B2B (Business-to-Business) is a phrase that is widely used in the industry. When a company produces a product (good, solution or service) with the intention of selling it to other companies, this is referred to as Business-to-Business (B2B).
B2B (Business-to-to-Business) marketing refers to the practice of selling items and services to other businesses rather than to individuals. Industrial marketing is frequently used interchangeably with B2B marketing. However, B2B marketing encompasses not just the marketing of industrial products but also the sale of products to trade businesses, making it the more inclusive phrase. Customers of B2B marketing include businesses, merchants, government organizations, and a variety of other organizational customers.
Main characteristics of B2B marketing
Although it is similar to the B2C market in some ways, there are specific B2B market characteristics that you should definitely consider.
1. Complex purchasing procedure
Corporate purchasing is a difficult process that may require several decision-makers and ultimate clearance from the finance team or, in certain cases, the directors of the company if the purchase is significant. Additionally, decision-makers are always shifting, posing a significant challenge for business-to-business (B2B) marketers. Certain businesses may choose for the cheapest quote in order to keep expenses down and generate a higher profit on product sales.
Given the involvement of multiple key individuals in the purchase of crucial items for a business, a B2B vendor must have a high degree of market and product knowledge. They should exhibit superior product knowledge and guarantee of technical expertise in order to give after-sales support during the transaction process.
2. Logical purchasing
Unlike a typical consumer, a business purchases based on a reasonable appraisal of the costs and advantages to the company. This is the major distinction of B2B marketing strategies from consumer marketing.
In contrast to B2C market characteristics, businesses base their purchasing decisions on a range of criteria with the goal of increasing profit for the company or generating a return on investment (ROI).
B2B marketers’ jobs grow more difficult as purchasing decisions are made based on an extensive study of advantages and drawbacks. Additionally, purchasing decisions may also be made based on the supplier’s reputation and track record. In business markets, no B2B buyer will buy an unproven product, even if the cost aspects favor the business.
3. Complex products
B2C products are purchased depending on the company’s brand development and awareness efforts. Consumers may be uninterested with the product’s deeper technical features. So, you need a different marketing approach for B2B markets.
Product complexity is one of the most significant B2B market characteristics. Therefore, B2B marketers should be equipped with the required technical specifications and standardizing procedures in order to acquire access to the customer’s top decision-makers. The information presented should be accurate and intended to instill a sense of worth in the customer. Additionally, considerable expenditure in brand development and value creation in the customer’s perception can be avoided in a sale based on technical features.
4. Less buyers, more sellers
Unlike a consumer market, which might have hundreds or even millions of buyers, the business-to-business (B2B) market is more constrained to a small number of potentially big and medium-sized customers. So, these B2B customers have the choice of selecting from several suppliers. The B2B market operates on the Pareto Principle of 80:20, in which 80% of suppliers compete for 20% of the market’s customers.
However, the few major company purchasers may be purchasing in massive amounts in comparison to the ordinary consumer in the market, whose expenditure on that product category may be restricted to a few thousand dollars.
The small number of buyers gives both a difficulty and an opportunity for sellers. B2B marketing procedure includes presentations, raising awareness, collaborating closely with a customer to accomplish necessary product improvements, conducting the selling process, and providing after-sales support.
The B2B supplier is finally evaluated on the qualities of the product, technical consultation, product efficiency, value generation, and on-site support services.
5. Limited segmentation
In a consumer market, a product may be segmented according to its requirement, purchasing power, and attributes. There might be a collection of brands from a single company with various price points to appeal to entry-level, ordinary, and premium shoppers.
However, a B2B purchasing team don’t consider products for end consumption and are hence unconcerned with viewing them through the eyes of a consumer.
There is significantly less segmentation in the B2B market, since emotional decisions are not driving factors in purchase. The problem for B2B companies is to identify the appropriate segment and engage with them to develop a long-term strategic partnership. At this point, restricted segmentation helps somewhat in comparison to consumer markets.
Industry segmentation is the most complicated one among other B2B market characteristics. In terms of this feature, the most effective B2B marketing technique is to segment the target market by size and area, and to provide all necessary support to the customer.