Business-to-business

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The "electronic components district" of Guangzhou, where numerous shops sell electronic components to other companies that would use them to manufacture consumer goods.

Business-to-business (B2B) describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer. Contrasting terms are business-to-consumer (B2C) and business-to-government (B2G). B2B branding is a term used in marketing.

The overall volume of B2B (Business-to-Business) transactions is much higher than the volume of B2C transactions.[1][2][3] The primary reason for this is that in a typical supply chain there will be many B2B transactions involving sub components or raw materials, and only one B2C transaction, specifically sale of the finished product to the end customer. For example, an automobile manufacturer makes several B2B transactions such as buying tires, glass for windscreens, and rubber hoses for its vehicles. The final transaction, a finished vehicle sold to the consumer, is a single (B2C) transaction.

B2B is also used in the context of communication and collaboration. Many businesses are now using social media to connect with their consumers (B2C); however, they are now using similar tools within the business so employees can connect with one another. When communication is taking place amongst employees, this can be referred to as "B2B" communication.

Differences between B2B and B2C[edit]

The main difference between B2B and B2C is who the buyer of a product or service is. The purchasing process is different in both cases and the following is a list of key differences between them.

Buying behaviour in a B2B environment[edit]

Some characteristics of organizational buying / selling behaviour in detail:

  • For consumer brands the buyer is an individual. In B2B there are usually committees of people in an organization and each of the members may have different attitudes towards any brand. In addition, each party involved may have different reasons for buying or not buying a particular brand.
  • Since there are more people involved in the decision making process and technical details may have to be discussed in length, the decision-making process for B2B products is usually much longer than in B2C.
  • Companies seek long-term relationships as any experiment with a different brand will have impacts on the entire business. Brand loyalty is therefore much higher than in consumer goods markets.
  • While consumer goods usually cost little in comparison to B2B goods, the selling process involves high costs. Not only is it required to meet the buyer numerous times, but the buyer may ask for prototypes, samples and mock ups. Such detailed assessment serves the purpose of eliminating the risk of buying the wrong product or service.

B2B brands need to be differentiated[edit]

One of the characteristics of a B2B product is that in many cases it is bought by a committee of buyers. It is important to understand what a brand means to these buyers. Buyers are usually well-versed with costing levels and specifications. Also, due to constant monitoring of the market, these buyers would have excellent knowledge of the products too. In many cases the purchases are specification driven. As a result of this, it is vital that brands are clearly defined and target the appropriate segment.

As explained above, every one product can only be associated with one brand. Because of this, it is vital that companies find a white space for their brand, an uncontested category to occupy space in the minds of the buyer.

In differentiating one’s brand, companies can use various strategies, often referring to the origin of the goods or the processes used to manufacture the product(s). Some have identified up to 13 such strategies. Depending on the company’s history, the competitive landscape, occupied spaces and white spaces, there could be one or many strategies that any company could use.

Ultimately, a strong B-2-B brand will reduce the perceived risk for the buyer and help sell the brand.

References[edit]

  1. ^ Sandhusen, Richard (2008). Marketing. Hauppauge, N.Y: Barron's Educational Series. p. 520. ISBN 0-7641-3932-0. 
  2. ^ Shelly, Gary (2011). Systems analysis and design. Boston, MA: Course Technology, Cengage Learning. p. 10. ISBN 0-538-47443-2. 
  3. ^ Garbade, Michael (2011). Differences in Venture Capital Financing of U.S., UK, German and French Information Technology Start-ups A Comparative Empirical Research of the Investment Process on the Venture Capital Firm Level. München: GRIN Verlag GmbH. p. 31. ISBN 3-640-89316-6. 
  • Prashant Kasera J. (2006): 'World of B2B' '1st Edition, India.
  • De Chernatony L. et al. (2003): Creating Powerful Brands Elsevier/Butterworth-Heinemann, 3rd Edition
  • Huczynski, A. et al. (2001): Organisational Behaviour 4th Edition, Harlow
  • Ries A. et al. (1994): The 22 Immutable laws of Marketing Harper Collins Publishers
  • Dr. Temporal, P. (2005): B2B Branding–A Guide to Successful Business-to-Business Brands, International Enterprise Singapore
  • Tai J. et al. (2008): Killer Differentiators–13 Strategies to Grow Your Brand, Marshall Cavendish Business
  • Trout, J. (2004): Trout on Strategy: capturing mindshare, conquering markets. McGraw-Hill