Consumer and Business Market: 10 Most Important Differences in B2B Marketing

10 Most Important Differences Between Consumer and Business Market

It is important to understand the consumer and business market for a better understanding of the business. When B2B International began in the 1990s, one of our biggest challenges was convincing potential clients that our skills as B2B consumer and business market researchers and marketers were unique. The idea that B2B marketing – and thus the techniques used to explore these markets – were meaningfully distinct from consumer marketing was frequently dismissed. In the last two decades, B2B marketing has become a distinct discipline, highlighting marketing practice differences.  We believe it is important to emphasize the many differences between the consumer and business market, especially when implementing a business-to-business marketing strategy. 

 

B2B Marketing:

As always, definitions must be precise. What are B2B markets and B2B marketing? Assume that the value chain begins with consumer demand and ends with dozens of business products or services. Consider the simple shirts we buy. They don’t just happen in the shops. For example, a garment is machined into a fabric and then packed and distributed through various levels until it is finally picked up from the shelf. The demand for the product pulls everything to the left of the shirt through the chain of derived demand. Textile mills sell cotton to merchants, who sell it to spinners, who sell it to weavers, etc. No business buys products for pleasure. They buy them to add value to the products and move them down the supply chain to us, the public.

 

10 Reasons Why Consumer and Business Market are different.

We believe there are ten key differences between consumer and business markets. They are as follows:

 

1. B2B Decision-Making Units Are More Complex

 

Even the most complex decisions are usually made by one person in a small family unit. In business-to-business consumer and business markets, the decision-making unit (DMU) is complex or has the potential to be.

Ordering low-value, low-risk products (like the ubiquitous paper clip) may fall to the office junior. However, purchasing a new business-critical plant may require a large team to deliberate over a long period. Individuals leave the company or change jobs far more frequently than they leave the family unit.

This dynamism has implications for B2B consumer and business markets. B2B’s target audiences are amorphous, consisting of individuals with varying interests and motivations. Buyers want a good deal. They want high output. Executives want low risk. And those are just their basic needs. Each party to the DMU brings psychological and cultural baggage to the decision, which can lead to interesting product and supplier variations.

·       Business-to-business purchases are classified into four categories based on their financial value and business risk. Each of these categories has distinct buying habits and complexities.

·       Low-risk, low-value purchases are the most consumer-like. In many cases, only one person is involved. The decision has little financial or business risk, so it is made quickly.

·       For low-risk, high-value items like raw materials, a mix of technical and purchasing personnel, often board members, is required. This complexity is required to reduce costs without compromising quality. Purchasing personnel would normally make transaction-by-transaction decisions, thanks to more technical employees who would periodically review suppliers.

·       Low-value, high-risk items like office insurance would also have specialists and buyers. In this case, an expert (perhaps an in-house legal expert) would be the key decision-maker because the ‘risk’ is in the product rather than the price.

·       High-value, high-risk purchases require a large number of senior decision-makers to evaluate a wide range of purchase criteria. An example of an upper-management department head involved in plant equipment is the CFO.

 

What does this mean for B2B marketers?

Faced with a complex and knowledgeable buyer, it is critical that the B2B marketer exhibits high levels of expertise in all interactions. This includes product knowledge as well as technical and other support provided by the seller after the sale.

Marketers must also be diligent and patient when negotiating with decision-makers in finance, production, technology, and other areas.

 

2. Business-to-Business Buyers are More Rational

 

We believe that business-to-business buyers are more rational than consumer buyers. We don’t leave our emotions at home when we go to work, but we try to keep them hidden from our coworkers.

Would a person who pays 3,000 for a leather jacket that is less warm and durable than a 200 jacket make the same choice at work? For example, would the same person choose to buy an infuriating computer or an asbestos-laced roof over a computer that infuriates them every Saturday?

Consumers are often less informed, less accountable to others, and more susceptible to whims, indulgences, recklessness, and self-promotion than workers. We thus tend to make purchases that a rational observer (a business-to-business buyer who must make a monthly profit) would consider absurd. Consumers rarely inquire about a product’s return on investment (return on investment). We buy wants, not needs.

 

What does this mean for B2B marketers?

The fact that B2B buyers are rational makes our job as B2B marketers easier – we just need to design and manufacture good products and deliver them promptly and on budget.

No way. It would be naïve to assume B2B buyers are rational. Because most B2B buyers are held accountable, trust and security are critical. The life or reputation of a B2B buyer is at stake. Trust and security are crucial emotional issues. This emphasizes brand, reputation, case studies, and other factors that convey reliability and consistency over the life of the purchased product or service.

 

3. B2B Products are Frequently More Complicated

When it comes to industrial products, a skilled professional is often required, unlike when it comes to consumer products. Unlike consumer items, industrial products are typically bespeaking and require fine-tuning. Simplicity is often chosen even for complicated consumer goods. An automobile can be picked for speed and style, and a radio for volume.

Conversely, simple industrial items are routinely integrated into bigger systems, demanding professional modification. Choosing a turbine manufacturer or commercial website design buyer based just on aesthetics is ludicrous. Technical, productivity and safety considerations will determine the turbine’s selection while user interaction, search engine visibility, and website integration will determine the website’s selection.

Consumers aren’t concerned with product specifications. The majority of automobile purchasers care more about top speed than acceleration. Similarly, a chocolate bar shopper is more interested in the product’s taste and functioning than the ingredients and technology that enable it. This leads to shallow or even vacuous product marketing.

Carmakers frequently neglect a car’s performance, or lack thereof, in favour of non-physical characteristics like sex appeal. Conversely, B2B campaigns aim to educate their target audience. A salesperson would not buy a car based on colour or sexual attractiveness. So promotional material for B2B campaigns may need to include product specifics.

 

What does this mean for B2B marketers?

The B2B marketer must be well-versed in the product or service being sold. For example, after-sales service, problem resolution, client management team, etc. must all be understood. As a result, B2B salespeople are often highly experienced and come from a technical background. A small team of salespeople can make or break an entire business-to-business product line.

 

Business and consumer market

 

4. B2B Markets Have Fewer Buying Units

 

Almost all B2B consumer and business markets follow the Pareto Principle or 80:20 rule. A few clients dominate the sales ledger. Neither do we mean thousands or millions. Even the largest business-to-business companies have 100 or fewer customers that really matter to sales. Each person’s purchase and use of a product is limited in consumer markets. There are heavy users of all consumer products, but the difference between the two is minor compared to the scale of differences in B2B markets. Most consumers fit into a “typical monthly spend” category, with a few outliers. The difference in spending between the largest and smallest buyers in business-to-business markets is likely to be much larger than in consumer markets. In contrast to consumer markets, business-to-business markets have small numbers of customers of varying sizes and a few key accounts.

 

How does this affect B2B marketers?

Because small numbers of customers dominate businesses, database management is critical in B2B marketing. Customer relationship management systems now allow databases to be updated with DMU members’ personal information, transactions, and contacts.

The B2B marketer must also be adept at key account management, with all the responsibilities that entail. Key accounts expect not only product delivery prompt and amount but also services like quick problem resolution and technical advice. Indeed, key B2B accounts increasingly seek partners who will hold stock on their behalf, provide technical advice, calculate product efficiency and added value, and provide long-term on-site support.

Above all, the small number of buying units in B2B markets, and the concentration of expenditure among a few of those buying units, create an opportunity and an expectation that the biggest spenders get special treatment and value-added services. Someone else will if you don’t!

 

5. Fewer Behavioral and Needs-Based Segments in B2B Markets

 

Our over 2,000 B2B studies show that B2B consumer and business markets have far fewer behavioural or needs-based segments than consumer markets. While an FMCG market can have 10, 12, or even more segments, the average B2B study only has 3 or 4.

This is partly due to the smaller target audience in B2B consumer and business markets. One can easily distinguish between 10 or 12 distinct segments in a consumer market with tens of thousands of potential customers, even if the differences are minor. This is not the case when targeting a few hundred business buyers.

As corporate audiences behave and need differently than (less rational) consumer audiences, there are fewer segments. When purchasing for a workplace, insecurities, fancies, and pleasures are significantly less likely to surface than when purchasing for oneself or a close family member. A B2B purchasing choice entails several coworkers and workplace norms that have been created through time to filter out many of the extremes of conduct that would otherwise manifest if the decision was left to one person with no responsibility.

The behavioural and needs-based segments that emerge in the B2B consumer and business market are frequently similar across industries. Needs-based segments in a typical B2B market include:

  • A price-focused segment that is transactional and does not seek ‘extras’. Companies in this segment are often small, have low margins, and consider the product/service in question to be unimportant.
  • A segment that values quality and is willing to pay for it. Companies in this segment typically have high margins, are medium-sized or larger, and value the product/service highly.
  • A service-oriented segment with high expectations for product quality, range, after-sales, delivery, etc. It can be a small, medium, or large company. They usually buy in bulk.
  • A partnership-focused segment made up of key accounts that seek trust and reliability from suppliers. Large companies with high margins view the product or service as strategically important.

 

What does this mean for B2B marketers?

The fact that B2B consumer and business markets have few segments makes the job of B2B marketers easier. However, knowing which customers fit which segments and how to appeal to each isn’t easy to come by. Creating a behavioural or needs-based segmentation is difficult because:

  • Once a segmentation has been achieved, identifying which companies are in which segment is extremely difficult. Behavioural and needs-based segments often transcend ‘firmographic’ segments, meaning there are no obvious indicators (like country, industry sector) of a company’s segment.
  • Sales, marketing, customer service, and other departments must adjust their approach to often intangible criteria. This requires massive horizontal and vertical investment within a business.
  • Many marketers find it easiest to categorize B2B target audiences by size and geography, giving accounts the attention they ‘deserve’ based on their strategic value to the supplier.

 

6. Personal Connections Matter More in B2B Markets

 

Personal relationships are vital in B2B consumer and business market. It’s easy to talk to a small group of regular customers. Sales and technical reps visit clients. On first-name terms. Personal connections and trust grow. It’s not uncommon for a business-to-business supplier to have long-term customers.

Personal relationships are vital in emerging markets like China and Russia, where there is a lack of free information, a history of poor quality from local suppliers, and little other than trust in the salesperson to judge the provenance of the product or service.

 

What does this mean for B2B marketers?

This emphasis on relationships means marketing budgets spend more on people (sales and technical support) and less on other forms of promotion. Business marketers’ advertising budgets are usually measured in thousands of pounds (or Euros or dollars). Unlike consumer salespeople, B2B salespeople focus on listening and building relationships rather than the more transactional and quantity-driven approach seen in consumer markets. Face-to-face contact is emphasized, and the salesperson must have a thorough technical understanding of the product being sold.

 

7. B2B Buyers Buy Longer Term

 

Long-term investments like homes and cars are rare. Capital equipment, component, and consumable purchases made for the long term are more typical in the business-to-business consumer and business sector.

Furthermore, long-term products and services for businesses often necessitate more assistance from suppliers than those for consumers. It is common for the after-sales service to be significantly more extensive on larger purchases like a computer network or a fleet of vehicles. Customers are unlikely to require continuous knowledge and services (such as delivery, implementation/installation guidance, etc.) for repeat business purchases (such as machine parts and office supplies).

Finally, because there are fewer of them and those that do exist are valued more, corporate customers are seen as more loyal than consumers. Reducing the advantages of retaining a B2B customer can have major ramifications for the business in question.

 

What does this mean for B2B marketers?

With a longer-term outlook in mind, B2B marketers should remember two key points: first, the value of building relationships, especially with key customers, and second, the value of a technically focused sales team.

 

8. Consumers Drive Innovation More Than B2B Markets

 

The consumer markets drive most innovation. B2B companies that innovate usually do so by responding to an earlier innovation. B2C businesses are less risk-averse because they must predict and respond to consumer whims and irrational behaviour rather than business decision-making. B2B companies can respond to trends rather than try to predict or even drive them.

That doesn’t mean B2B companies aren’t innovators. B2B innovation is often more carefully planned and commercialized, with more defined audiences and trends.

 

What does this mean for B2B marketers?

Business-to-business marketers have the time and the data upstream to carefully weigh their options. Given that competitors are in a similar position, gathering quality intelligence is critical. B2B marketers should conduct thorough market research and combine it with upstream data to build a comprehensive market intelligence picture.

 

9. Consumers Rely on Packaging More

 

In recent years, packaging for consumer goods has grown a lot. This is because marketers want to not only protect and preserve their products but also show their customers what they want and what they hope for.

This strategy has been particularly effective since consumers are less logical than business-to-business buyers.

It’s tough to provide value through packaging in B2B consumer and business markets because things are often judged primarily on their utility, and expanded offerings are focused on relationships rather than aspirations, objectives, or aesthetics.

 

What does this mean for B2B marketers?

Packaging, like the product, is primarily functional, which has clear implications for B2B marketers. Relationships and expertise are far more valuable than resources.

 

10. Sub-Brands Fail in B2B Markets

 

We’ve said before that building a strong brand is the most overlooked B2B marketing opportunity. A strong brand’s support is vital in a world where it’s hard to tell one product from another. The influence of the brand on B2B in the consumer and business market, and buying decisions has risen in the last decade (from 5% to 30-40%), and there is room for B2B companies to differentiate themselves through effective branding strategies.

However, B2B companies are far less adept at developing and implementing branding strategies than B2C companies. B2B companies often fail to recognize that branding should encompass all customer touchpoints and aspects of the business – an unskilled technical sales team can easily undo a branding communications campaign.

Many B2B companies have overcompensated by creating hundreds of sub-brands for every aspect of their product range. This strategy works well in consumer and business markets, where diversified companies like Unilever recognize the need to connect with multiple target audiences. In business-to-business markets, however, target audiences are smaller and value relationships over brand when making purchases. Most importantly, B2B buyers are more informed than consumers and find multiple brands and sub-brands confusing, if not insulting.

 

What does this mean for B2B marketers?

The key takeaway for B2B marketers is to thoroughly research and meticulously implement their branding strategies. It should cover all customer touchpoints within and outside the company, acting as a framework for communicating the company’s values. Above all, B2B marketers should recognize that a single cohesive brand that customers, stakeholders, and employees can all relate to is preferable to a confusing slew of sub-brands that hinder rather than promote meaningful choice and are little more than product identifiers.

 

The third characteristic that distinguishes B2B buyers is that they are more demanding. They must make prudent purchases for their businesses. They take fewer risks and, as a result, expect the greatest quality. They understand how to recognize a bad deal. As a result, they obtain what they desire. They often pay more than a consumer would and expect more in return. They are more likely to see themselves as active participants in the product or service delivery than passive recipients.

What does this mean for B2B marketers?

The ramifications for B2B marketers are clear. We must raise our game to ensure that our products, services, and intangibles meet and exceed customer expectations.

Having a proper understanding of the consumer and business market is essential as the fact that B2B buyers are more predictable than consumer buyers works in our favour. Quality market intelligence and close attention to our target markets’ needs position us well to meet market needs.

 

Read about the B2B Content Marketing in our Blogs: https://sabpaisa.in/b2b-content-marketing/

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