B2B vs. B2C: How Business Marketing Differs from Consumer Marketing
B2B, Business to Business Marketing, refers to a transaction happens between two organizations. It is a business conducted between business rather than customer and individuals. For instance, sales happen between a manufacturer and wholesaler. It relies on the same basic principle of consumer marketing, but these principles are executed in different ways.
A typical supply chain involves multiple business to business transactions, as companies purchase components and products such as raw materials, for the use in manufacturing process. Finished product can be sold to individual through wholesaler, retailers.
Marts are perfect example of the B2B. They act as middlemen between a consumer and wholesaler. They purchase goods from wholesaler at low prices and add their profits and sell to the ultimate customers.
B2B Relationship Development- It is really important to have a good relationship with the client to have a nice B2B connection. These types of transactions require planning to be successful. It mainly depends on the company’s account management personnel to establish business client relationship. It should be nurtured prior to the sales, for successful transactions to take place. Conferences and trade shows also helps the businesses in building awareness of the products and services it provides to other business.
B2B E-Commerce- Since internet marketing currently is at its top level. Company’s websites allow interested parties to check out the products and services and their features and also allow them to initiate contact. Specialized online directories providing information about particular industries, companies and the products and services they provide also facilitate business to business transactions.
Business to Business Advantages-
a) Easier to Convince- First advantage of B2B marketing is that it is easier to convince the businesses. Company has to deal with the companies not the customers, so it is easier to convince a single or group of company about the product.
b) Higher sales transaction- When a company makes a transaction with a company, it generally sells the product in high quantity. It is always better to sell quantity of 1000 of a product to a single company rather than to 1000 customers.
c) Brand image and customer loyalty- Another advantage of the B2B marketing is that it is easier to create Brand image and customer loyalty. Once a business becomes your customer, it will be there with you for a longer period of time if customer service will be good.
d) Stability- B2B marketing enjoys stability. It is not like customers, whose needs and wants keep on changing with the environment. And companies also come under a contract of one year or more than that. Contract generally has guarantee pricing and terms.
a) Limited Market- It is one of the biggest disadvantages of B2B marketing. Market available for business dealing with other business is very limited. Companies to which a company can sell its products are very few as compared to individual consumers who are in large number.
b) Bargaining Powers- Whenever a company sells its product to other companies. It has to give discount on the products as generally buying companies purchase the items in bulk. Plus the bargaining powers are strong in comparison with customers.
c) Uncertain and Time consuming- Another limitation of B2B marketing is that it is a time consuming process. Various people are involved in the transaction and sales cannot be done overnight. Plus it is not certain that even after employing this much of time, sales will be made.
B2C, Business to Consumer, refers to the transactions happens between business and customer. It focuses on selling to an individual, and market their products for personal use.
Many companies have company and individual both as buyers. B2C cycle in comparison with B2B is shorter. Consumers are encouraged to buy the product immediately.
Business to Consumer Advantages
- a) Market not limited- Market in the B2C is not limited to an extent. It is having a large market. So, the scope of the marketing also increases.
- b) Effective process- It is not a time consuming process in comparison with B2B model. Consumers quickly make decision and purchases or drops the product.
- a) Low sales transaction- Like B2B, business cannot make sell the product in bulk to the customer.
- b) Stability- Customers’ tastes, preferences changes and sometimes it become difficult for the company to manage with this.
- c) Convincing- It is not easy to convince the customers since they not only think about their satisfaction but also the benefits they derive from the product. So company has to put a lot of time in convincing them.
- d) Costly- It is a costly process. Business has to incur huge costs in the advertisement of the product to make the customer aware about the product and its benefits.
Difference between B2B and B2C
a) Marketers can use industry jargon, technical words to excel in the B2B marketing but it cannot happen with B2C marketing because customers do not have knowledge about the technical words that are used in the business marketing field.
b) Customers purchases are mostly driven by their needs, wants and their desire. But it is not the case with the companies. Business seeks expertise and efficiency but customers are carried away by typically emotional feature.
c) Generally it happens in the B2B business that fewer customers are there in comparison with B2C. Area of the business is large in B2C.
d) Purchasing process differs in both the model. In B2C, purchasing process is more complex. Decision making group includes members from financial, technical, business departments. But in B2C, customers purchase the product for their own use. So it is not a complex and lengthy process.
e) In B2C, price of a single product is same for all the customers but in B2B, prices may vary depending on the relation, bargaining power and ordering quantity. When a firm makes bulk purchasing, it expects the selling firm to give them heavy discounts.
f) Lengthy content tends to work for B2B since a brand or business has to prove its expertise and give its target audience a reason to buy in. Consumers tend to prefer something short and snappy, especially for lower-priced B2C products.
g) B2B marketers have a longer chain of command to deal with. It is not easy to get the sales from the business. It always requires time. There is a time gap between pitching the product and getting the sales. Since a product purchasing decision has to go through various departments’ approval, so it becomes difficult sometimes. On the other hand in B2C, companies need to slightly influence the customers via other or through recommendations and the sales will be done.
h) A contract for B2B purchases tends to last for months or even years. But it is not the case with B2C. B2C cycle can be as short as few minutes.
i) Often, the largest problem that B2B marketers have is a lack of content and time to create it. This differs from B2C marketers who would rather have a bigger advertising budget and other ways to spread the word about their products. Naturally, this has a significant effect on tactical executions.
j) Customer loyalty and brand image in the case of B2B is created by the personal relations with the business. And in case with B2C, brand image is created by satisfying the needs and wants of the customer.
These are the differences between business with a company or an individual. Company has to make sure that they consider all these difference during the process of making marketing plan of their product. Marketing plan for consumer and business will be totally different.
Business marketing is a marketing practice which is done by the individuals and corporate bodies. Corporate bodies include companies, government and institutions. Business marketing allows the firm to sell to different organizations that resell, uses in their product or which supports their works.
Unlike a consumer, who makes a purchase based on his or her individual needs and desires, businesses appoint individuals who act on behalf of the organization.
Business and Consumer Market
Business market’s demand is dependent on the customer’s demand. If a customer won’t demand a product, business would not produce the product. If production doesn’t happen, then requirement of other company’s product is nil. Business markets do not exist in isolation.
Hundred of business demand rises because of a single customers demand. For example- A customer needs a laptop. Then demand for motherboard, battery, hardware, parts will also be increased.
Increase in the buying power will increase in the business demand because if there is an increase in the purchasing power of the consumer then the demand for goods will also be increased.
a) Producer Markets- Producers buy goods and services to make them a sellable product, which ultimately be sold to the consumers for the purpose of making profits. Example- Manufacturer, Construction Companies etc.
b) Reseller Markets- In this market, reseller buys goods and services from the producer and ultimately sells to the consumer. In this market, product modification is not done. They sell the same product they have received from the manufacturer. Reseller adds their margin in the product cost. Example- Wholesaler, who buys goods from the manufacturer and sells to retailer by adding their profit in their cost.
c) Government Markets- A government market is a market where the consumers are federal, state and local governments. Governments buy the same types of products and services as private sector consumers, plus some more exotic products such as aircraft carriers, fighter jets, tanks, spy satellites, and nuclear weapons. They usually buy the goods and services through bidding process.
d) Institutional Markets- A market consisting of schools, universities, hospitals, charities, clubs and similar organizations which buy goods and services for use in the production of their own goods and services.
Managers have to deal with different situations when they sell directly to businesses. The buying center of a business can complicate how a sale occurs. Buying center refers to each and every individual who is responsible for purchasing decision. It depends on company to company, how many buying centers are available. If the size of the organization is small, then the center will be small and vice versa. Many a times, marketing and engineering department of the firm affects the decision making up to a great extent. They are one of the biggest influencers.
There are three different types of re-buys:
a) New buy- In this type of situation, a company requires purchasing of a product for the very first time. Business sellers have to be very good in convincing the buyers and they should also provide a competitive argument to use their product line. This type of situation takes a longer time as this requires the buyer to think, analysis and then make decisions.
b) Modified Re-buy- In this type of situation, the product has already been purchased by the individual or organization but some elements or the supplier gets changed. In this situation, buyer wants to modify the features, price, terms or suppliers. In this case the “in supplier” has to protect his account whereas the “out supplier” sees it as a better offer and gain some business. It is generally less time taking process and new product introduction from the earlier version always creates a modified re buy situation.
c) Straight Re-buy- It is a situation in which regular supplies of product is purchased from a supplier who is on approved list. In this situation, suppliers make an effort to maintain product quality and service quality and automate reordering to save time. For a supplier to get successful in this situation has to offer something new or exploit dissatisfaction with a current supplier. He can then get a small order and enlarge their share over time.
For example- Office supplies, furniture, etc.
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