Business-to-Business Concepts and Examples

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Business-to-business refers to transactions that take place between companies rather than between companies and individual consumers. Many companies cater to providing products or services to other businesses and never deal with end consumers. Marketing, strategy and other business concepts are somewhat different for business-to-business product and service providers than they are for firms that provide for consumers directly.

Derived Demand

Business-to-business, called B2B, marketing is an important concept for firms operating in the B2B marketplace. The business you are selling your product or service to will likely resell a related product or service to another customer; therefore, they will be concerned about costs and value that they can pass along to consumers. For this reason, marketing strategies should be focused on how your product or service benefits the customer further down the distribution chain. B2B firms should consider this concept of derived demand when marketing their products and services to other companies. For example, a company selling rubber to a shoe manufacturer needs to have some awareness of the type of shoe that end consumers want, so they can provide materials of a quality that customers will expect when they buy the shoe.

Segmentation

Since market sizes tend to be smaller in the B2B space, segmentation can be a challenge. Dividing the total market into smaller segments by company size or by geography, for example, can be a logical way to start categorizing your business clients. Make sure the segments are not so small that marketing costs will not generate a good return. In addition, it is important to consider the needs of the companies in each segment and then formulating a strategy to target each segment separately.

Branding

Building loyalty is an important part of sustaining strong business-to-business client relationships, and strong branding can help create that loyalty. A good brand conveys the messages you want your customer to hear, and just like business-to-consumer branding, an attractive and easily recognizable brand can bring new customers to your business who will remain loyal if your company delivers on its brand promise. For example, a company that buys coffee to serve its employees may remain loyal to a particular brand even if lesser known brands have lower prices, because the brand's promise of quality has been delivered over and over again. A brand also helps to position a company among its competitors and set it apart from other companies offering similar services to other businesses.

General Strategy

B2B companies need to consider all of the factors that may affect their customers' decisions. For example, a company might consider buying a substitute product from another firm if the price is lower for similar quality or if consumers start demanding slightly different product offerings. In the B2B space, it can be more difficult to determine what will make a customer switch product or service providers because the factors affecting decision making may occur much further down the distribution chain. Therefore, B2B product and service providers must be especially knowledgeable about their market segments and be able to anticipate their needs.

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