Introduction to Industrial Marketing and Organisational Procurement

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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
OrientationFocusCharacteristics and AimsEavesdroppingMain era (generalized)
USAWestern EUEastern EU
ProductionManufacturing*Increase production
*Cost control and reduction
*Make profit through volume‘Any colour you want – as long as it's black'Up to 1940sUp to 1950sUp to
1980s
ProductGoods*Quality is all that matters
*Improve quality levels
*Make profit through volume‘Just look at the quality of the paintwork'Up to 1940sUp to 1960sLargely omitted SellingSelling 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 - 19501950 - 1960Early 1990s MarketingDefining 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...
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