SECTOR MARKETING

Application: Strategy, Communications, Sales, NPD

The Concept

Sector marketing is an approach which involves the construction of programmes around the knowledge of a particular industrial sector. It is routinely found in business-to-business marketing, where firms, of all shapes and sizes, have “line of business” or “industry” specialists who focus on different industrial sectors. They try to understand issues within it and to customize their firm’s offer to businesses within them. This can range from, on one hand, an informal grouping of professionals across the firm who take an interest in an industrial sector to, on the other hand, a highly qualified specialist designing well researched and well funded marketing programmes. Many companies put significant investment into initiatives which demonstrate their understanding of a sector. It may involve research into trends commissioned by marketers with deep knowledge of a sector or dissemination of the deep knowledge of an expert. Merchant banks, for instance, tend to send out to senior people frequent updates on structural changes in a particular market. Many board level people appreciate these insights and read them avidly.

There are several reasons why sector marketing is valuable:

(i) Perspective

Part of the value to buyers of outside advisors or suppliers is the perspective they develop from handling the problems of several companies in the same industry sector. Business customers are often curious about how they stand when compared to peers and have an open ear to issues or trends that outsiders can spot from such deep engagement. They will even attend confidential discussion sessions and briefing programmes with competitors present if facilitated by a supplier they trust and if there are clear rules for the meeting.

(ii) Opportunity

Such a powerful position as industry expert is a very rich source of sales projects and fees. There is, however, a greater reason for deep knowledge of the sector in which customers operate. Buyers rarely know the full scope of the products or services offered by a supplier and often have latent needs, which, they think, cannot be resolved easily. They may not have even formulated them into potential projects or a request for proposal. An account manager or consultant, who understands the priorities of firms working in a sector, is likely to spot these latent needs and identify those that their firm can meet. They can then create projects, as yet unimagined by the buyer, to solve problems they identity through sector knowledge.

(iii) Empathy

Consultancies and other professional service firms tend to base their sales approach on “industry knowledge”; familiarity with the industrial sector in which the buyer works. As problem diagnosis is at the heart of the consultative approach, clients need to be reassured that the consultants with whom they work have a deep personal knowledge of their industry. So, most consultancies have a sector approach to organizing their practices. Very often there will be a “practice head” who leads a group of specialists dedicated to a business sector such as telecommunications, computing, or banking. Unlike field sales organizations, this organization is not really interested in efficiency within a defined territory. “Virtual” teams can be dedicated to an industry’s specific problem from across the world. For them, the incremental revenue that can be gained from greater industry knowledge outweighs any consideration of the number of “sales calls” that can be achieved in any one day.

As sector focus affects all methods of marketing communication (from proposals and beauty parades to PR and digital marketing) it is sensible to develop a clear communications strategy to tackle it. What are the buzz-words in the intended industrial sector? Who do they respect, what do they believe (however daft), and what progressive learning has there been in their little corner of the industrial landscape? People in financial services, technology, luxury goods, public service, and pharmaceuticals have very different views and assumptions. What are they?

There is then a very important decision to be made. Is the marketer going to adopt the technical language of the herd? Marketing agencies frequently complain that they are asked to use jargon in their work and boast about how they brought common sense and simple English to a communication piece. Yet that may not be the right thing to do. If buyers in an industrial sector are wedded to certain words and use them to represent their strategies and assumptions, then they have to be used. In fact, demonstrating that you understand, that you are part of the herd, is an important way of displaying that most important essential element of good marketing and income growth: empathy. You simply cannot develop relationships, pitch, or advise if you cannot communicate.

There is an alternative strategy though. Sometimes it is possible to shock or gain attention with one piece of communication which deliberately misuses industry language. Some organizations set out to challenge and shake up markets. In consumer markets companies as different as Virgin, First Direct, and Apple have deliberately cut a lone and different path. It is striking, too, that in nearly all the professions, respected and outstanding performers exist who are contrarians, standing out from the crowd.

History, Context, Criticism, and Development

Business leaders and marketers have distinguished between the needs of different business types for some time. As described in the business-to-business entry, for example, British technology pioneers, Boulton and Watt, focused their new steam pumps on the needs of mining, brewing, public sector sanitation, and clothing manufacture (to name but a few). It was a deliberate attempt to craft features and benefits to different business communities and would have been called sector marketing if the term had existed then.

Voices and Further Reading

• “… the starting point is the question of which industry to serve, followed by a series of decisions on customer size and purchase criteria. This methodology has been employed to great effect by, among others, IBM … they segment the market by commercial type: banking, transportation, insurance, processing industry and so on …” Wilson, R.M.S., Gilligan, C., and Pearson, D.J., Strategic Marketing Management. Butterworth-Heinemann, 1992.
• “SIC codes are used by direct marketers to segment lists and to target promotions … What the code cannot tell the direct marketer is whether a business is engaged only in that activity defined by the SIC code or whether the code represents only a primary business activity. If the latter is the case, there may be other marketing opportunities pertaining to that firm not identified by the SIC code.” Imbler, J. and Toffler, B., 2000.
• “An efficient method of estimating area market potential makes use of the standard industrial classification (SIC) system, developed by the U.S. bureau of the census. The SIC classes all manufacturing in 20 major industry groups, each with a two-digit code … we must be careful not to confuse a segment and a sector.” Kotler, P., Marketing Management. Prentice Hall, 2003 (11th edn).

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