Business To Business Markets V/S Consumer Markets

Business-to-Business Markets V/S Consumer Markets

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Business-to-Business Markets are very different from Consumer markets, as different as a proverbial chalk and cheese. The differences are so deeply embedded that even business strategies are formalized accordingly. To add my two-bit of pseudo-wisdom here, the entire outlook of a B2B market is quite different from a consumer market.

Say, for instance, the shirts we buy. What do you think? The shirts arrive at the shop right away. No, there is a process involved, a value-chain that starts with a consumer demand, and from here on dozens of business processes or services take off. In case of shirt, first the cotton or fibre is woven into a cloth, and then it is turned into a garment, then packed and distributed through various levels, before it is finally made available to the end consumers. The process involved somewhat reads like this: companies sell cotton to merchants, who then sell it to spinners, who sell it to weavers and finally to garment makers, so on and so forth. Unlike in the consumer markets, here the buyers don t buy for sheer pleasure, but their ultimate objective is to add value to the products and then move the products down the value chain, before they reach the general public.

In other words, b2b marketing is all about meeting the demands of businesses.

There are about ten major factors that make business-to business stand apart from consumer markets. The ten factors are described in detail below:

1] Complex Decision Making Units Govern B2B Markets

It has generally been observed, in a traditional household, be it Indian or otherwise all crucial decisions are the preserve of the prominent few. Even when it comes to purchasing items such as food, clothes or cigarettes, a chosen few in the family, call the shots. Akin to a conventional household, even in a business-to-business world there is a Decision Making Unit (DMU) that presides and decides over matters. This could be a highly complex unit or has the potential to be so.

Say, for instance, purchase of low value products, any junior level employee could be engaged, but when it comes to buying a plant considered crucial for company s growth, many more people get involved and decisions are made over a protracted period. Nonetheless, DMU at any given point of time is said to have a short-term existence, expert s drop-in, give their vital suggestion and then back-out. In fact, people involved in DMU keep changing due to high attrition rates.

All these aspects have implications on Business-to Business markets. The target group for B2B communicators is vague, in the sense that they keep changing, comprising individuals with different tastes and motivations. Buyers look forward to a good deal. Production Managers desire high throughput. Health and Safety Executives wish to keep the risk low. Moreover, every person, who is part of the DMU, will bring along with him/her psychological and cultural baggage. All this brings to the fore some interesting variations, which eventually influences the selection of products and suppliers.

Business-to-Business purchases can be divided into four different categories according to the financial value and business risk involved.

Low-risk, low-value purchases- More often than not, a junior person is involved, because there is hardly any financial or business risk involved. To put it in other words, only little thought process goes into decision making.

Low-risk, high-value purchases- Sometimes purchase of raw materials calls for a combination of technical and marketing personnel. Even senior people, like board members have to be roped in. This complexity is imperative, just to ensure that cost is minimized without impacting the quality aspect. Purchasing personnel s may be the chief decision makers, who would prefer to look at it transaction-by-transaction basis, under the supervision of technical employees.

Low value, high risk items- Say, for instance, the purchase of office-insurance should comprise a mix of specialists and purchasers. There is risk in the product, and not in the price involved and each transaction carried out tends to be unique, so the presence of expert, mainly an in-house legal expert would be important whenever a deal is carried out.

High value, high risk purchases- Here large numbers of decision makers are involved, evaluating a large range of purchase decisions. For instance, for purchase of plant equipment, a CFO, R&D Director, Production Director, Purchasing Director, Head of Legal Department, CEO and number of top management department heads are involved.

The Role of a Business-to-Business marketer

The role of a BtoB marketer assumes crucial importance because he/she is facing a very knowledgeable buyer. So he/she should be well-prepared in advance and should demonstrate high-level of competence in all the interactions with the target audience. Not just the product knowledge, the B2B marketer should have all the necessary technical and other back-up information that the buyer will seek during purchases.

The marketer should also display due diligence and patience when negotiating with the Decision Making Unit, addressing all their fears of finance, production, technical and other decision-makers.

2] B2B Buyers adopt a more logical approach

There is a yawning gap in the approach of B2B buyer vis- -vis a conventional consumer. We believe that a B2B buyer leaves his emotional baggage at home, as opposed to a normal buyer.

The normal buyer loves to show off. He spends wildly as per his whims and indulges in unnecessary expenditure. For instance, he may spend $3000 on a jacket, which is high on glamour quotient, instead of opting for a $200 counterpart -which better serves the purpose- available at a neighborhood shop. A conventional consumer, doesn t think twice before shelling out $1000 for a season ticket at a football club that inevitably turns out to be a disappointing experience every Saturday, or spends $6.50 on a packet of cigarettes, and invite all health problems.

The fact is that consumers being less-informed and less accountable perform tasks to please themselves; this is not the case with B2B buyers. B2B buyers have ROI (return on investment) on mind. They buy what they need and not what they want.

The Role of a B2B Marketer

The logical approach of B2B buyers help B2B marketers in a big way, as they have to simply focus on designing and manufacturing good products and delivering them on time and at a good price.

All said and done, however, the job of a B2B buyer involves loads of risks. B2B buyers have a lot at stake, his reputation, his credibility. No B2B buyer will buy an unreliable product or service, as emotional issues such as trust and credibility are absolutely crucial for him. A B2B buyer places greater emphasis on his brand, and reputation, which conveys reliability and consistency of his products.

3] B2B Products are Complex

Similar to complex Decision Making Units in business-to-business markets, B2B market products are typically complex.

When it comes to purchase of a consumer product, it can be carried out very easily, without giving much thought to the finer aspects, however the opposite is true when it comes to purchase of industrial products. Industrial Products are largely custom-made and calls for high-level of fine-tuning, while consumer products come in a largely standardized format. Even complex consumer products can be chosen by following fairly simple parameters. Say, for instance you may buy a car going by its looks and speed. You might buy a stereo, merely because you like its sound quality.

On the other hand, even simple industrial products have to go through expert examination and modification before buying in B2B markets. For example, a turbine manufacturer or a commercial website designer won t buy a product just by its look and feel. Instead the purchase of turbine will involve a whole host of technical, productivity and safety issues, whilst the choice of website will depend on various parameters like its interactivity with users and its capability to draw potential clients via search engines.

Buyers of consumer products are hardly interested in technical details of the products. Majority of the car buyers, for instance, are only concerned with the speed of the car and how it will attain the maximum required speed. Likewise, the buyer of Chocolate bar is far more interested in knowing the taste of the chocolate than in the technology and ingredients that are involved in its making. So naturally, consumer products are often marketed in ways that are superficial.

Car Manufacturers sometimes may completely turn a blind eye to cars performance; instead they show interest in the non-physical attributes like sex-appeal of their products, while, Business-to-Business campaigns provide the target audience with specific factual information. A company, while buying vehicles for its sales force is unlikely to consider the sex-appeal of the car. In fact, most of the target companies are well-informed about the product they deal in, so the role of promotional material in a BtoB business is merely confined to providing product specifications.

The Role of Business-to-Business Marketer

The basic quality every B2B marketer should develop is to gather complete information on the technical aspects of the product or services he is selling. Not just technical details, the marketer should have in-depth information on aftersales services, problem resolution, client management etc. B2B sale is typically a technical sale . So salespeople in business-to-business markets are considered extremely experienced and technically oriented.

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Business-to-Business Markets V/S Consumer Markets