The whole variety of trade and business relations between buyers and sellers is usually divided into two large segments:
- B2B market;
- B2C market.
Market for business and market for buyers
The B2C market is the sale of end-customer oriented products and services. In general, simple and understandable rules apply in this segment, and preference is often given to the mass character of the product. On B2C, narrow and unique offers focused on one specific person are rarely used. Due to its mass character, marketing work is being carried out in this segment, aimed at large groups of the population.
The B2B market (from English business to business) is focused on selling services and products to another business, which forces its players to use methods and techniques of promotion and sales that are radically different from the market focused on ordinary customers.
Market for business and its features
If companies operating in the segment focused on mass customers use, in a sense, tools that generalize the audience and bring the faceless masses of customers to a common denominator of needs and desires, then the B2B market that does not accept this approach. B2B marketing focuses on a much narrower audience. Any offer here it should take into account the needs of a particular client and his business and be focused on solving, again, specific rather than general tasks.
And if in the B2C segment the buyer is often guided by momentary desires, and a large proportion of purchases are made impulsively, and even more - for reasons of basic necessity, then things are different in the B2B market.
B2B Market Characteristics
So, if the motives of purchases in this segment are different from the motives that dominate the market focused on ordinary buyers, then how do they differ? B2B market features are described below.
- Sales volumes (or purchases). For a company operating in the B2B market, ordinary consumers are not interested in buying one or more units of goods. Since, for example, dealers of various manufacturers sell goods in dozens, hundreds and thousands of units to shops and other customers at a price significantly lower than the retail price. However, given the fact that the average time spent on one transaction is relatively small, and the quantity of goods sold is significantly more than one unit, the seller wins on the number of goods sold. Moreover, most customers become regular, which allows you to more accurately plan sales volumes.
- Limited market. If the B2C market is made up of millions of customers, then the business to business segment is much smaller. From this fact it follows that the competition is much higher, and it is more difficult to attract buyers. For example, in a small town there are five construction stores. In order to close their needs, a few suppliers will be enough. And if the supplier offers an extensive list of products, then he may be one for all.
- Price. If for an ordinary consumer the difference in the cost of a product of $ 1 may not have absolutely any value, then in the B2B market such a difference can result in thousands of dollars per batch of goods. However, if you go beyond the scope of a single product and consider additional services or solutions that work in the future, here the cost may fade into the background. Suppose a businessman invests in a software package that automates his business. And the successful implementation of this solution will allow it to significantly reduce personnel costs, logistics, etc.In this case, the value of the proposal will be considered in terms of future benefits, and if it is correctly formed and submitted, its value will not be a decisive factor in deciding on a purchase.
- Weighted shopping approach. In business, people are used to counting money and analyzing their behavior. Decisions on choosing a partner and purchasing goods and services for business needs are made carefully and based on facts. There is practically no place for spontaneous decisions or choices based on personal sympathies and preferences. Therefore, proposals focused on the business segment take into account various factors and demonstrate the benefits of the purchase for a particular business.
- The uniqueness of the proposals. Without a clear and correct understanding of the client’s needs, successful work with the business segment is impossible.
Work in the B2B market
The creation of any product for B2B, whether it’s a product, service or software solution, begins with determining the specific niche for which this product will be intended. This requires a detailed analysis of the market, since errors at this stage can turn into a failure for future sales.
If we compare the B2B market with the retail one, we can see that the sales processes on them are significantly different. Firstly, the transaction closing time is much longer, and secondly, the process itself is much more complicated and confusing.
In addition to traditional advertising, an important role is played here. direct sales, meetings with customers, demonstrations, production of test samples, etc.
Since often the decision-making process on the purchase is made not by one person, but by several (for example, the company has a procurement department, after the approval of which the final decision is made directly by the head), the seller has to make a lot of efforts to reach a positive decision.
Business Partner Selection Criteria
Such criteria exist for every company operating in the business segment. And they are more likely dynamic because they can vary depending on the situation. But, nevertheless, the basic principles of choice always remain unchanged. This quality, speed, reliability and cost of goods partners.
As an example, you can list this:
- Quality of work.
- Fame of the company and the presence of positive reviews and recommendations.
- The speed of supply of goods.
- Speed of response to inquiries.
- The breadth of the product range.
- The cost of goods and services.
- Possibility of deferred payment.
- The financial condition of the company.
- Image of office staff, manager and the company as a whole.
Not the last place is occupied by personal relations between the buyer and seller. Therefore, a lot of attention is paid to building friendly relations with customers.
B2B market segmentation
B2B market segmentation is one of the most important stages in work. In fact, there are many criteria by which you can break the market into segments. However, there are two large groups of them:
- Macro segmentation.
- Microsegmentation.
For macro segmentation, the global characteristics of enterprises matter. For example, headcount, annual turnover, geography, industry.
Microsegmentation is necessary in a detailed market analysis. In this case, more hidden features of enterprises are revealed. For example, how the procurement process occurs, what criteria the company uses when making decisions, etc.
In general, segmentation is a rather laborious and lengthy process that requires a systematic approach and a good resource base. However, successful B2B marketing is not possible without a clear definition of its customers.
Examples of criteria for segmentation
- Type of activity of the organization. This defines the markets in which the company operates. For example, construction, energy, IT sector, food industry.
- Specialization of the enterprise. What the organization specializes in when working in its market.For example, the production of drywall, the cultivation of wheat and barley, etc.
- Company position in the market. How strong a position it occupies in its niche, what is the company's share in total sales.
- The size of the organization. Small, medium or large business.
- Company organization. Which group does the organization belong to? For example, trading, manufacturing, trade and manufacturing, wholesale, retail, wholesale and retail.
- The geographical scope of the work. At what level does the company work - international, national, local?
- The presence of branches. Does the company have a branch network and how developed is it?
- The production cycle. How complete is the company’s production and supply cycle? How often does she resort to the help of contractors and what is the percentage of her own security?
- The number of purchased goods and services. How large are external purchases?
- Decision making process. How and at what level does the company make decisions, for example, on procurement?
Segmentation difficulties
To fully segment the B2B market, a huge amount of resources is needed. Therefore, usually no more than 3 criteria for analysis are distinguished, which, in turn, are divided into additional subgroups. In most cases, this approach is sufficient, since the business model of an enterprise operating in the B2B market is usually built with a focus on a specific niche of consumers.
B2B business models
Given the rather complicated and long sales cycle, as well as the features of this market, it is necessary to build a business model that takes into account many factors. To ensure effective promotion on the B2B market, first of all, a detailed analysis of the selected market segment and the search for solutions that may interest its participants are necessary. It is necessary to find the most effective ways of promotion, take into account the closing time of transactions, the competitive environment, determine the criteria for choosing partners and build your strategy based on them.
The B2B market does not forgive poor preparation and ignorance of its features. Sometimes even a small mistake can result in big losses.
