Sunday 12 April 2009

Business to Business Marketing


The business market can be defined as "all the organisations that buy goods and services to use in the production of other products and services, or for the purpose of reselling or renting them to others at a profit" (Kotler, 2008). There are many types of organisations that benefit from B2B marketing, including: institutional organisations such as community-based and not for profit organisations; Government organisations such as health, education, environmental protection, policing, transport and national defence and security; and commercial organisations including distributors, original equipment manufacturers, users and retailers.

In many ways business to business marketing is very similar to marketing to the customer. The same questions must be posed in order to determine the specific target audiences: who the buyers are and what are their needs, how the buying decisions are made and what factors are likely to influence these decisions. However, there are also many differences in marketing to businesses rather than to consumers, one reason being that "business markets involve far more money and items than do consumer markets" (Kotler, 2008). As an example, there are a huge number of transactions that take place during the production and sale of a single set of Pirelli tyres, including the use of various suppliers of rubber, steel, equipment and other goods required to produce and develop the product. The finished tyre is then sold on to the retailers who then sell the product on to consumers.



"Business to business is about meeting the needs of other businesses, though ultimately the demand for the products made by these businesses is likely to be driven by consumers in their homes" (B2B International).

There are four key characteristics that clearly define the difference between business to business and business to consumer markets:

The decision making unit is far more complex;

  1. Business to business products and their application are far more complex;
  2. They address a much smaller number of customers who are very much larger in their consumption of products than is the case in consumer markets;
  3. Personal relationships are of critical importance in business to business markets.
(B2B International)

One of the most neglected marketing opportunities in the business to business arena is the building of a strong brand, especially in the rapidly changing environment where it is becoming increasingly difficult to distinguish one product from another.

Kotler (2008) explains that the most influential characteristics of business to business marketing are that these markets contain fewer but "larger" buyers, purchases are likely to be very high risk, meaning that if the product was not suitable or were to fail it is likely to cause major disruptions in the function of the business. Business customers are likely to be more geographically concentrated in the way that the majority will be based in the larger cities of the world rather than smaller villages for ease of access and communication. The demand in the business market derives from the final demand of the consumer in the way that, for example, if there was to be a higher demand for Coca-Cola, the products required to produce the drink will ultimately need to be increased in order to satisfy the overall demand. Business markets are not affected immediately if prices were to change. An increased number of people are involved in the decision making process within business markets and a more professional purchasing effort is involved. The buyers and sellers within business markets work closely together in order to build successful long term relationships.

This Coca-Cola advert below "the Coke side of life" demonstrates the aspects involved in the creation of each individual product. It is portrayed in a conveyor belt style with each development shown during the process of the making of the drink from the initial thought to the delivery to the consumer. It encourages the consumer to appreciate all that goes into the production in order to satisfy our needs with the use of intriguing imagery and complex scenes that are full of detail.



As with business to consumer marketing a model of buyer behaviour is available to determine the processes in which the consumer goes through when purchasing a product. In the business market, this process is far more complex and involves many high risk decisions from all areas of the business. The model shows the ways in which marketing and other stimuli can affect the overall decision and therefore, the final response from the buyer. The four P's still exist in the business model, being the major form of marketing stimuli, as well as other stimuli including economic, technological, political, cultural and competitive. These stimuli are acknowledged and responses are delivered accordingly with regards to product or service choice, supplier choice, order quantities and delivery of goods.

In cases within B2B marketing, organisations develop a partnership with their suppliers and other associates in order to exceed the level of demand and provide first class, value for money products for consumers. An example of this is the hugely popular Swedish born retailer IKEA who not only buys from its suppliers, it also involves them "in the process of delivering a stylish and affordable lifestyle" to its' customers. A case study into real marketing taken from Kotler's Principle's of Marketing states that the organisation could not survive without the support from all the suppliers, manufacturers and designers etc in order to continue to develop and produce highly popular and durable products. IKEA state that they always buy resources in bulk on a global scale so as to be in the position to offer the best and lowest prices to the customers.



There are three major types of buying situation involved with business to business markets: the straight rebuy which tends to be a fairly straightforward purchase in which a reorder of an existing product is made with no modifications; the modified rebuy may involve negotiating on the price of the product in question, altering the product specifications or even changing suppliers; and finally, the new task is where a product or service is purchased for the very first time by the organisation.


The buying centre or decision making unit of a business incorporates all the individuals that are involved in the buying process. There are five main roles within this unit including the users who will ultimately use the product or service; influencers who "help to define specifications and also provide information for evaluating alternatives;" buyers who generally tend to select the suppliers and negotiate purchase terms; deciders are the individuals with the power to select or approve the final suppliers or product; and gatekeepers "control the flow of information to others" (Kotler, 2008).


It is important to consider the total number of businesses that are involved in helping other businesses run successfully. For example, product manufacturers and suppliers require assistance and services from many sectors including gas, water and electricity so these individual companies must develop marketing strategies specifically targeted at fulfilling the requirements of the business so that they fend off competition and win contracts. With services such as those offered by PR, Marketing and advertising agencies, it is important to build a close relationship and ultimately build trust and manage efficient customer relationship management strategies due to the fact that in the business world there are far fewer customers in comparison to B2C markets and they cannot afford to lose any. The forms of marketing communications used within business to business selling differ greatly from B2C markets in the way that majority of marketing spend goes towards personal selling. This is due to the fact that purchases are generally larger and of great value increasing the need to build a close and trusting relationship and get to know customers on a more personal level. Personal selling is followed by sales promotion as price is always seen to be one of the most important aspects for an organisation to consider. Occasionally, products or services are not always bought for cash. In some instances services have been exchanged between two companies (also known as reciprocity) for example, a software company and a car dealership where computer software may be exchanged for company cars etc. Leasing is also becoming a popular option as some products may be too expensive for organisations to buy outright or may be likely to need updating in the near future.

Business to business marketing is present in all industry sectors although some are more obvious than others. After gaining experience working for two companies that provide business to business services, it is clear that services provided specifically for businesses are imperative when considering the possible success of the business. One company I previously worked for provides counselling and psychology services to other businesses including popular high street banks and police forces. The services provided have shown to have an immediate effect on employee performance and retention but in the long term, the services provided to customers of the client are greatly improved helping to develop a good reputation for the brand. This proves to be an effective example of business to business partnerships reinforcing the fact that "demand is derived from final consumer demand."