Marketing Differences between Large and Small Firms: A Test of the Industrial/consumer Dichotomy Hypothesis

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Marketing Differences Between Large and Small Firms: A Test of the Industrial/Consumer Dichotomy Hypothesis

Marketing scholars often distinguish between industrial and consumer marketing course offerings, journals, conferences, theories, and textbooks. But Fern and Brown [4] argue that this distinction is unjustified. They claim that no empirical support exists for this dichotomy and that it establishes artificial intradisciplinary boundaries, interferes with the collection and dissemination of marketing knowledge, and stifles the development of effective marketing strategies. The argument centers on the hypothesis that there are many differences between industrial and consumer marketing companies. Proponents of the industrial/consumer dichotomy hypothesis argue that major differences exist between the two sectors in terms of products, markets, marketing activities, and environmental influences. Proponents of the industrial/consumer similarity hypothesis maintain that there are few differences between the two sectors. Any differences between them are based on other factors, such as company size [3,19].

Classification of marketing phenomena is important because it is often the first step in theory development and practice. According to Hunt [6], usefullness of the schema outweighs all other criteria for evaluating classification schemata. The purported utility of the industrial/consumer distinction is that different market activities should be developed for different types of products, firms, and market segments. Those who support the opposing hypothesis argue that other factors such as company size may be more important than the industrial/consumer distinction.

THE INDUSTRIAL/CONSUMER DICHOTOMY

The definitional differences between industrial and consumer marketing tend to emphasize company action, product, and/or market related differences. Consumer goods marketing includes business activities involved in the flow of goods and services destined for personal, ultimate consumer use. The good and services are supposed to be in such a form that they can be consumed without further processing. Industrial goods marketing involves business activities that deal with the flow of goods and services used in producing consumer goods, other business or industrial goods, and/or in facilitating the operation of the business. These definitions capture the essence of themes common to the dichotomy [2, 7, 8, 11, 17, 18].

Proponents of the similarity hypothesis maintain that small families and large business organizations make group decisions on large purchases in a similar fashion [14, 15, 21]. Wind [20] maintains that most consumer segmentation research can be applied to industrial market situations. In terms of theory development and strategy creation, perhaps it is best to think of differences in the dichotomy in terms of the nature of the selling firm's marketing activities, environmental influences, and the size of the firm marketing the products.

PREVIOUS RESEARCH

Differences in industrial and consumer markets imply a need to emphasize different marketing actions and to be concerned with different environmental variables. For instance, the industrial market has large purchases per customer in more geographically concentrated areas [12, 13]. Demand in the consumer market tends to be less volatile and more elastic [16]. Industrial goods are more likely to be purchased by fewer buyers who are professionally trained purchasing agents [11]. They are often cautious, deliberate, sophisticated, and product-knowledgeable.

Further, industrial products are usually more technically complex and require more servicing than consumer products [1, 16, 18]. More information is searched for, and the actual purchase is seen as being riskier in the industrial market [5, 13]. Prices are often negotiated in the industrial market, and market mix combinations typically differ [1, 2, 11, 16]. …