B2B and B2C: What Do They Mean?

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Marketing strategies for consumer products can be complex and are typically multifaceted; businesses will promote their products on factors including price, quality and emotional appeal. In the market for business to business sales, advertising sometimes takes on a different tone. Business to business marketing (or B2B marketing) involves promoting products to an enterprise buyer set. Although the tone of B2B marketing often differs from business to customer marketing (or B2C marketing), many of the basic principles of marketing remain the same.

What are B2B markets?

To understand which markets are B2B and which are B2C it is useful to consider a production chain. The production chain ends with a business to consumer sale and involves a number of preceding steps to create a product that customers value. For example, craft beer bars and stores sell beer to consumers. To sell beer to consumers, a number of B2B markets are engaged. Bars and retailers purchase fresh beer from breweries who, in turn, purchase brewery inventory such as hops and grain from growers who also rely on downstream suppliers. All of the transactions occurring before the ultimate consumer purchase take place in B2B markets. For this reason, the market for B2B sales is almost as large as the market for consumer products.

How does B2B differ from B2C?

B2B purchasers are generally thought of as more ‘rational’ than traditional consumers. B2B purchasers tend to purchase products solely on economic factors, such as price, expected life and productivity. This is not to say that traditional consumers are not rational actors – but rather that B2B purchasers are unlikely to take hedonistic factors into account when making a purchasing decision. Although B2C marketing often involves competing on price with similar products in the market, B2C advertising often focuses on factors such as lifestyle compatibility, fashionability and emotional appeal.

Although B2B marketing may be more straightforward in terms of content, it is worth noting that the decision making process preceding a B2B purchase is likely to be more robust and complex than the process undertaken by most consumers. Very large businesses often have entire teams dedicated to procurement, with major decisions requiring board or executive level sign off. A B2B marketer has to cater to a wide audience; for example, a firm marketing enterprise-level IT hardware should tailor their marketing to IT professionals, procurement specialists and (ideally) to business leaders. Although all of these stakeholders will be aiming to make a ‘rational’ purchasing decision, it is worth noting that each stakeholder will bring a different perspective to the procurement process. For example, IT professionals may be concerned with security and user experience, while the procurement team may have a better handle on the organisation’s budget. For large transactions, business leaders may consider a purchase from a strategic point of view. On the other hand, B2C marketing only needs to appeal to key stakeholders within a household or family, generally a much smaller and less diverse set of people.

Personal Relationships are Critical

Somewhat strangely, B2B marketing is characterised by very strong personal relationships between sales staff and stakeholders within consumer businesses. Although B2B marketing involves marketing products on a ‘rational’ basis, enterprise purchasers tend to be less flighty than consumers. The role of an effective B2B marketer is to be a near instant source of information for B2B consumers. Rather than convincing customers to want a product (as is the case in B2C marketing), B2B marketers must compete on responsiveness and information as well as price. Using the brewery inventory example, wholesalers are likely to gain an edge over their competitors by having an in depth knowledge of the flavour, balance and stability effects of particular hops. Although B2B consumers are making a rational purchasing decision, being able to engage with passionate brewers on a personal level is essential to developing credibility and building trust.

Now that you’ve understood about B2B and B2C customers, see how pricing affects your customers’ perception of quality.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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