B2B marketing can be defined as a type of commercial transaction between businesses. They involve transactions such as that happening between manufacturers and wholesalers or wholesalers and retailers. It basically refers to businesses conducted between companies and not between companies and individual consumers. This means that it is different from B2C (business to consumer) and B2G (business to government).
Typically, a supply chain involves a number of business to business transactions. This is because companies buy components as well as other raw materials which they need to use in their manufacturing processes. The companies then sell their finished products to individuals through B2C transactions.
As such, b2b marketing refers to the situation wherein one business involves in a commercial transaction with another business. Some examples of such transactions are:
#1: A company sourcing materials to be used in their production processes. For example, a food manufacturer has to buy salt from a company involved in manufacturing salt in order to make their food products.
#2: A company that requires the services of another business for carrying out its operations. For example, a company involved in manufacturing food items has to employ an accountancy organization for the purpose of auditing their finances.
#3: A business involved in re-selling of goods and services that have been produced by others. For example, a retailer has to purchase finished products from businesses involved in manufacturing different products so that they can sell it to the customers who come to their shop.
Typically, the overall volume of transactions is tremendously high in the case of B2B marketing scenario compared to that in the case of B2C marketing situation. This can be attributed to the fact that B2B transactions involve raw materials and subcomponents that go into the manufacture of a product and B2C transactions involve only selling the finished products to the end consumers.
To give you an example, a company involved in the manufacture of automobiles has to make a number of B2B transactions. They need to buy tires, different types of windscreen glasses, rubber hoses and a host of other items in order to make the end product. The B2C transaction in this case is a finished vehicle that is sold to a customer. It is a single transaction.
How Is B2B marketing Different from B2C Marketing?
There are a few differences between the process of marketing to businesses and marketing to consumers. They are as follows:
#1: The number of customers is fewer in the case of B2B marketing
The people living in a country are all consumers, but the number of businesses in the country will always be much less than its population. Therefore, the number of business customers that a business may have is significantly lower than the number of consumers of their products or service they provide.
#2: Demand for B2B marketing is derived from consumer demand
The demand in the B2B segment is to a great extent dependent on the consumer demand. To give you an example, the demand for books at a book retailer’s shop from the wholesale provider of books declines as more and more of their customers transition to digital books. A single book retailer may not be impacted much, but it can hurt the operations of the traditional book publishing industry as a whole.
#3: The transactions involved in the case of B2B marketing are complex
The buying process associated with B2B marketing is often very complicated. Even the products purchased tend to be very complex as well as expensive. For example, equipment used for manufacturing various products (sometimes they are even customized) can cost a great deal of money. In addition, prices are often negotiated between sellers and buyers because of the higher bargaining power of buying business owners.
Consumer goods are less expensive compared to B2B goods, but the selling process is more cost intensive. Marketing people will have to meet buyers several times and provide the buyer with models, prototypes or samples. A detailed assessment is essential to eliminate the risk of buying a wrong product or service.
#4: Individuals are buyers in B2C marketing model
Typically, buying decisions are taken by individuals in the business to consumer marketing set up. In the case of B2B marketing model, buying decisions are often are generally taken by a committee of people holding key positions in an organization. Each member may have a different attitude towards a brand and they come out with different reasons as to why a particular brand should be bought or not.
#5: The decision process consumes a lot of time in a B2B marketing scenario
This is because many people are involved in the buying process. Technical details are often discussed in great detail. As a result, the time taken to decide as to whether something is to be bought or not is longer in the case of B2B compared to that in B2C model.
#6: Businesses always look for long-term relationships with their suppliers
In B2B, businesses often strive to establish long-term relationships with their suppliers. This is because the business parameters may be affected if they try to experiment with different brands of products.
Different Types of B2B Buyers
The four major types of B2B buyers or consumers are:
Producers or Manufacturers and Service Providers
Companies involved in manufacturing activities purchase goods as well as services form other companies and transform them into other products. Some examples of manufacturers are Procter and Gamble, General Motors, Dell, Delta Airlines and McDonald’s.
Resellers are companies that are involved in selling goods and services provided by other companies without incorporating any material changes to the products. Wholesalers, retailers and brokers are examples of resellers. Target and Walmart are two famous retailers you must be familiar with.
Governments of countries are also purchasers of goods and services. They purchase everything from paper clips and fax machines to weapons, buildings, medical and security services and highway construction services.
Institutional buyers include non-profit organizations like the Red Cross Society, charitable organizations, churches, hospitals, civic clubs, private colleges, etc.