B2B or B2C? The difference between business-to-business (B2B) marketing and business to consumer (B2C) marketing has been highlighted by the Internet revolution – mostly because the old rules that governed the appropriate selection of tools for the rather different tasks involved were somewhat overthrown by the advances in technology.
We all know what it feels like to be the targets of consumer marketing and therefore we feel more familiar with it. We all see advertisements on the television. We all read newspapers and magazines where articles and advertising messages appear. We all receive mail at home from companies promoting their goods or services. We have all experienced the end results of impersonal ‘mass marketing’ exercises which were the predominant style of business to consumer marketing.
Yet we are less sure of the methods and techniques used in B2B. This is partially because we are less often on the receiving end but also because the very nature of the approaches used in B2B marketing means they are less easily observed.
The confusion is compounded when we consider the differences between selling tangible products (such as baked beans to consumers or computers to organisations) and selling intangible services (such as insurance to consumers and loans to businesses). So we could think about marketing in terms of the following matrix:
| Tangible products | Intangible services | |
|---|---|---|
| Consumers | FMCG | Financial services |
| Marketing | marketing | |
| Organisations | Industrial | Business services |
| Marketing | marketing |
It is interesting to note that some of the latest trends in marketing – CRM (customer relationship management) and one-to-one marketing are good examples of where B2C marketing has ‘borrowed’ the predominant ideology and approaches from B2B. This is an interesting turn of events as historically it was the consumer marketers who led the field and the industrial or business marketers, typically sales force driven, who were the poor relatives.
The way of reaching the business audience needs to be different to reach a consumer audience and the message you communicate needs to be different (i.e the consumer message is often shorter and simpler than the business message). B2C mostly uses indirect methods whilst B2B mostly uses direct methods:
| Direct methods | Indirect methods |
|---|---|
| Networking | Advertising |
| Selling | Signs/posters |
| Tenders/Proposals | Media relations |
| Presentations | Sponsorship |
| Literature (mailed) | Literature (left on display) |
| Seminars/briefings | Web sites |
| Hospitality | Word of mouth |
| Telemarketing |
Typically, there is a greater concentration on marketing in B2C and a greater emphasis on selling and client development in B2B marketing (See FAQ on “What is Marketing?“). That is because historically consumer marketing focused on transactions whilst business-to-business marketing focused on relationships. However, more consumer marketers are now focused on relationship marketing as the lifetime value of existing customers becomes a more important calculation than the cost of winning a new customer.
So, to summarise the key differences between B2C and B2B (with particular reference to my clients and contacts in professional firms):
| Attribute | Consumer/Private Client | Business/Commercial Client |
|---|---|---|
| Target | An individual or family | Someone or people within a business or partnership |
| Number in the UK | 58 million population | 1.6 million registered for VAT (i.e. income over c£50,000) |
| Needs | Diverse | Diverse |
| Segmentation method | Demographics, socio economic classification, life cyle, life style, disposable income etc | Size of business, industry sector, profitability, growth, region etc |
| Buyer | An individual | Often several individuals |
| Technical knowledge | Little | Sometimes little and sometimes a lot (if professionally qualified e.g. in-house bankers or accountants). Usually larger organisations have more technical knowledge and more sophisticated needs. |
| Purchase frequency of professional services | Rare | Frequent |
| Public information available on target | Relatively little | A significant amount |
| Funding | Private income or insurance | The organisation |
| Emotional involvement | High | Low |
| Sales cycle | Short | Long |
| Relationship | Unlikely (in the past) – Little personal contact | Desired – Often based on personal relationships |
| Marketing methods | Indirect (e.g. advertising, media relations, intermediaries) | Direct (e.g. direct marketing, personal selling) |
Yet advances in technology, the Internet and e-business are blurring the distinctions. The Internet allows you to customise your marketing messages to suit individual consumers’ on-line profiles and past buying habits quickly and cost-effectively – the so called one-to-one marketing revolution. The creation of on-line communities of consumers and businesses and the availability of new, cheaper on-line advertising media means that previously prohibitively expensive advertising is now more affordable.
The use of computerised knowledge bases and intelligent databases means that relatively inexperienced and unskilled sales staff can get up to speed quickly and take over quite complex personal selling roles for both consumers (through call centre technology) and businesses. So, in effect B2B and B2C marketing methodologies are converging.
(A fuller explanation of this topic was recently provided for the banking journal Eclectic – please let me know if you would like a copy)
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