Business buying is where it buys products and services fromanother business for use in its activities. The buying operation refers to theactions of the business (its employees or agents) in buying products andservices for its use, including the of selection of suppliers and bearing theconsequences of its purchase.
Businesses buy products in larger volumes for use in production ofanother product or for their own use. They buy such products which they refineto provide additional value for selling to Consumers. These products include raw material, finalproducts for company use, and ancillary items such as office stationary, etc. Within the buying process for B2B companies, a number of areas needto be considered;i) Whatconditions do our customers’ buyers operate in?ii) Whichpeople/departments are involved in the business-to-business buying process?iii) Who and how arebusiness buying decisions made?Major differences in B2C and B2B markets can be seen in a numberof areas;Mindset – thereasons for purchasing varies between B2B and B2C. A business is usually purchasing on a “needs”basis, whereas consumers are often purchasing on a “want” basis.Many consumer purchases are discretionary products that people maywant but don’t necessarily need, such as consumer electronics or travel, andthe buying behaviour can be based on characteristics such as style, fashion orpeer acceptance. In contrast, businesses usually buy a solution to a need –products that are required for daily operations, or to solve a specificbusiness problem. Their need pre-exists.
Product performance characteristicsare far more important than the image of the product. Business buyers are lessemotional and more task oriented. It’s simply a matter of finding thesupplier who can best fulfil that need.
Planning – Most purchases made by a business are planned wellin advance, whereas purchases might be impulse buys for a consumer. When ordering new equipment, a business maymake contact with the selling business, arrange to see a sales representative,may arrange samples, may undertake trials, and may speak to a number ofCompanies. A consumerordering such equipment may visit a website, perhaps visit a shop, discuss withfriends, but the decision is far more likely to be an impulse decision.To be able toaccommodate both business and consumer purchases, the company needs to have astructure in place that allows businesses to plan their purchases while stilloffering impulse options to consumers.
BuyingProcess – the process ofbuying in B2B is vastly different to B2C buying due to influences such as the greater size volume, and value ofthe markets, the greater numbers involved in the buying process, and the factB2B markets can be highly specialised in comparison to B2C.One to One relationships – In consumermarketing, the relationship often ends with a remote transaction made through aretailer. The manufacturer rarely makes personal contact with the consumer. In business marketing, the buyer-seller proximityis reversed. In most cases the supplier visits the customer in person andestablishes a true one-to-one relationship with the customer over an extendedperiod of time.ExpertBuyers & Multiple Decision Makers – Consumer purchases typically involve an individual decision maker in asingle-step transaction. Compared with consumer decisionmaking, business buying behaviour is characterized by a formal multi-stepprocess conducted professionally over a period of time, involving many peopleinteracting within a formal organization.
Customers’Product Knowledge – Consumer marketing isaimed at a mass market and doesn’t require deep knowledge of the product orsupplier to make a purchase decision. Business buyers are comparativelymore sophisticated and educated than consumers. The business customer has yearsof training in his or her field and often knows more about the product and itsapplication than the B2B marketer.Theexpertise of business buyers falls into two categories: buying process ortechnical expertise. Procurement managers are buying experts whose solefunction is to procure products and services on behalf of the company.Technical experts and users possess a strong understanding and interest in theproblem to be solved and the product being marketed as the solution. Andthroughout the sales process business buyers continue to learn about asupplier’s cost structures, production methods, development expertise and financialviability.
StrongerCustomer-Centric Focus – B2B marketingrequires that all parts of the business be customer-oriented and that allmarketing decisions are based on a complete and accurate understanding ofcustomers’ needs. B2B companies are usually closer to their customers and moreknowledgeable about their needs than the typical consumer company. Decision-making -In most B2C purchases, the consumerdecision-maker is usually the person that ultimately buys the product. A consumer buying an individual laptop islikely to be the person who will use that equipment. A business purchasing process starts with anidea and then goes through a formal approval process. The person that makes thefinal purchase is often a purchasing agent or departmental representative.
It is likely that the purchaser may not bethe final user of the equipment, and they may be buying in volume.Support – Supportcontracts play a much more important role in B2B marketing decisions for many items.As an example, for the purchase of a photocopier, an extended period ofwarranty and a rapid call out service is likely to be required, and this willbe factored into the buying decision.On the otherhand, consumers are much less likely to factor in the terms of the warranty ina purchasing decision, although it will still be important.
It isoften sufficient to satisfy a consumer for a business to simply having adequatecustomer support and back-up for a product. It is unlikely that a four hour call out facility will affect the buyingdecision for consumers. A business islikely to insist on these warranty and call-out terms as part of the purchaseconditions.History – Many businesses places great stockon previous business relationships, preferring to deal with businessesand customers they know and trust. This can often be of great influence in the buying decisionsfor the company. As an example, if a business has a dealt with the Companypreviously, then pricing contracts, dedicated support personnel, terms andconditions and personal preferences of the business/staff are alreadyestablished.
Individual consumer are more likely to compareprices and offers between companies, but are less likely to factor in supplierrelations. B2B marketing is highlycomplex, continually changing and needs to have a detailed level of formulated planning.B2C and B2B markets share anumber of primary strategies, including;i) The definition of the targetmarketii) Attempting to give added andunique value to the productiii) Means of reaching out to thetarget audienceiv) The setting of goalsv) The need for continued assessmentand modifications of the plansThere are also many shared facetsin the approach of marketing between B2C and B2B markets. Both are businesses selling to consumers,either online or offline, both make use of marketing events, direct marketing, internetmarketing, advertising, public relations, word of mouth and alliances to assistin their selling. However, theimplementation of these strategies, what they say, and the outcome of themarketing activities are fundamentally different.As asuccessful established Company, GTech already has strategies in place for theB2C market.
The challenge will be how tomodify these to suite the B2B market.In B2C marketing, decisionssuch as buying a new car or planning a family holiday, are usually confined tothe small family unit, while items such as clothes, food and personal careproducts usually involve just one person. In contrast, in B2B thedecision-making unit can be highly complex, with the target audience made up ofgroups of constantly changing individuals with different interests andmotivations. Buyers seek a good financial deal, superior quality andoften low risk. Perhaps the most importantdifference is in the mindset of the two markets in terms of purchases. Businesses tend to work hard to streamline the buying processto save time and money, making the decision primarily based on logic, whereaswith consumers a purchase is based much more on emotion.To set up a B2B marketing planbased as an extension around modifications to the existing B2C offering, it isimportant to understand the differences in the mindset of the two consumersections.
With B2C marketing, there are;i) Fewer,larger customersii) Purchases made for individual or householdconsumptioniii) Decisions usually made by individualsiv) Purchases are often based on brand reputation,personal recommendations with little or no product expertise v) Multiplesales callsvi) DeriveddemandWith B2B marketing, there are;i) More buyers with different functionsii) Averages over 4 people involved per purchaseiii) Goals & risksiv) Purchases made for a purpose rather thanpersonal consumptionv) Purchases based on primarily rational criteriavi) May engage in lengthy decision processesvii) Specialistsviii) Business buying involves a more professional purchasing effortB2C is often termed a numbersgames, whereas B2B can be termed a value game. A B2B plan will need only a smaller higher value number of customers tobe successful.It is not about the product, it’s about the people using the productand/or service.It must also be recognised that buyer demand is derived from final consumerdemand, and that that demand fluctuates quickly. ImplementationGTech clearly has a successful marketing operation in place,works very well in the B2C market. GTech’s task is to adapt this operation to attempt to gain traction inthe B2B market, making the assumption that the same products are to be offeredto the B2B market.
The Company already has an offering that addresses; n Customer Valuen Competitive Advantagen Concentration of focus (segmentation)n Alignment of resourcesn Anticipation of changing customerneedsWhat needs to be considered is how this offering can be tweakedto be of interest to the Business Market.The questions GTech needs to ask itself, in relation to itsshift to the new strategy, are;iv) What is my market and how does itsegment?v) Which channels do we wantto be in for sustainable profit?vi) How do we differentiate our offerfrom our competitors? vii) How do we communicate this offer toother businesses?viii) How can our company build strong relationshipswith business customers?ix) A business market comprises all theorganisations that buy goods and services for use in the production of otherproducts and services that are sold, rented, or supplied to othersAction AreasTo implement the marketing of this new element of theCompany, I am suggesting the following key action areas;The initial consideration will be to set in place theoffering that will be made to the B2B community. The unique selling points of the productswill need to be given a different slant to be more appealing to the B2Bmarket.
Areas such as warranties,after-care, returns policies etc must be given greater importance.The “kick-off” to the venture A “heads-up” marketing eventby the Managing Director – to stimulate initial interest in the new venture, Isuggest Mr Grey uses his existing publicity channels to tell the business worldof his forthcoming venture. This islikely to be a mixture of TV, radio, business newspapers, and social media.Once the business community have had their “interestwetted”, the next stage will be to implement a suitable social media strategy.
This will need to be a different emphasis tothe social media strategy for the B2B section of the marketing. Instead of a reliance on Facebook, Instagramand such like, use will need to be made of LinkedIn and Twitter.In addition, the content of the marketing will need to bevaried to be much more succinct, with different visual content and media form,such as e-books, newsletters, etc.There will also need to be modification to the Companywebsite.This would need to be of a different slant for the B2B world, with theprovision of a separate website for the B2B world, although perhaps a separatesection added to the existing website may be more appropriate, with the frontend with two sections (consumers as one, businesses as the other, with theseeffectively being stand alone websites).The B2B section of the website will need to be seen as alead generator, not an order generator as it is for the B2C section, and needsto be written accordingly.
The next stage of the marketing plan would be a marketing event. It is important that the additional offering ispromoted as a “new venture”. This canthen be used to attract the attention of the business world to an importantbusiness event.
A suitable venue should be hired, and the “great and thegood” of the target areas of the business world could be invited to see the newproposition.As a follow up to the marketing event, contact should besought with potential business customers, initially using existing contactsfrom previous experiences of the Managing Director and the existing marketingstaff.It is important for the Company to be able to make directcontact with these buyers, and face to face meetings is the desiredoutcome. As a successful existing Company, it already has a headstart against start-up companies, in that it already has a number of productsto offer.The CEO of the Company and its marketing department willalready have a number of B2B contacts, through their previous businessexperience.
It is likely that new marketing staff will be required whopossess differing skill sets to the existing B2C sellers. The Company will also need to implement a lead generationpolicy, alongside the lead nurturing, and this tends to be a more thanklesstask which can take much longer to bear fruit.Whereas with B2C markets the offer can be sent out tounidentified individuals, with B2B the offer has to find its way to the desksof the decision makers or buyers.A number of lead generation companies exist, and these areoften engaged to provide databases of further companies, including contacts,business criteria etc.