B2B Marketing: Understanding the Business Market
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**The Definition of Business-to-Business Marketing**
Business-to-business marketing (or B2B marketing, as it is commonly known) involves the sale of one company’s product or service to another company.
**How Business-to-Business Marketing Differs from Business-to-Consumer Marketing**
The key distinguishing feature of a business-to-business market is that the customer is an organization rather than an individual consumer.
The nature of the product is not a determinant to distinguish between consumer market and business market.
Business-to-business markets are characterized by a higher concentration than business-to-consumer markets.
B2B markets are less price-elastic than B2C and might even end up more commonly having a reverse elasticity.
Dimensions: Market structure, buying behavior, and marketing practice.
**Characteristics of Business Market Customers and How They Buy**
Companies are not self-sufficient; they need access to the products (capabilities) of other companies to support their own activity.
Buying behavior factors:
- External dynamics
- Macro environment
- Sector influence
- Internal factors
- Organizational characteristics
- Group and individual forces
Organizational characteristics: The organizational factors discussed here inform the purchasing behavior of managers in customer companies.
A. Nature of the Company Business
a) Unit Production
The design and supply of products that are tailored to specific customer requirements. The complexity, scale, and bespoke nature of such products mean that purchasing lies within the remit of the team assembled to oversee the project, with managers that are responsible principally for the technical content of the final product assuming a key role in dealing with suppliers.
b) Mass Production
Involves the design and supply of high-volume, standard products. Operational efficiency and a low-cost base are central to the ability of mass production companies to compete. To maximize efficiency, those companies will generally have a high degree of inflexibility and will require the entrants to be precise, regular, and consistent. The companies would expect their key suppliers to adjust logistical and administrative procedures to suit their requirements.
c) Process Production
Does not assemble finished products; rather, its business centers on the processing of raw materials for use in other supply chains. The company will consume high volumes of necessary materials, with those that have a standard specification being sourced via commodity markets.
B. Business Strategy
a) Product Leadership
Relentlessly pursues innovation in order to offer customers leading-edge products that consistently enhance the value derived by its customers in their use of the company's products.
b) Operational Excellence
Where a company competes by providing reliable products with minimal inconvenience to customers and at competitive prices.
c) Customer Intimacy
Competes by developing adapted market offerings that are based on a detailed understanding of and ability to predict changes in customer requirements.
Corporate and Social Responsibility (Company Policies)
- Environmental protection
- Fiscal/Financial compliance
- Sustainability
- Human rights
- Special category requirements
A. Purchasing Orientation
a) Buying Orientation
Uses purchasing practices whose principal purpose is to achieve reductions in the monetary value spent by a company on bought-in goods and services.
b) Procurement Orientation
It changes the way purchasing managers deal with the suppliers and other functions inside their companies. The decision will rather take into consideration the total cost of ownership, looking at the process of use, including acquisition, possession, and disposal.
c) Supply Management Orientation
This approach is based on reevaluating the value chain and the willingness to maximize value along that chain.