the suppliers of industrial goods cannot afford to lose sales or disappointment their customers. They should avoid poor salesmanship, uncertainty in delivering the goods, delivery of defective goods etc. Therefore they should always supply standardized and branded goods so as to maintain uniformity in respect of quality, durability etc. Further, since the buyers are concentrated in a place, the seller of industrial goods in an advantageous position to sell his goods directly to them.

Technical Consideration: Since industrial goods are required for use in production, their supply in adequate quantity and uniform quality is quite essential. The raw materials, machinery, spare parts etc. should be of highly standardized quality so as enable the manufacturers to maintain the high quality of the finished products and avoid any variations in their quality. Sometimes, goods have to be produced according to the specifications of the buyers. Therefore the manufacturers insist upon the quality of raw materials, spare parts, machines etc. The marketing of such special products necessitates the following sales efforts on the part of the manufacturer. For example, he should make an appeal to the rational buying motives of the buyer. In other words, he should appeal to the technical and business sense of the buyers. He must impress upon the buyers as how his goods are superior to others and how they meet the particular needs of the buyers. Therefore, he must utilize the services of highly trained salesman to see all his products. They should visit the buyers concerns, demonstrate the use of the products and convince them of the superiority, quality and durability of these products.

The technical services are also important both before and after sales. Because many manufacturers prefer to get such technical services before and after the sales made. Therefore the sellers of such industrial goods which are highly technical have to maintain the skilled engineers or trained technicians who should personally go the buyers, concerns, install them, demonstrate, their working and carry out any technical troubleshooting, faults or adjustments. The sellers of new labor saving devices like accounting machines, franking machines, computers, automated machines or any other such devices used in factories etc., must arrange for services before and after the sale. Everything should be systematically updated following companies software applications. The provision of such technical services is sure to promote sales and business growth. But the cost of maintaining the engineers and the technical hands and providing their services before and after sales is likely to be considerable to the seller of such technical goods and such cost will add to the usual marketing expenses. But the seller of such goods has to incur these expenses so as to maintain an assured market for his products. However such expenses are likely to be offset by single orders of large volume and the certainty and continuity of an assured market. Therefore, the percentage of such expenses to total sales will be low in the long run.

DERIVED DEMAND FOR INDUSTRIAL GOODS: The demand for industrial goods is derived from the demand for consumer goods for the manufacture of which industrial goods are used. If the demand for the consumer goods increases, the demand for industrial goods also increases. The demand for cements depends upon the demand for buildings. If the demands for buildings of houses increase, the demand for cement also increases. Thus the demand for industrial goods changes more or less closely according to the changes in the demand for consumer goods.

Moreover, if the demand for consumer goods is seasonal, then the demand for industrial goods required will also be seasonal. For example, the demand for rain coat is seasonal. And the demand for woolen goods is also seasonal. Therefore the demands for industrial goods required for manufacture of either rain-coats or woolen goods is also seasonal, similarly, fluctuations in the demand for industrial goods. But since the industrial goods like equipment (i.e., plant machineries, turbine, boiler, valves, pumps etc.) have long life, any decrease in the demand for consumer goods manufactured by the equipments affects he demand for that equipment immediately while any increase in the demand for consumer goods influences the demand for equipment only after a long period. Therefore, equipment industries suffer greatly during bad years but have to work overtime during good years.

Therefore, the marketing of industrial goods has special problems. The characteristic of derived demand for industrial good influences in a great extent the marketing policies of the producers of industrial goods. For e.g., the producer of wool may have to undertake the advertisement for the use of woolen clothes etc. Only by increasing the demand for woolen goods, he can increase the demand for wool. But, he cannot increase the demand for his products only by reducing the prices. But if the prices of industrial goods rise, they add to the cost of production of consumer goods and this will raise their prices and reduce demand also. Thus, a rise in the prices of industrial goods leads to rise in the prices of consumer goods and a fall in the demand for them, while a fall in the prices of industrial goods may or may not increase the demand for consumer’s goods. That is why the sellers of industrial goods help the manufacturers of consumer goods in their advertisement and sales promotion activities.

ADDITIONAL FEATURES OF INDUSTRIAL GOODS

INFREQUENT PURCHASES: Industrial goods are not purchased frequently like the consumer goods. They are purchased after long interval and that too in very big quantities. Costly machines, machinery parts for plants, or extension of new plants, erecting and commissioning of new turbine or boiler are purchased once in many years.

LONG PERIOD OF NEGOTIATIONS: Industrial goods are purchased only after negotiating for a longer period since the quantity to be purchased is usually large or decisions are to be taken after considering the specification, future requirements etc.

RECIPROCAL TRADING: Reciprocal trading means the seller of industrial goods sells his goods to the manufacturer and buys from him some other goods required by him. Thus it is an exchange of goods for goods between the seller and the buyer.

LEASING: The buyer of industrial goods must get them on lease basis instead of buying them completely. The buyer becomes the lease and the seller becomes leaser. Large capital equipment like textile machinery, heavy constructions machinery, automobiles, machines, tools, pumps etc are now sold on lease basis by the seller to the buyers. Such leasing is beneficial to both leaser as well as the lease. (This depends upon the type and policy of the manufacturer)

It is needless to emphasize that every salesperson must have such basic knowledge before entering into Manufacturing Plants for contacts and building up relations and preparing for selling goods according to the needs of the buyers to retain long term business with Industrial Manufacturers...



Jul 16, 2016

SELLING SKILL IN PLANT MAINTENANCE


SELLING PRODUCTS FOR PLANT MAINTENANCE


In today's tough competitive environment the need to remove unwanted and unnecessary business costs makes any Maintenance Products Supplier the preferred supplier to the world's big companies through to local maintenance professionals. It may be design, manufacturing or maintenance.

In the maintenance area the suppliers periodical plant visit and survey approach delivers reduction in downtime, provides on plant coaching or training and increases safety standards. With the most comprehensive maintenance inventory rationalisation can also be realised.

Companies salesperson or technical service engineer or any representative is willing to discuss customer's specific application needs.

The following is, but one approach to the maintenance market. The assumption that must be made is that almost everyone would prefer to sell original products applications.
These are interesting, challenging and easily defined as far as value potential. Maintenance, Repairs and Overhauling is a much harder way to pay the fiddler, yet it offers large dolor value potentials in virtually every territory.Maintenance should be a part of every sales strategy. It should offer balance to your sales thrust and hopefully even out the highs and lows that can be caused by manufacturing variances. In order for maintenance selling for industries to be a profitable use of salesman's time, it must be handled in the same passion as the OEM applications professionally.

Maintenance, Repairs and Overhauling customer's leads come about in the same fashion as OEM application customers. The most successful means we have found are the following....

MANUFACTURING DIRECTORY.
TYPES OF PLANT MAINTENANCE

Paper Mills.
Chemical Plants.
Petroleum Plants.
Primary Metals.
Machineries.
Cement Plants.
Sugar Industries.
Automobile Industries.
Power Plants.
Manufacture of Food Products.
Manufacture of Beverages, Tobacco and Tobacco Products.
Manufacture of Jute, Hemp and Nesta Textiles.
Manufacture of Textile Products.
Manufacture of Wood and Wood Products, Furniture and Fixtures.
Manufacture of Paper Products and Printing, Publishing and Allied activities.
Manufacture of Rubber, Plastics, Petroleum and Coal Products.
Manufacture of Chemicals and Chemical Products.
Manufacture of Non-Metallic and Mineral Products.
Manufacture of Basic Metal and Alloys Industries.
Manufacture of Metal Equipments.
Manufacture of Machineries, Machine Tools and Parts.
Manufacture of Electrical Machinery, Apparatus, Appliances and supplier parts.
Manufacture of Transport Equipment and Parts.
Other Manufacturing Industries.
Repair services.
Steel and Energy and so on.Some other areas that are less than old methods, yet have large maintenance budgets.
Hospitals.
Power Plants.
Transport Service Maintenance.

Highway and Railway and so on.. ample opportunities are there for generating sales from MRO customers in a different way depending upon various maintenance applications.
Selling maintenance products to Industries makes a salesperson more efficient and enhances his selling experiences.

WHERE DOES MAINTENANCE FIT IN THE ORGANIZATIONS?

PLANT MANAGER.

PRODUCT DESIGN (responsible for product design)

MAINTENANCE (responsible for keeping the plant running)

PLANT ENGINEERING (responsible for facility and production line design)

PLANT PRODUCTION.

PURCHASING.

SHIPPING & RECEIVING.

HOW A MAINTENANCE DEPARTMENT IS ORGANIZED?

Maintenance Operations (Foremen And Tradesmen)
Maintenance Control (Planners, Facility Engineers)
Maintenance Personnel (Training Supervisors)
Maintenance Engineering ( Mechanical Engineers, Electrical Engineers,Industrial Engineers, Instruments Engineers, Spare Parts and Standards Engineers)
Maintenance Materials ( Material Co-ordinators)
Each and every Plant regardless of size, capacity productivity and organizational structure, uses maintenance products every day.
Who in Maintenance?
Initiates The Purchase Request?
Select the type of products?
Specifies by brand name?
In maintenance today....
There is an increased demand for......
Profitability.
Maximum returns on Investments.
Engineering Reliability in facility and equipment operations.
Buying proven and performance - tested supplies and equipment.
Improved procurement standards and inventory control.
Efficient utilization of manpower and facilities.
Improved overall plant performance.