It is customary to divide the entire area of sales of various goods and services into two large segments. The first is B2C, the second is B2B. Quite often, having met these abbreviations, many wonder: B2C - what is it? Or what is B2B? So, let's figure it out.
B2B Market Description
If you literally translate the decryption, you get "business to business", from English business to business. The term B2B means any business focused on the sale of goods or services to other businesses. An example is wholesale bases that sell their goods in large quantities, trade organizations representing large manufacturers and acting only as sellers, etc. So, B2C market - what is it, what is B2B and what are their differences?
B2B Market Characteristics
Sales in this market segment are characterized by a number of features. Among them are:
- Volume . B2C is focused on sales for business, therefore, companies operating in this segment are more interested in wholesale than retail. At a low cost of goods (compared with the one offered to the final consumer), these companies make large cash flows due to the volume of various products. A striking example is the wholesale bases and dealer companies.
- Limited market. If we compare the number of buyers in the retail market with the number of potential consumers in the business-oriented market, we can conclude that the latter is many times smaller in quantitative terms than the former. Naturally, this fact increases competition in the B2B segment and requires completely different approaches to customers than the B2C market.
- Weighted decisions. Unlike an ordinary buyer, almost every businessman approaches any purchase for his business very strictly. This is primarily due to high risks. Suppose you can buy a batch of new goods, but it will not be in demand among consumers. Or, for example, buy a production line, and it will issue a marriage. In fact, there are a great many such risks. And the businessman must take them into account, especially since the financial and time costs for acquiring goods on the retail market vary significantly.
B2C - what is it
We have more or less sorted out the business-oriented market, let us move on to the consumer-oriented segment. So B2C - what is it? In English - business to customer, and translated into our native - "business for the buyer." If you compare it with the sales segment for sellers, you can see that these concepts are fundamentally different.
Key business features for customers
- Assortment . Typically, retailers try to cover as much of the market as possible. This is done due to the maximum expansion of the range of goods sold and services provided. Perhaps the most striking example of B2C is supermarkets. In such stores, the consumer can purchase almost everything he needs. Plus, get additional services, such as delivery, configuration and installation of household appliances.
- Customer value. In retail, the value of one customer is not very large, since the bulk of the money is made up of sales volumes for different consumers. Therefore, the B2C segment is focused on the needs of the market as a whole, and in rare cases takes into account the needs of a single person. As a good example, you can take any consumer goods, for example, bread. This product has all the characteristics that can attract the maximum number of customers. And if one person wants to buy mint-flavored bread, it is unlikely to succeed. And no plant will make one loaf just to satisfy the need of one client instead of thousands. And vice versa: for example, the owner of a supermarket for some reason decided that bread with mint flavor would disperse with a bang. He negotiates with suppliers - and they make him a test batch of such bread. Naturally, for such experiments, the volume should be large. The situation, of course, is rather unnatural, but, nevertheless, it can be understood from it how different the methods of promoting goods in the markets are, with a focus on business and consumers.
B2C: courier delivery
Like the market for goods, the market for B2C services is different from B2B. This applies to all areas of business. For example, B2C - courier delivery. Orientation to the consumer market obliges the carrier company to have a very wide warehouse network, as well as transport. This is necessary because the company needs to reach the maximum audience and create the best conditions for customers.
Combination of markets
If you look closely at many businesses, especially large ones, you can understand that in a certain place a clear line is erased between the two types of promotion of goods. The natural desire of the owner of any enterprise is to make more profit, and if the opportunity is given to get an additional portion of customers, no one will refuse. All sorts of building materials databases will be a good illustration. Or dealerships that distribute products to outlets.
An example of a company working with different markets
Consider an example: there is a small organization engaged in the production of metal products. In its work, this company uses paints and varnishes. The owner purchases it in construction stores or at construction sites, since he has small volumes to buy goods directly from the manufacturer. Alternatively, this owner can find an organization that has a dealership agreement with the factories and which distributes their goods to the very same construction stores. Given that such companies have a so-called minimum order, for example, $ 100, ordinary consumers are automatically eliminated. But for the owner of a small business, this amount is quite acceptable, given that he uses these goods in the production process. Working with a dealer company, he receives significant savings, since in this case the price he pays for the goods is almost equal to the purchase price of any store.
In this case, the owner of a small business acts as a small consumer, since the volume of his purchases is much less than that of stores, and, nevertheless, he is able to take advantage of better conditions than other consumers.
Difference in approaches
What is the difference between B2B and B2C? There are quite substantial differences between the two markets, although at first glance they are very similar. These differences lie in both marketing approaches and end-user goals.
The main differences between the market for consumers and the market for sellers:
- Weighted and rational shopping decisions. B2C is characterized by emotionality, the need to satisfy desires.
- Volumes . If an ordinary consumer makes purchases to satisfy his needs, then a businessman buys to ensure his business. Therefore, the volume of purchases can be huge.
- The price of the product. For the average consumer, the cost of goods plays a big role, but very often not decisive. But in the case of the B2B market, a difference of 1 dollar per unit can result in tens of thousands on the entire batch, so great attention is paid to the cost of goods.
- Sales methods. While B2C sales pay great attention to mass advertising, in sales on the B2B market personal contacts with customers and work with databases come to the fore.
Thus, we can conclude that corporate sales are significantly different from sales in the B2C market, that this is a division that requires completely different approaches and methods.