Business Marketing

Business Marketing

Business marketing is the practice of organizations facilitating the sale of their products or services to other companies or organizations.

LEARNING OBJECTIVES

Differentiate the characteristics of business marketing from consumer marketing

KEY TAKEAWAYS

Key Points

  • Demand in business markets exists only because of another demand somewhere in the consumer market.
  • The number of products sold in business markets dwarfs the number sold in consumer markets.
  • Business marketing generally entails shorter and more direct channels of distribution.
  • Business products can be complex, and so can figuring out the buying dynamics of organizations.

Key Terms

  • purveyor: Someone who supplies what is needed.

Business Marketing

Business marketing is the practice of individuals or organizations—including commercial businesses—facilitating the sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer, or use them to support their operations. In the broadest sense, the practice of one purveyor of goods doing trade with another is as old as commerce itself. As a niche in the field of marketing as we know it today, however, its history is more recent. Business markets have a derived demand. This means that a demand in business markets exists only because of another demand somewhere in the consumer market. In other words, business markets do not exist in isolation. For example, the demand for restaurant furniture is based on the consumer demand for more restaurants.

Also known as industrial marketing, business marketing is also called business-to-business marketing, or B2B marketing, for short.

A row of electronic product shops in Guangzhou, China.

B2B Marketing: Electronic product shops are an example of B2B marketing. They are local companies that supply various products.

B2B Versus B2C

Business-to-business (B2B) markets differ from business-to-consumer (B2C) markets in many ways. For one, the number of products sold in business markets dwarfs the number sold in consumer markets. Suppose you buy a computer from Dell. The sale amounts to a single transaction for you. But think of all the transactions Dell had to go through to sell you that one computer. Dell had to purchase many parts from many computer component makers. It also had to purchase equipment and facilities to assemble the computers; hire and pay employees; pay money to create and maintain its website and advertisements; and buy insurance, accounting, and financial services to keep its operations running smoothly. Many transactions had to happen before you could purchase your computer. Business products can be very complex. Some need to be custom built or retrofitted for buyers. The products include everything from high-dollar construction equipment to commercial real estate and buildings, military equipment, and billion-dollar cruise liners.

Business marketing generally entails shorter and more direct channels of distribution. While consumer marketing is aimed at large groups through mass media and retailers, the negotiation process between the buyer and seller is more personal in business marketing. A single customer can account for a huge amount of business. Some businesses, like those that supply the U.S. auto industry, have just a handful of customers, i.e., General Motors, Chrysler, Ford, etc. Figuring out the buying dynamics of organizations can also be very complex. Many people within an organization can be part of the buying process and have a say in what ultimately gets purchased, how much of it, and from whom. Having different people involved makes business marketing much more complicated, and because of the quantities each business customer is capable of buying, the stakes are high. However, B2B and B2C marketing do share some basic principles. Namely, the marketer must always:

  • successfully match the product or service strengths with the needs of a definable target market;
  • position and price to align the product or service with its market, often an intricate balance; and
  • communicate and sell the product in the fashion that demonstrates its value effectively to the target market.