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Chapter 14 – Products and Services for Businesses
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Chapter 14 – Products and Services for Businesses
Teaching Objectives
The overall objective of this chapter is to illustrate how the differences in the motives between buyers of
consumer products and industrial goods and services place different emphasis on the marketing of these
products. It is important to stress that much of what has been discussed in Chapter 13 is relevant for
industrial goods and services, but that emphasis is affected by the inherent nature of industrial goods. The
teaching objectives are to:
1) Emphasize a fundamental difference in consumer demand vis-à-vis industrial demand—the
inherent volatility of the latter.
2) Explore the relationship between a country's stage of economic development and demand for
industrial goods.
3) Stress the growing importance of technology and quality in successful product development.
4) Illustrate the important role of relationship marketing in maintaining competitiveness in industrial
goods marketing.
5) Examine industrial trade shows as an important means of promotion.
6) Present the major issues in marketing business services globally and the affect of the fundamental
characteristics of business services on marketing.
Comments and Suggestions
1. Perhaps the most important point to make regarding the marketing and development of industrial
products is the inherent volatility of derived demand. Demand for capital equipment is particularly
susceptible to huge fluctuations in demand.
2. The growing importance of technology and quality in successful industrial goods marketing cannot be
overstressed. The level of technology reflected in the product, compliance with standards that reflect
customer needs, support services and follow through, and the price relative to competitive products
are all part of a customer’s evaluation and perception of quality.
Lecture Outline
I. The Volatility of Derived Demand
II. The Industrial Product Market
A. Stages of Economic Development
B. Technology and Market Demand
C. Attributes of Product Quality
D. Quality is Defined by the Customer
E. Service and Replacement Parts
G. Universal Standards
H. ISO 9000 Certification—An International Standard of Quality
Chapter 14 – Products and Services for Businesses
III. Promoting Industrial Products
A. Industrial Trade Shows
IV. Marketing Services Globally
A. Services Opportunities in Global Markets
B. Entering Global Markets
1 Client Followers and Market Seekers
2. Entry Modes
D. Cultural Barriers and Adaptation
V. Relationship Marketing and Industrial Products
Discussion Questions
1.
Define the following terms and show the significance to international marketing:
2. What are the differences between consumer and industrial goods and what are the implications for
international marketing? Discuss.
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3. Discuss how the various stages of economic development affect the demand for industrial goods.
Perhaps the most significant environmental factor affecting the market for industrial products is the
degree of industrialization. Although generalizing about countries is a dangerous practice, the stage of
economic development of a country can be used as a rough gauge of market characteristics for
industrial goods. Regardless of the stage, demand for industrial goods exists, but different levels of
machinery and other industrial goods necessary for the processing of the raw materials prior to
manufacturers of consumer goods which have relatively large mass field. The demand for industrial
achieved the highest level of industrialization, there is still a market for industrial products because a
Chapter 14 – Products and Services for Businesses
4. “Industrialization is typically a national issue, and industrial goods are the fodder for industrial
growth.” Comment.
The main points in the solution of this problem center around the desire of the underdeveloped
countries to industrialize. This industrialization is not a haphazard, natural growth, but a planned
5. “. . . The adequacy of a product must be considered in relation to the general environment within
which it will be operated rather than solely on the basis of technical efficiency.” Discuss the
implications of this statement.
The statement really refers to a major problem faced by many U.S. marketers in that the industrial
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6. Why hasn't the United States been more helpful in setting universal standards for industrial
equipment? Do you feel that the argument is economically sound? Discuss.
7. What role do service, replacement parts, and standards play in competition in foreign marketing?
Illustrate.
Service, replacement parts, and standards are an important aspect of competition in foreign
8. Discuss the part industrial trade fairs and trade centers play in international marketing of industrial
goods. What is the difference between industrial trade fairs and trade centers?
Chapter 14 – Products and Services for Businesses
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9. Describe the reasons an MNC might seek an ISO 9000 certification (note: in all discussions of the
basic ISO 9000, the instructor/students may want to include the updated 9001:2015, although
concepts remain relatively unchanged).
One research report examining the purchase decision variables of importer managers found that
10. What ISO 9000 legal requirements are imposed on products sold in the EC? Discuss.
11. Discuss the competitive consequences of being ISO 9000 certified.
A strong level of interest in ISO 9000 is being driven more by “marketplace” requirements than by
12. Discuss how the characteristics that define the uniqueness of industrial products lead naturally to
relationship marketing. Give some examples.
Two basic factors account for greater market similarities among industrial goods customers than
Chapter 14 – Products and Services for Businesses
The characteristics that define the uniqueness of industrial products discussed above lead naturally to
relationship marketing. The long-term relationship with customers which is at the core of relationship
marketing fits the characteristics inherent in industrial products and is a viable strategy for industrial
13. Discuss some of the more pertinent problems in pricing industrial goods.
Pricing industrial goods in a foreign market is a problem which domestic manufacturers find to be
shaded oftentimes with political overtones. That is, political rather than economic reasons may often
14. What is the price-quality relationship? How does this affect a U.S. firm's comparative position in
world markets?
15. Select several countries each at a different stage of economic development and illustrate how the
stage affects demand for industrial goods.
Library project.
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16. England has started the process of shifting from the inch-pound system to the metric system. What
effect do you think this will have on the traditional U.S. reluctance to such a change? Discuss the
17. Discuss the importance of international business services to total U.S. export trade. How do most U.S.
service companies become international?
18. Discuss the international market environment for international business services.
Service firms face most of the same environmental constraints and problems confronting merchandise
traders. Protectionism, controls on transborder data flows, competition, and the protection trademarks
Chapter 14 – Products and Services for Businesses
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