WHAT IS B2B MARKETING?
Business-to-business or B2B marketing is sometimes referred to as industrial or trade marketing, and it deals with products and services that are bought by enterprises rather than individual consumers. For example, not many of us will ever buy earthmoving equipment or a conveyor belt for personal use or as a birthday present. And yet such things certainly are bought – even though you may not find them for sale in the stores you go to on a regular basis.
As consumers, we buy finished products that are ready to use and have been through all the processes they need to go through before they are finally put on the shelves. Very few of us still make our own shoes or clothes, and none of us would even think of making our own tyres.
B2B companies very often provide one element of a finished item. Their products and services are bought by other companies who use them in their products and services. Think, for example, of a cellphone and all its different elements. From the printing on its surface through to the battery inside, it contains a large number of parts that had to be changed from basic raw materials, by being manufactured, assembled, packaged and distributed as a brand new phone that is ready to be sold to consumers. If you consider all the parts and processes that go into everything that gets bought – either by enterprises or by consumers – you will realise that they all add up to an astonishing amount of money being spent in B2B markets. In fact, the total B2B market is way bigger than the consumer market.
And that’s why B2B marketing is so important.
THE COMMERCIAL IMPORTANCE OF B2B MARKETING
Given that spending in B2B markets is far larger than all spending in consumer markets, it becomes clear that B2B marketing should be creating sales, protecting margins and building market share for your own company. It should be motivating your market to buy from your company and to keep on buying from your company. In other words: your B2B marketing should be a real money-making machine.
B2B MARKETING SHOULD MOTIVATE YOUR MARKET TO BUY FROM YOU AND TO KEEP ON DOING SO
We all recognise large consumer brands and understand that a great deal of money and effort goes into motivating us to buy them. These large brands certainly understand the power and importance of marketing. They put so much effort into their marketing that we see it and hear it all around us every day.
So why isn’t the same kind of thing happening throughout B2B markets? Why is the power of marketing – and what it can achieve commercially – so badly neglected in the B2B environment?
Perhaps many B2B companies misunderstand the marketing function. Or perhaps its voice doesn’t carry enough authority internally, and that’s why not much happens on the marketing front. Maybe these companies don’t see marketing as a profit-generating, business-sustaining function, and that’s why they don’t pay much attention to it.
Because there is certainly a common notion in many B2Bs: ‘We don’t do all that marketing stuff here.’ There’s also a view among many marketers that B2B is boring – that it’s somehow more fun, more interesting and more challenging to be marketing fabric conditioner or financial services than earthmoving equipment or IT solutions.
Whatever the reasons, there’s clearly a great deal to be gained from a change in attitude here. All B2B companies should be taking advantage of the potential to create sales, protect margins and build market share through a structured, disciplined approach to their marketing.
But before it can have a truly positive impact on your sales figures, market share and margins, you need to understand what B2B marketing is all about and how to make it work. The best place to start is by looking at the reasons why B2B is so different from business-to-consumer or B2C marketing.
B2B VS. B2C: THE MAJOR DIFFERENCES
B2B marketing is a very different animal from B2C marketing. However, B2B also has much in common with B2C. For starters, its overall goals are the same: to build sales volume, market share and margins. Moreover, many of its activities are very similar, advertising being an obvious example. So the misconception that there’s not much difference between B2B and B2C is perhaps understandable. But consider the following: genetically, people are about 99.9 per cent the same. That’s what makes us what we are: human beings, as opposed to other mammals such as whales or bears. It is that tiny 0.1 of a genetic percentage point that makes us who we are – it makes us individuals who differ widely from one another.
So although B2B and B2C marketing may appear very similar, they are completely different. But what are these differences?
Although B2B and B2C marketing seem very similar, they are completely different.
Major vs. minor consequences
B2C typically deals with frequent low-price purchases, high volumes, simple products, short sales cycles, inflexible pricing and minor consequences. There’s not a lot at stake when we make most of our personal purchases, and we don’t give them much thought.
There is no structured consultation or fact finding, and there are no presentations, vendor assessments or long-term return-on-investment considerations when you buy a trolley load of groceries or cleaning products from your local supermarket. And if an item is out of stock, this is not usually a major problem. You can try another store or switch suppliers and brands really easily. And if you can’t get it today, chances are you’ll get it elsewhere tomorrow.
But in B2B, everything changes, because B2B typically deals with Marketing in the B2B environment infrequent high-price purchases, low volumes, complex products, long sales cycles, flexible pricing and major consequences.
If your company wants to buy four earthmovers for really serious money, you will be going through a much more involved process than you would on your next visit to the supermarket. And there is a lot more at stake, because if you buy the wrong earthmovers, the consequences are rather more far-reaching than when you buy the wrong toothpaste. In addition, continuity of supply is much more important in a B2B transaction, as it will seldom be possible to switch suppliers at the drop of a hat.
B2B buying involves more people.
Another major difference between B2B and B2C is that many more people will influence the buying decision. B2B customers – the enterprises that buy and use your products – are only one part of an overall market that may contain many different elements that influence buying decisions. The overall market might include distributors and wholesalers, turnkey solution providers, specialist consultancies or professions, support and service providers, analysts, commentators in the media, special-interest groups, standards boards and statutory regulators, trade associations and even the general public.
However, there are also people with different needs within your customers’ organisations. And each of their specific needs must be fulfilled by your products, services and processes.
Here is a simple example of the different influencers within a customer. Let’s say your company makes fabulously reliable earthmovers and that among your customers are companies that build roads. High levels of reliability that cut your earthmovers’ downtime and so increase their productivity is a really attractive benefit for the sales director at a roadbuilder. Why? Because he can tell customers that higher productivity allows him to build roads faster and at a lower cost than his competitors. And because he can work faster, he has the opportunity to do more road-building deals. So he has the potential to make more sales and earn higher commissions. Reliability is also an attractive benefit for the road-builder’s finance director. But for him, in addition to the attraction of increasing sales, reliability also translates into lower cost-of-ownership and a higher return on investment. This creates the potential to increase income, improve margins and raise profitability. So he can grow his performance bonuses.
B2C VS. B2B: WHAT YOU WANT VS. WHAT YOU NEED
Companies that make earthmovers advertise. Companies that make cars advertise. They advertise for the same reasons and are looking for the same commercial results. Their advertising may well be based on the same principle: grabbing your attention and boosting your interest in their product.
The advertisement for JCB shown here promotes the idea that hassle-free operation is one of the ways its big machines will help build the success of your business. Fair enough …
By contrast, the B2C approach to advertising is often very different. In 2008, the BBDO advertising agency in Athens, Greece, produced a controversial print advert for previously owned cars from a well-known luxury brand. It featured a head-and-bare-shoulders image of a beautiful blonde woman, with the tag line, ‘You know you’re not the first.’ The none-too-subtle message was that you don’t need to feel second-rate because you are choosing second-hand (an internet search for the tag line will bring up the advert).
The fact that this used-car advert is so blatantly sexist highlights the point that much B2C promotion is poisonous and deceitful. One of the many problems this creates is that it affects our attitude to all forms of promotion and the extent to which we trust it – either as B2B buyers or B2C consumers. We’ll get to grips with this particular issue in Chapter 9 (PR and B2B), when we look at the challenges of countering ‘orchestrated lying’.
But for now, with an advert having attracted attention, what happens next?
Unlike the (exclusively male?) used-car buyer who may be looking for a symbol of status and personal prestige, people who purchase earthmoving equipment do so purely for business reasons, and not to improve their lifestyle or to reward and please themselves. So while B2C customers are mainly motivated by what they want as opposed to what they need, B2B customers are not motivated to buy solely for emotional or personal reasons.
In Chapter 3 (B2B’s Big Five buying motivators), we’ll look at the specific reasons that truly motivate B2B buying.
But first we need to look at how B2B markets work and how buying decisions are influenced and made. This is very important, as in B2B it is these decisions that generate your sales, your margins and your market share.
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