Business to Business Marketing: The process of buying and selling goods or services to
be used in the production of other goods and services, for consumption by the buying
organization, or for resale by wholesalers and retailers. The distinction between a B2B
and a B2C transaction is not the product or service itself; rather, it is ultimate purchaser
and user of that product or service.
B2B firms focus their efforts on serving specific types of customer markets to create
value for those customers.
Four types of B2B markets:
Manufacturers or Producers:
Manufacturers, for example buy raw materials, components, and parts that allow them to
manufacture their own goods. For example, The Clorox Company requires a vast variety
of inputs to manufacture more than 150 earthfriendly, natural personal care products
under the brand Burt’s Bees., including plastic for the product containers, perfumes, and
beeswax. To match the rapidly growing demand for their products, Clorox must manage
its suppliers and transportation intermediaries closely to minimize any inventory
shortages or overages, as well as to ensure ontime delivery to the more than 30,000 retail
outlets in various countries hat carry their products. Thus, not only does manufacturer
purchase products from other firms to make its products, but it also works with it
corporate partners, such as transportation companies and retailers, to facilitate the
movement of the raw supplies to the factory and finished products to the stores. Many
B2B companies are demanding, as a condition for doing business, that suppliers
demonstrate social responsible by putting in place polices and practices to reduce their
Resellers: Marketing intermediaries that resell manufactured products without
significantly altering their form. For instance, wholesalers and distributors buy jeans from
7 For All Mankind and sell them to retailers (a B2B transaction), and retailers in turn
resell those same jeans to the ultimate consumer (a B2C transaction). Wholesalers,
distributors, and retailers are all resellers.
Institutions, such as hospitals, educational organizations, prisons, religious organizations
and other nonprofit organizations, also purchase all kinds of goods and services for the
people they serve.
The bulk of the federal government’s buying of goods and services is done centrally by
Public Works and Government Services Canada on behalf of more than 85 departments,
agencies, Crown corporations, and Special Operating Agencies. Information about
government buying can be obtained from Business Access Canada or from MERX.
MERX is the most complete source of Canadian public tenders, private tenders, U.S.
tenders, and private sector construction news available in Canada.
Key Challenges of Reaching B2B Clients
The first challenge is to identify the right persons or decision makers within the
organizations who can authorize or influence purchases. Second, marketers must
understand the buying process of each of its potential clients. The third challenge is to identify the factors that influence the buying process of potential clients. For example,
institutional buyers, such as nursing homes and universities, tend to have relatively small
budgets and therefore seek the best value when buying products and services for their
organizations. If they had to choose between two suppliers, they may choose the one with
the lower price. Governments, on the other hand, make much larger purchases, but their
buying processes must not only satisfy strict policy guidelines and directives set by the
government, but also meet international trade rules set by the World Trade Organization
(WTO) or North American Free Trade Agreement (NAFTA). Private sector companies,
such as manufactures, producers, and resellers rarely, if ever, disclose their buying criteria
or buying process. They are likely to engage in reciprocal buying, a situation where two
companies agree to buy each other’s product as appropriate.
Differences between B2B and B2C Markets
In B2C markets, consumers buy goods to satisfy their own individual or household needs
and are heavily influenced by price, personal tastes, brand reputation, or personal
recommendations of friends and family. In B2B markets, demand for goods and services
is derived from B2C sales in the same supply chain.
Derived demand: The linkage between consumers demand for a company’s output and its
purchase of necessary inputs to manufacture or assemble that particular output. For
instance, the demand for raw denim used to make 7 For All Mankind jeans is derived
from the sale of the jeans to consumers. Thus, demand for raw material and semi finished
goods purchased by business firms tend to fluctuate more, and more frequently. Demand
in many business markets is inelasticthe total demand for goods is not affected much by
price changes in the short run. In a B2B market the number of business buyers is
substantially fewer than in B2C markets, and the business buyers are more concentrated
in big cities, towns, and industrial areas. Also, the size of the orders are substantially
larger than consumer purchases.
In B2B markets, the products ordered are primarily raw materials and semi finished
goods that are processed or assembled into finished goods for the ultimate consumers.
For example, Dell orders all the computer components from different suppliers and then
assembles the computers before shipping to the final consumer. In certain B2B markets
(e.g., aerospace, medical, pharmaceutical) the products are very technical and
sophisticated in nature and must conform to technical standards specialized by the buyer.
Thus, the raw materials, components, and semifinished goods undergo rigorous testing
before shipping. Technical services and financing assistance are important aspects of B2B
buying. Companies such as Bombardier often provide vendor financinga practice where
a company provides its customers with a loan that is used to buy goods from the
company. In B2C markets, consumers buy finished goods for their own personal use.
Buying Process Characteristics
For routine purchases or smalldollarvalue purchases, only one or few individuals within
a department or the company may be responsible for the buying decision. However, for
purchases of highly technical or complex products, the buying effort is much more
structured, formalized, and professional. Most people are usually involved in complex
buying decisions. They are usually technically trained, and qualified professionals, and
they represent different interests within the organization. The group of people involved in the buying decision is often referred to as the buying center. Most companies have formal
policies and procedures to guide buying decisions that must be closely followed by the
people involved in the buying decisions. Examples of such procedures include rules
governing competitive bidding, negotiated pricing, complex financial arrangements, etc.
Another major difference between B2B and B2C buying lies in the nature of the
relationship between the firm and its suppliers. Generally, the buying decision is based on
negotiations, which for complex purchases could be quite extended. The negotiated
contract normally covers a range of concerns, including price, delivery, warranty,
technical specifications, and claim policies. In B2B markets, buyers and sellers strive to
develop close relationships with each other and so will often provide help or advice to
ensure a winwin situation for both parties. In addition, some firms may engage in
reciprocal buying arrangementsa practice where two firms agree to buy each other’s
products and services. Two such consequences are that it excludes other vendors from
participating in the buying process and may limit the firms to each other’s products.
Marketing Mix Characteristics
Salespeople are an important component of the communications mix for B2C
transactions such as sales of real estate, insurance, jewellery etc. On the other hand, in
most B2B sales, the salesperson is an integral component of the