Friday, 10 April 2009

B2B vs B2C - more than just a letter

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 marketing, 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.


Source of Theoretical differences between B2B and B2C: Vista Consulting

Professor Malcolm McDonald


Charmaine Hill said...

Hmm, interesting. Initially i would have thought that B2B is far less complicated then B2C, however i agree with the Business to Customer approach. After all, isn't that what marketing is all about?

Burt Alper said...

In my business, there is a fundamental difference. My company creates new brand names ( ). In the B2C world, names need to stand out more, and can often communicate more about the functionality or benefit of what is being named. In B2B settings, names often need to communicate trustworthiness and stability (sometimes at the expense of standing out or communicating something specific to functionality). More abstract names can work well in B2B as they offer more flexibility over the long haul.

Also, it's been my experience that B2C branding is more likely to be tested (via market research) than B2B branding. Not always true, but more typical.

Have you heard from anyone else? I'd love to know what others have to say on the subject.

Simon Middleton said...

The differences are mundane. The similarities are profound: whichever your audience the need remains the same, to capture imagination as well to fulfil a need, to be different from the next guy, to not be boring. In short, to tell a compelling story about an authentic and irresistible brand.

Sarah Goodall said...

agree Charmaine - when all said and done it's about the customer - what they choose, how they choose, at what point in the process they decide, how they budget etc. The decision making cycle is similar whether B2B or B2C - it just may happen a bit quicker in B2C and the mix might be weighted slightly differently. I work in B2B and am fascinated by the B2C world - only because I think there is so much overlap and best practice that can be crossed over!

Simon Charly said...

In my experience marketing both B2C and B2B, I would have to say the key difference is the value proposition and the delivery, although this does vary widely depending on the type of product/service being offered and how broad or niche the target market is. This will impact on the medium used to take the product to market.

As with all marketing, the question that needs to be answered is 'what are the key benefits that will stimulate the target to buy and what is the most cost effective way of getting infront of them?'

I hope this isn't too cryptic :0)

Charlene Childers-Coleman said...

I agree with Professor Malcolm McDonald because I've done both. The main difference is the message and the delivery mechanism. Though with social media the delivery lines are becoming blurred.

Gill Hunt said...

My experience of B2B has been with services and professional services. These purchasers make decisions based on influence from their own peers and from factual evidence based information. They can be sceptical about unsolicited information from people they don’t know. They are less sceptical about introductions to people who are recommended by people they know. For this reason the media used for this B2B segment is biased towards personal interaction.
B2C communications relies more heavily on media. Bluetooth marketing such as allows two way communications to groups which may be difficult to reach through traditional media.

Jamie Lee of Savvy Sisters Marketing said...

For me, it boils down to the fact that people are people whether they are individuals or members of an organization. In that respect, many key marketing tactics and strategies translate well in either a B2C or B2B venue - tenets like knowing your reader, writing to benefits & results vs straight features, and striking the right tone.
However, I think there are logistical differences in how a writer approaches each type of assignment. As several commenters have noted, the B2B realm often requires more detail and persuasion because the decision cycle is longer, the investment greater.
No matter which camp you're in, your skills can be leveraged in the other. I agree that it's less about labeling your work as B2C or B2B and more about creating content that meets the needs of customer and company.

Jim Schmiedeskamp said...

Having managed branding and integrated marketing communications for both B2C and B2B brands and businesses, I see the primary difference in the branding strategy and financial resources to create a consumer brand vs B2B product/service brands.

For example, most consumer brands are created as standalone brands which typically involve significant marketing investments to create awareness and equity in these products--e.g. P&G's Tide and Cheers detergent brands.

With B2B brands where you do not need to typically reach a mass market and where the financial resources are limited, oftentimes the brand strategy involves corporate or "master" branding where the company chooses to build equity in the "corporate brand" vs creating coined or fanciful names for every service and product. An example would be what we did at Accenture, where Accenture was the only trademark we registered and every service offering or solution used clear and descriptive nomenclature, thereby avoiding the trademarking costs and additional investments required to make each service offering or solution name unique and memorable. Historically it seems that all companies feel they need a creative or unique product or service name, which is not really the case for many B2B companies and product/service categories. At Owens Corning, we had B2C product brands but chose to invest in the Owens Corning "corporate brand" while utilizing a brand architecture for specific products to differentiate our full product line. While these products used unique names that were registered as trademarks, what we ultimately invested our marketing dollars against was building the equity in the Owens Corning building product brand.

Edward Jones said...

I have worked most of my life in the B2B arena, but at the same time have always applied a close eye to the B2C arena. For example i have worked for a food manufacturing business which was essentially B2B marketing towards the retailers, however you need to be aware that the end user of the product is a consumer hence B2C marketing must be taken into considertion.

A key difference is also regarding the buyer and who that is? Within B2C it is usually the consumer who uses the product hence the decision is made soley by themselves. Within B2B you must take into account the DMU (decision making unit). There may be various gatekeepers that need to be satisfied before an eventual purchase is made. For example the product may be used by a junior manager but their manager will give input and possibly then their manager, then there is the finance director, compliance teams etc etc depending on the product/service in question.

Ralph Severini said...

Since I've spent a good deal of time in the technology arena, a valid example of where a company needs to do a great job at both is Microsoft.
First the Microsoft name in and of itself means something to both consumer and businesses. And Microsoft has often done a better job at one over the other. This has frequently varied over time, depending on the product and its reception.

Take for example Vista. Both are sold to the C and B markets. However, the B (or enterprise business) markets have been slow on the upgrade. I think Microsoft would agree that the Vista brand pretty much caved at the business side. Needs and issues are frequently different for these segments. To me, given the quality of the Microsoft name and its products and its people, it really did a poor job at managing this B2C/B2B product.

In the case of Vista specifically, I also believe that the negative ramifications from the business side also impacted the consumer side uptake. While I don't have any rigorous analysis to support that, from my personal analysis i think that is the case.

Sumit Roy said...

The difference is the same as that between a corporate jet and a passenger airline.

Interestingly, the same brand could offer both.

If the emotional truth was the same for both types of users.

Mark Margetts-Smith said...

In most industries there is a big difference between B2B & B2C. For instance, if you are focussed on B2B then those differences are most obvious in your pricing model (potentially reduced margins, to leave profit for the final B2C sale); your sales pitch (you need to pitch the benefits of buying and selling your product and all of the many items that this brings into play); yours sales strategy (your target may be selling larger quantities to a fewer clients for instance, depending on what your product and sales channel model is); supply chain strategy (selling and delivering to a B2B clients distribution warehouse reduces your business costs but increases your need to monitor their abilities to distribute your product in a acceptable manner/timeframe etc) and your advertising & marketing strategy (Who is to market your product? This can be down to your B2B clients, with subsidies from you or direct marketing with leads forwarded to your B2B clients - all depends on your budget versus the size of your target market).

B2C marketing is more familiar to many apart from the need to occasionally develop different distribution/marketing channels. But don't be mistaken into believing that B2B & B2C are the same, beyond the fact that you are marketing a product to a potential buyer.

The Marketing Eye said...

Thanks to all. I'm delighted by the interest this discussion has generated.
Edward - I agree that the complexity of the decision making process is one of the fundamental points.
Mark - your analysis comes from the angle of one business using another for distribution and is of course correct in these circumstances. I wonder how you feel about products and services provided directly to businesses for their own consumption e.g. finance, plant and machinery, professional services?

Brenton Schmidt said...

A key difference between B2C and B2B is that consumer branding (other than pharmaceuticals) mostly focuses on increasing pleasure and emotional appeal while B2B branding/value propositions generally need to focus on reducing a pain that a purchaser is facing today and supporting this with credible stats/facts and proof.

Erik Bower said...

One way to think of it is that B2C is one person pushing a shopping cart to one person behind the booth taking orders. B2B is a whole group of people pushing the shopping cart, aruging about what should be in it and coming to a booth with many people behind it trying to get them to ring out.

Yes, silly, but B2B has a lot to learn from B2C about how the customer expects the sales process to be. There is an assumption that B2B can be more rigid in their processes, dealing with RFPs, etc. But B2B consumers are starting to expect the same level of ease of use in their B2B checkout and they do their B2C. The lesson for B2B is to have a "check out line" that is clearly communicated and easy for the customer to navigate.

The Marketing Eye said...

Thanks Erik,

I like the analogy, particularly in respect of the number of people arguing about what should be in the cart. For me, the multi-stakeholder purchase process is the fundamental difference between B2B and B2C.

The other side of your analogy suggests that businesses have multiple people vying for the same sale. I have certainly seen and worked in businesses where there is dysfunctional internal competition for a sale and clearly the issue is more rife than I thought. Streamlining the purchase process and making it easy for the customer (one point of contact, clear ordering process etc) is undoubtedly important.

Kimmo Linkama said...

I'm a bit late at the party, as usual, but wrote about the same subject at without having seen your post.

True, "you're talking to people" in both B2C and B2B, but the B2B people need to be addressed in a much different way and have a variety of checks and balances in place.