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B2B vs B2C - more than just a letter

Posted Friday, April 10th, 2009 by Neil Edwards

A friend asked me in the week to explain the difference between marketing to businesses and marketing to consumers. Unprepared, I fumbled my way to an answer, but soon realised it was a deeper question than it first seemed.

There is, of course, a plethora of theoretical responses. B2C is traditionally said to be:
  • Product driven

  • Aimed at maximizing the value of the transaction

  • Mass-market

  • A single step buying process and a shorter sales cycle

  • A creator of brand loyalty through repetition and imagery

  • Reliant on merchandising and point of purchase activities

  • The leverage of emotional buying decisions based on status, desire, or price

Whereas B2B:

  • Is relationship driven

  • Aims to maximize the value of the relationship

  • Has a small, focused target market

  • Involves a multi-step buying process and longer sales cycle

  • Creates brand loyalty through personal relationships

  • Uses educational and awareness building activities

  • Leverages rational buying decisions based on business value

A useful analysis, but not uniformly true by any means.

The eminent Professor Malcolm McDonald says that 'the central ideas of marketing are universal' and it therefore makes no difference whether you are marketing vacuum cleaners or power furnaces. This seems overly simplistic too.

The principle that all marketing has the basic aim of satisfying the customer is, of course, incontrovertible, but the important follow-on questions are: 'who is the customer?' and 'what is my product?'

We can say that consumers are, on the whole, more impulsive in their decision making than business buyers, because the financial risk is often so much smaller. This means B2C marketers can focus less on the rational basis for a purchase, and more on the emotional appeal. B2C marketing is often geared towards catching the wave or, better still, creating the wave in the first place.

To say, however, that B2C marketing isn't relationship driven is a mistake. Any retailer, from a supermarket monolith to the local corner shop, needs to form a relationship with its customers to build loyalty and drive repeat business. Retailers are merely intermediaries in the value chain between the manufacturer and the buyer. Manufacturers themselves would also be mis-advised not to consider the relationship - Sony wants loyalty over Panasonic as does BMW over Mercedes. A charity will want a relationship with a donor to encourage repeat donations.

And what of professional services firms? They want life-time relationships with both business and private clients, which means that the marketing must be entirely geared towards the principles that are outlined in the traditional analysis of B2B.

In B2B, the pure number of people involved in a purchase tends to have the effect of suppressing the emotion and bringing everything back to the business case. A good B2B campaign has to be brimming with promises of increased profitability, reduced costs or enhanced productivity. This is not to say that there is no room for the emotional influence of the brand. The old adage that 'nobody ever got sacked for buying IBM' still holds true in many quarters and familiarity breeds comfort in the board room. There is a clear need to build the brand with air cover from advertising, sponsorship and pr.

The conclusion is that the biggest drivers of the marketing approach are not whether it is B2B or B2C, but in the size of the financial risk, the nature of the relationship and the complexity of the decision making process for the customer. If we understand this then we are likely to make the right decisions. Perhaps we should do away with the distinction and simply call it Business to Customer - which is probably the point Professor McDonald was making.

Links

Source of Theoretical differences between B2B and B2C: Vista Consulting

Professor Malcolm McDonald



Posted Friday, April 10th, 2009 by Neil Edwards

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