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B2B versus B2C: Marketing to Businesses and Consumers
Business Essentials · Chapter 12: Marketing Foundations and Consumer BehaviorSection 12.3 · lesson 57 of 10514 min · free with a free account
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In this lesson
Same product, different buyer, different marketing.
- Distinguish business and consumer markets
- Explain derived demand and its consequences
- Describe the buying process and buying center
- Contrast marketing practice across the 2 markets
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Marketing Foundations and Consumer Behavior
B2B versus B2C: Marketing to Businesses and Consumers
A delivery van is a delivery van. Or is it? This section is about two kinds of market that can sell exactly the same product. Business markets, where organizations buy, and consumer markets, where people buy for themselves. We'll start with the test that separates them, which is the buyer's purpose. Then the structural differences, including derived demand, the most consequential of them. Next, the business buying process, and the buying center that runs it. Then the three buying situations a seller can face, and how marketing practice changes as a result. Keep one question in mind throughout. Who, exactly, is the customer?
Defining the Distinction
The Buyer's Purpose, Not the Product
The cleanest way to draw this line is by the customer's purpose, not by the product. That matters, because the same product can be sold into both markets. In a business market, also called business-to-business, the buyer purchases on behalf of an organization. The product is used to produce other goods or services, resold, or used to run the organization. In a consumer market, or business-to-consumer, the buyer purchases for personal or household use. Take a delivery van bought by a courier company to move packages. That's a business purchase. Now picture the identical van model, bought by a family for personal travel. That's a consumer purchase. The van hasn't changed at all. The buyer's purpose has. And that purpose decides which set of dynamics in this section applies.
Structural Differences
Fewer Buyers, Bigger Orders, Closer Ties
Business markets differ from consumer markets in several structural ways, though individual cases vary. First, business markets usually have fewer buyers, and larger ones. A company selling jet engines may have a customer list numbering in the dozens. A company selling breakfast cereal has millions of individual buyers. That concentration changes the stakes. One customer won or lost matters far more in a business market. Second, business purchases usually carry greater volume per transaction. A single order may equip an entire facility, or supply a whole year of production. Third, buyer and seller tend to be closer, with technical support, customized terms, and long-term contracts. Compare that with the largely anonymous, one-off transactions of consumer retail. Fourth, in some industries firms cluster in particular regions. That concentrates a seller's customers in space, as well as in number.
How Demand Behaves
Derived Demand: Set by Someone Else's Market
Two more differences concern how business demand behaves. The first is derived demand, and it's the most consequential difference of all. Derived demand exists only because of demand for the consumer product a business product eventually helps produce. Consider a maker of automotive upholstery fabric. It sells to vehicle manufacturers, not to car buyers. Yet its sales rise and fall with consumer demand for new vehicles. That's a market it never sells into directly, and may never even observe. If consumers buy fewer vehicles, manufacturers need less fabric, however well the fabric maker serves them. So a business marketer has to understand demand further down the chain, sometimes several steps removed. Those distant conditions ultimately govern the seller's own fortunes. The second difference is lower price elasticity in the short run. A change in one input's price has only a limited immediate effect on how much a business buys. The input is often a small part of a larger product's total cost. And it usually can't be substituted, or eliminated, on short notice.
Table 12.3.1
2 Markets Compared, Row by Row
This table pulls the comparison together, and adds two rows we'll develop shortly. Business markets have fewer buyers, often buying in volume. Consumer markets have many, each buying a little. Business purchases are large and often contractual. Consumer purchases are small, and often one-off. Business demand is derived, and less price elastic in the short run. Consumer demand is direct, driven by the buyer's own wants, and more elastic in many categories. The business decision is longer and more formal, and involves a buying center of several roles. A consumer decision is often quicker, and frequently made by one person or one household. Business promotion leans on personal selling and technical content. Consumer promotion leans on advertising and mass promotion. Here's the real lesson. The markets differ on every row, and the rows reinforce one another. So a single mismatch compounds. Treat a big business buyer like an anonymous consumer, and you go wrong several ways at once.
The Business Buying Process
8 Stages from Need to Review
A significant business purchase follows a recognizable path, called the business buying process. It begins with problem recognition. Someone identifies a need. The trigger may be internal, or external, like a supplier's proposal. Need description and product specification then turn it into defined requirements, often written in technical detail. Supplier search identifies candidate vendors, and proposal solicitation invites the qualified ones to submit formal offers. Supplier selection weighs the proposals against the requirements, and chooses one vendor or more. Order routine specification settles the details: quantities, delivery schedules, and terms. And performance review evaluates how the supplier actually performed after delivery. That last stage feeds directly into future purchase decisions. Compare this with a typical consumer purchase. The business process is longer, more formal, and involves more people. A consumer purchase may be decided by one person, in a few minutes.
The Buying Center
5 Roles Around a Single Decision
So who actually makes the decision? Usually not one person, but a buying center. That's the set of people in an organization who take part in a purchase decision. It typically has five roles. Users are the people who will actually use the product once it's bought. Their satisfaction with daily use often shapes future purchases, even when they had no formal say this time. Influencers shape the decision by supplying criteria or technical expertise. Think of an engineer who sets the required specifications. Buyers hold formal authority to select suppliers and negotiate terms. They're often the contact a seller finds easiest to reach. That ease is exactly the trap. Deciders hold final authority to approve the purchase. That may or may not be the buyer. And gatekeepers control the flow of information into the buying center. That might be an assistant who screens which sales calls reach a decider. Or a purchasing department that filters which vendors are even considered.
Figure 12.3.1
Reaching the Buyer Is Reaching 1 Role in 5
Here is the buying center drawn around one purchase decision. Five roles surround it, each with a different concern, and a different point of access for a seller. The shaded box is the buyer, the role most sellers reach first. But a seller who reaches only the buyer has reached one role out of five. That seller has probably missed the influencer's technical criteria, and the user's daily experience. They've missed the decider's final authority, and the gatekeeper's control over access. And a missed role can sink a deal at either end. A user who finds a product hard to operate may quietly undermine a purchase that's already formally approved. An influencer whose criteria were never met may have eliminated a seller early. That can happen before the buyer or the decider ever sees the proposal.
Buying Situation Types
New Task, Modified Rebuy, Straight Rebuy
Business purchases fall into three recurring situations, and each calls for a different selling approach. A new task is a purchase the organization has never made before. It needs extensive information gathering, and a fuller pass through the buying process. Sellers win here through education, technical credibility, and helping the buyer define its own requirements. A modified rebuy resembles a past purchase, with changed specifications, a different target price, or interest in other suppliers. Here sellers compete by showing a clear improvement over the current arrangement. A straight rebuy is a routine reorder, on essentially unchanged terms. In this case the incumbent supplier is strongly favored. The buyer has little reason to reopen a decision that's working adequately. And switching carries a search and evaluation cost the buyer would rather avoid. That difficulty of displacing an incumbent is a defining feature of business markets. A challenger usually needs a benefit big enough to justify reevaluating the purchase. A marginal improvement won't do it.
Marketing Practice
How the Differences Change the Work
First, let's clear away a common simplification. It says business buying is purely rational, and consumer buying is purely emotional. Neither is accurate on its own. Business decisions are formally justified in technical terms, yet personal relationships and trust built over years shape them. So does a buyer's own career risk in recommending an unfamiliar supplier. And consumers weigh price, durability, and functional fit, even when a purchase carries emotional or social meaning. Both markets mix rational and relational elements, in different proportions. Now to practice. Business marketing weights personal selling more heavily, relative to advertising. Personal selling is direct interaction with the buying center. Advertising is mass communication to a broad audience. With few buyers, large purchases, and several roles to reach, direct conversation is simply more efficient. Sales cycles are longer, often spanning months or more for a major purchase. Technical content matters more, like specifications and performance data, aimed at influencers and users. And relationship management matters more, sustaining one account over years of repeat business and support. In much consumer marketing, a single sale need not imply any continuing relationship at all.
Beyond Ordinary Business Markets
Government, Institutions, and What Transfers
Two more categories follow rules distinct from ordinary business markets. A government market is made up of federal, state, and local government bodies buying goods and services. It's governed by formal procurement rules, with competitive bidding, public solicitation, and documented evaluation criteria. The aim is fairness, and the responsible use of public funds. The rules vary by level and jurisdiction. An institutional market includes hospitals, schools, and charities, buying to support their own operations. They often work under budget constraints, and mission-related considerations a for-profit buyer wouldn't face. To sell into either market, you learn its procurement requirements, which are usually more rigid and more public. So what carries over from consumer marketing? The segmentation, targeting, and positioning sequence from section twelve point one applies here too, with different segmentation bases. The research methods and cautions from section twelve point two apply as well. But with so few buyers, probability sampling and large surveys are often impractical. Depth interviews with key accounts work better. What doesn't transfer is the promotional mix weighting, or the length and formality of the decision. Nor does the assumption that one person, found and persuaded, represents the whole customer.
Case Vignette
The Missed Mechanics
Let's finish with a composite case. The company and the person are fictional. Priya, a sales representative at Corvane Fleet Solutions, is bidding to supply a regional delivery company with new vans. She builds a strong relationship with the procurement agent, negotiates favorable pricing, and submits a polished proposal. She loses the contract to a competitor. That competitor had walked the company's maintenance mechanics and delivery drivers through its van. They raised concerns about cargo door clearance, and access to certain components on Priya's model. The rival van addressed those concerns better, and the operations director, who held final authority, weighed them heavily. Priya's options are to stay with her familiar procurement contact, lean harder on price, or seek access to users and technical staff. Her constraint is limited time with any one account. The trade-off is the efficiency of one familiar contact, against the completeness of the whole buying center. Priya reached the buyer, who handled paperwork and pricing. She never reached the users, or the maintenance influencers. Their concerns shaped the decider's final judgment, and one strong relationship couldn't make up for them. The sounder approach is to map the buying center at the outset, and seek access to every role.
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