What is business to business marketing?

B2b is business to business marketing and sells. Most products sold do have b2b market but not the b2c market. E.g Spark plugs are sold by manufacturers to dealers or service and not to direct bikers which are direct consumers.  A6 chips are sold to IPhone manufacturers which in turn used by millions of customers worldwide. Hence b2b marketing is different than b2c marketing. We will discuss various aspects of business markets to understand why business marketing is different.

business to business marketing

Business markets do have a team or unit which decides what to buy, when to buy, where to buy from, what should be pricing, what should be organizational buying process, what should be specifications and many other details. As business products are complex so does the buying decisions. This team is called as Decision making Unit or DMU.

B2b markets are different than B2c markets in various ways which are as follows:

  • Business buyers buy for
    • Produce other things ( Food processing, Coal purchased to generate power)
    • Resell (Spare parts, Wholesale market, distributors)
    • To become part of their good (Spare parts, LCD screens, Chips)
    • Replace, repair or modify existing product (Spare parts of bike)
  • Business products are different
    • Business products are technically complex ( ERP software, Power generators)
    • Many time these are customized (Banking software, ERP software, Server configurations)
    • Products have complex service requirements (Banking software, Nuclear plant supply, Siemens healthcare systems)
    • Products are differentiated (GE get engines)
    • These might be part of larger assortment (Spare parts)
  • Business products are classified¬† differently than b2c products
    • Raw materials (coal, lime, iron ore)
    • Consumables
    • Capital equipment (Heavy machines)
    • Systems ( ERP systems)
    • Spares and processed parts (Generator spare parts, Machine spares)
    • Services (Annual maintenance contracts)
  • Size and markets of b2b firms
    • b2b customers and sellers are small to large organizations (SME, Enterprises)
    • These firms are concentrated in industrial areas of the state (e.g MIDC in Maharashtra, SEZ)
    • Number of customers are very small if compared with b2c customers
  • Demand of business markets
    • These are based on economic condition (Less orders in Recession)
    • Based on derived demand (e.g When people buy more Mobile phones, demand for chips, lcd screens, battery will increase)
    • Joint demand (Builders also need cement, bricks, sand, color etc)
    • Inelastic demand (Power generation plants needs coal irrespective of change in price)
    • Fluctuating demand (Demand for cars increase at end of financial years so does for material required for it)
  • B2b buying process
    • Here sellers visit buyers while its vice versa in b2c market (Personal marketing)
    • Buying process is very elaborate and involves many entities in the company (Requirement gathering, Specification writing, tendering, shortlisting, negotiation etc)
    • Process is predominantly rational (No emotional attachment to decisions)
    • Process cycle time is large ( All DMU in involved)
    • Technical expertise are needed( to decide specification which are part of DMU)
  • Communications
    • More personal selling (one to one discussions)
    • More information is conveyed (catalogs, brochures etc)
    • Communication continues even after purchase
    • Sales to Spend on ads ratio is lower
  • Terms and conditions
    • Terms are very much detailed and includes
      • Delivery terms (FOB, C&F etc)
      • Payment terms (Credit period, installments)
      • Service, Installation, warranty
      • Cost breaks ups
      • Differentiated pricing
  • Value proposition
    • Products values in business markets lies in
      • Payment terms
      • Spare parts availability
      • TCO (total cost of ownership)
      • Low maintenance
      • Resale value
      • Service points

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