Key Elements of Business-to-Business (B2B) Marketing –
Business-to-business (B2B) is now a frequently used term in the industry, although it does not have any direct impact on the common man. When a business develops a product or service to be sold to consumers, it is called Business-to-Consumer (B2C). However, for a product to reach the consumer, a company has to depend on raw materials and semi-finished goods to produce them. This, in turn, may be produced by a small or medium-sized company that sells products only to other businesses.
There is a huge market for B2B businesses precisely because all products that reach the consumer has to have several components or kits that are then assembled or integrated as per a standardized design. Some of the attributes of Business-to-Consumer (B2C) are applicable for Business-to-business (B2B) as well- there has to be a need for the product, awareness creation, pitching for sales and actual sales of the product. However, branding is not probably required as the market is not just a consumer or a family but another business that just wants to get a good deal.
A car manufacturer sources could possibly be sourcing a variety of raw materials and shop floor requirements from a variety of suppliers- it could even start with the engine, suspension, radiator, catalytic converters, wheels, speedometer, upholstery, mirrors, dashboards and so on. Similarly, a laptop manufacturer may be sourcing the casing, display, motherboards, wiring, keypads, and Integrated Circuits (IC) from a variety of suppliers.
None of the business buying is done for indulgence but to make a value-added product and sell for profit, and hence there is a lot of difference in the mindset of an average consumer and a business buyer. The Business-to-business (B2B) business happens because of derived demand from the company that has a buyer for its end product.
Top 10 key elements Business-to-business (B2B) Marketing Strategy.
#1 Business buying is a complicated process
Business buying is a complicated process that may involve a various hierarchy of decision-makers and final approval from the finance department or sometimes even by the board of directors if it’s a major purchase. Moreover, decision-makers keep changing, and that creates a huge problem for Business-to-business (B2B) marketers. Some companies may go for the lowest quote as their objective is to keep costs down and earn more margin on product sales.
Business purchases are classified into low risk, low-value purchases that involve decision making at lower levels, low risk, high-value goods that require the approval of technical and finance levels, low-value high risk involving specialists and purchases, and finally, high-value high-risk purchases involving senior decision-makers in the company.
Since several key people are involved in purchasing of critically important products for a company, the Business-to-business (B2B) seller has to demonstrate a high level of expertise in all its interactions with the target audience. They should demonstrate a high level of product knowledge and assurance about technical competency to provide after-sales support for the entire life of the purchase.
#2 Rational buying
Unlike a normal consumer who buys from retail which could be triggered by a variety of factors including status, impulse buying, conspicuous consumption and so on, the business house buys based on rational analysis of cost and benefits to the company.
Consumers are less likely to have full information of the products or services they buy, but business houses base their buying on several parameters with the objective of making profits to the company or a return on investment (ROI).
With the proliferation of credit cards and more disposable income at the hands of a consumer, spending habits have changed. They could buy without cash in hand and pay in six months or one year equated monthly instalments.
The job of Business-to-business (B2B) marketers becomes challenging as the buying is based on critical analysis of pros and cons; however, buying could also be based on the reputation of the supplier and his previous track record. No B2B buyer will risk his stake on an unknown product, even if cost factors are favourable for the company.
#3 Complexity of products
Consumer products are bought based on brand building and awareness created by the company. Consumers may not be bothered about the finer technical details of the product, but the company needs to evaluate it in detail and see whether customization is required or changes in product specifications are required.
The Business-to-business (B2B) marketer needs to be armed with all the technical information and standardization protocols to gain access to the company’s top decision-makers. Information provided should be factual and not a value-building created in the mind of the buyer. On the other hand, a lot of investment required for brand building and value creation in the mind of the consumer can be eliminated In a sale based on ‘technical’ parameters.
#4 Less number of buyers and probably more sellers
Unlike a consumer market where there could be thousands and millions of buyers, the Business-to-business (B2B) market is more restricted to a limited number of perhaps large and medium scale buyers who have the option to choose from several suppliers. The Business-to-business (B2B) market works on the Pareto Principle of 80: 20, whereby eighty percent of the suppliers vie for 20% of the buyers in the market. However, the few key business buyers may be buying in large quantities compared to an average consumer in the market whose spending will be limited to a few thousand of dollars for that product category.
The limited number of buyers present a challenge and an opportunity for sellers as the process involves presentations, creating awareness, working closely with a client to make modifications to the product if required, do the selling process and thereafter provide after-sales service.
The supplier will be evaluated not only on product merits but on technical consultancy, product efficiency, value creation and on-site support services.
#5 Fewer segmentation and needs
In a consumer market, a particular product could be divided into different segments based on need, buying power and features. There could be a set of brands from a company that is in the premium segment- Timex Watches, Unilever consumer products, Levis jeans may have different offerings at different price points that cater to entry-level, average and premium buyers.
However, the industrial buyer is not looking at products for end consumption and hence not bothered to look at them from the perspective of a consumer. Segmentation of the market is much lesser as whims, insecurities, and indulgences are not the factors that drive the purchasing. Several people are involved in Business-to-business (B2B) decision making and segments are based on price, quality, service and partnership. The challenge for Business-to-business (B2B) marketer is to focus on the right segment and work with them to evolve a long-term strategic partnership although limited segmentation helps to an extent when compared to consumer markets.
The best strategy is to classify the target audience by size, split by geography and provide all the assistance required for the client. In Business-to-business (B2B) buying, the target audience is often referred to as clients since the product is not fulfilling a need but a kind of support for their end product.
#6 Building personal relationships
In consumer selling, the companies depend on the mass media to market their products- it includes newspapers, television, radio, internet and at the physical level- banners, hoardings, arches, among others. Here, the several consumers who buy the products are not known to the company as the products are sold through wholesale and retail channels except in the case of some products such as Vaccum Cleaners, mobile phones, water purifiers, books that are sold online or directly at customer premises.
Here, brand building is more important and providing incentives to channel partners who include distributors, C&F agents, wholesalers and retailers who in turn would push the product. However, in Business-to-business (B2B) marketing, building a personal relationship with the key decision-makers in the target company is very important. Often the marketing team members are the brand ambassadors. Therefore, the first impression of a company is formed during the first visits by salesmen to pitch for the account.
In a Business-to-business (B2B) business, a premium is spent on getting the right sales and marketing force, training and retaining them. Moreover, frequent changes in the marketing team may affect the relationship building with the prospective clients and even entail losing business.
Apart from direct selling, major Business-to-business (B2B) sales leads are generated through participation in trade fairs which is not required in consumer selling because of the higher spend on mass media. American Business-to-business (B2B) marketing relies heavily on trade promotion fairs spending $17.3 bn annually.
#7 Long-term buying
For an average consumer buying fast-moving consumer goods (FMCG), a purchase could be for a lifetime at least for 5 to 10 years, as in the case of TV, Refrigerator, microwave oven and others. Groceries, grains and consumable goods may be required on a continuous basis.
In the Business-to-business (B2B) industry, it could be a requirement of a component or kit on a continuous basis until a particular brand or product may be taken off from the market. Or changes in design or product specifications may make the particular device, component or kit useless or obsolete.
In Business-to-business (B2B) business, since customers are fewer and business is long-term, the sales team needs to build long-term relationships; the company should adequately train the sales force in the latest technologies and ensure that they are successfully communicating it to the clients.
#8 Business-to-business (B2B) marketers need to focus on innovation
Products thrive on the innovative spirit of the companies that develop them. They, in turn, have to depend on other suppliers to fine-tune the devices and components. Since innovations are planned and successfully commercialized in the B2B market, the sellers need to work hand-in-hand to benefit from new market opportunities. B2B marketers need to undertake detailed market research, combining it with upstream information to build a complete market intelligence picture.
Business-to-Consumer (B2C) businesses are likely to be less risk-averse as they need to predict to the whims and irrational behaviour of consumers rather than the more calculated decision-making of businesses.
#9 Looks & packaging do not matter
Consumer goods depend on good packaging and branding for their success. Huge amounts may be spent on the attractive design of cartons and logos. However, in Business-to-business (B2B), marketing packaging has lesser importance as buying is not based on looks and design. A product is judged primarily on its intrinsic merits and not on its attractive looks. Moreover, the decision-makers may not see the packing at all. It may be opened and used on the production floor by technical and production personnel.
#10 Branding and sub-branding
In Business-to-Consumer (B2C) markets, the role of branding and sub-branding has already been highlighted, but Business-to-business (B2B) companies do not rely on branding as 5% of the decision making is only based on brand influences. Some B2B companies have created sub-brands for every aspect of their product range in their urge to use branding strategies. However, the importance of relationship-building over a brand building for Business-to-business (B2B) has already been emphasized. Some Business-to-business (B2B) marketers are increasingly relying on the web and social media to reach out to the potential market.
The major trend in digital marketing and web design is towards minimalistic design for web and digital marketing. Flat design will become more popular in the coming year, according to Jeremy Durant, business principal of San Diego web design firm Bop Design.
Business-to-business (B2B) marketers now recognize the fact that success in selling requires the team to identify the key attributes of the personas of a company. Persona is an imaginative description of buyers within an organization based on their decision making, tastes and preferences.
The report based on 37 North American business and marketing executives revealed that 29% of survey respondents felt half of their workforce could describe the buyer personas that have been developed, while only eight percent felt three-quarters of their organization knows about it.
Success in Business-to-business (B2B) marketing requires developing buyer personas, validating persona insights with qualitative measurement, training teams to use personas in their day-to-day work, and finding third-party data to support persona creation.
Here are some articles that will help you to get more detail about the Business-to-business (B2B) Marketing, so just go through the link.