Key Difference between Consumer and B2B Marketing - Assignment Example

? Business To Business Marketing Contents Part 3 Critically evaluate the key difference between Consumer and B2B marketing 3 Part 2 7 What are the implications of these differences for marketing strategy? 7 Reference 13 Bibliography 14 Part 1 Critically evaluate the key difference between Consumer and B2B marketing Marketing is a tool which is used and has its roots in understanding the consumers and being the fact that all are consumers it becomes easy to understand or concentrate on consumer based examples. However business markets are much larger than the consumers market and the transaction that happens between organizations tends to have a greater impact on the economy as well as on the welfare of the people as compared to transactions which takes place between the business and consumers (Blythe & Zimmerman, 2005, p. 3). Most of the large firms which produce goods such as production, steel and equipment along with computer memory chips cater to the business market customers and the organizations do not directly interact with its customers. The introduction of the laser printers along with the personal computers had brought HP which was a B2B marketer into consumer market. Conversely, Apple strength has also extended towards the business market as its iPad were being used or tested in more than 75% of the fortune 500 companies just after a month of its launch. Corporate using iPad includes J.P. Morgan Chase, Tellabs, Inc., and Cardinal Health. Products such as office furniture, smart phones, software and personal computers are products which are purchased both by the consumers as well as by the business markets. The feature that tends to distinguish consumer goods from business marketing is the “intended use of the product “and the intended consumer.” Some of the global big brands belongs to the business marketing section and they includes Google, Blackberry, Cisco, Caterpillar, FedEx, IBM, HP, 3M to name a few organizations (Hutt & Speh, 2012, p.8-9). Some of the key differences which exist between B2C and B2B marketing have been shown in table 1. B2B marketing focus on fewer and on varied customers and involves a complex and technical sales processes as compared to the consumer marketers. The issue of complexity such as multiple stakeholders which includes, purchasing agents, financial analysts, engineers, layers , manufacturing managers all of these stakeholders proceed through multi stage decision making process. The presence of however few but powerful customers who often account for a high percentage of sales represents that most of the powerful and common statistical tools in the B2C domain should be adapted in the B2B domain. In addition, most of the transaction in B2C sectors happens through common channels. For example, consumer packaged goods in the retail stores through which the retailers are able to capture and host about the competitive consumer marketing. In contrast, transactions in B2B marketing are mostly private and negotiation happens mostly through downstream channel of distribution. Therefore it can be said that data about the terms and nature of transactions and consumers are not visible to the common people (Lilien & Grewal, 2012, p.4). Table 1: Difference between B2C and B2B B2B marketing generally involves wholesalers, manufacturers and the service firms which markets the good and service to other form of business but not to the ultimate consumers. Thus the distinction between B2C and B2B is not only the service or the product but the ultimate users of the product and the service. For example, if a pair of jeans had been sold to industrial business which then to custodial firm where the employees would have wears them on the workplace, such transaction would still be termed as B2B transactions. Another major factor of difference between business marketing and consumer marketing is the role of sales person. Sales people are important and essential in dealing with consumer goods such as FMCG, consumer electronics, jeweler, insurance and real estates. On the other hand, in B2B sales, sales person forms an integral part of the transactions. The demand for sale in B2B is often derived from B2C in the same supply chain. For example, the demand for raw materials or denim used to make jeans is often derived from the sale of jeans to the consumers (Grewal, 2008, p. 150). In B2B marketing, the customers tend to be the organization. The main difference occurs between the needs of the individual consumers and B2B consumers. B2B customer buys greater quantities of product than the individual consumers in the consumer market. The quantity of transaction of products in consumer goods usually involves only a single transactions, more number of transaction takes place in B2B market. Products which are sold in B2B market are customized product whereas this is not the case in terms of consumer marketing. B2b and B2C also differ in terms of service delivery. In B2B, the level of delivery of service is much more important than the consumer market. For example, car maker Toyota expects a dependable service delivery from the suppliers that are used in the manufacturing process. Thus if the suppliers do not supply the parts on time, the delivery gets delayed. Another difference is the customer relationships in b2b and b2c marketing. An example of Airbus and SAA will help to understand the difference between B2c and B2B. In B2B there involves a close relationship with the suppliers of aircraft, spare parts, with the maintenance, operations and repair of the aircraft along with the cabin staff and crew. This is another major difference that occurs between b2b and b2c. However customer relationships are not completely ignored in consumer marketing, marketers do focus on strong customer marketing but majority of it takes place with B2B marketing. The distribution channel also differs, in B2B the channel of distribution is small, few levels are included where as in B2C, the channel of distribution is much larger than business marketing (Petzer et.al, 2006, p.363). The above paragraphs however dealt with the major difference that exists between business and consumer marketing. But it can also be said that organization often make use of the opportunity to enter either business market or consumer markets. Organization with strong brand image and reputation in the consumer marketing tends to enter the business market and grasp the opportunity that they tend to perceive in the business market. The move is promoted by a matured product line, desire to diversify or production strength in the business market. P&G had departed from its packaged consumer goods and is using its expertise in fats, oil as well as in pulps in order to diversify into fast growing industry. J. M. Smucker is an example of a company that operates both in the business as well in the consumer market. Also there seems to be some amount of similarity between b2b and b2c marketing. According to Bargh (1994), empirically tends to support the proposition that deciding, thinking and doing processes includes bit and pieces of conscious and automatic process. Also in addition, both executives and consumers use few framing rules while deciding upon the nature of problem or even opportunity. All the decision makers creates and uses simplifying decision rules when the organization have to chose from two or more than two alternatives. The decisions are also made in groups both in consumer and industrial organizations (Baker & Hart, 2007, p. 125). Thus from the above paragraphs it can be concluded that the business and consumer industries differs in many number but at the same there tend to exist certain similarity between business marketing and consumer marketing. The main difference between B2B and B2C is the buyer’s emotional perspective made about the purchase of the product. Consumer takes decisions which are based on security, status, quality and comfort. While the business buyers make decision based on profitability, reducing cost as well as enhancing productivity. Part 2 What are the implications of these differences for marketing strategy? In order to understand the implication of the difference between B2B and B2C marketing, the strategies adopted by both the industries needs to be analyzed along with the marketing mix which constitute of 4Ps product, price, place and promotion. However benefit of studying as well as comparing both the consumer and industrial research is to gain an understanding of subtleties and the strategies used are also likely to have an impact on the decision making skills. The marketing mix, product, price, place and promotion of industrial and consumer marketing also differ in certain aspects. Product: the product differs in consumer marketing and in business marketing. In business marketing products refers to some kind of service provided to the customers. Products which are traded and falls under the category of B2B are referred to as commodity goods, search out goods and convenience goods. In case of B2C the products are categorized as convenient goods or commodity goods. The products branding strategies also differs between B2C and B2B. Consumer marketing makes use of corporate family or the corporate branding. For example, Schwartau is a brand of “Schwartauer Werke Gmbh” which as a manufacturer utilizes the corporate strategy in branding and also uses the concept of family branding with its brand Corny which is a cereal bar. Thus with the strategies the company had created a distinctive reputation for the brand as well as a high perceived value for its products. The benefits associated with B2B branding are disputed and mostly product or service branding or own private labeled products are used by business marketers as branding strategies. Characteristic of packaging also differs from product to products in B2B and B2C marketing. The difference between B2C and B2B is based on two functions, firstly package as one of the medium of sales promotion and secondly as carrier of information. In consumer marketing the medium used is for sales promotions. The consumers are spontaneous rather than rational and so packaging has the power to influence the sale of the product. But purchase decision in B2B is rational and not spontaneously and hence distinctive design would have a little influence on the sales figure (Wright, 2006, p. 452). Place: The channel of distribution differs at a high level in both B2B and B2C marketing. In case of FMCG goods the distribution channel for B2C is a supermarket and the process of distribution is planned in a collaborative way. FMCG products are sold mostly through the internet and through delivery services but the percentage of the total turnover still remains to be low. In case of B2B the distribution channel are based on a long term contractual relationship. Thus based on the quality of the relationship, the service along with the delivery of the products should be discussed so that there is an increase in the level of satisfaction on both the sides. Price: Pricing strategies followed by organization in B2B and B2C also differs in certain aspects. Value based pricing techniques is considered as an essential tool used by B2B marketers (Lilien & Grewal, 2012, p. 19). In consumer marketing, marketers teds to use different form of pricing strategies to induce sale and suit the needs of the customers. Market skimming pricing strategies is mostly used by big brands along with competitors based pricing to stay ahead of its competitors in the market place. Promotion: Promotional offers also differ between B2B and B2C marketing. Promotional offers are important and play an integral part when it comes to consumer marketing. As customer do not have loyalty towards FMCG goods or most of the consumer goods, advertising play a vital role in influencing the consumer to buy a particular product. In promotional activity of B2C appealing as per the feelings of the buyers is of great importance for marketers. In case of B2B the buyers are much more rational than feelings. Thus a small amount of promotional budget is allocated in case of B2B marketing. The implication of media also differs in both the case. B2B marketing focuses on direct marketing while consumer marketing concentrates on a message targeting the customers. The message set is important as the customers in consumer marketing are unknown to the markets as compared to business or industrial marketing (Barschel, 2007, p. 6-9). An example of J. M. Smucker which operates in both industrial and consumer goods uses different strategies for the industrial market and consumer market will help to understand the marketing mix of consumer and business marketing. Smucker reaches the consumer market with product line which is sold by the retailers. New products are developed, tested, then targeted to the customers, priced and finally are promoted to the target market segment. The firm distribution channel includes the food brokers who act as both wholesalers and retail buying units. Promotional plans for consumer goods include advertising, special offers, coupons as well as incentives for retailers. Pricing decisions reflects the nature of the cost as well as behavior of its competitors. Thus the marketer should try to manage all the component of marketing mix, product, place, price and promotion. However the marketing mix in business marketing differs from that of consumer marketing. Manufactures plays the center role as they has the potential to use the products of Smucker in the production of other goods. The firm lists all its potential users of the product such as the bakeries, large food processors, it then falls under the marketing manager to identify suitable market segment which Smucker can serve profitably. Thus a specific marketing strategy is thus developed for each of the market segment. When the company identifies its organizational customers the sales force contacts the R&D director or the product development product leader and is challenged to identify the ‘key buying influential.’ Product samples are prepared before the approval of the product and then along with the development of the pricing strategies. Then the product is shipped to the manufacturer plant. The sales person plays an important role in business marketing as it’s the duty of the sales person to follow up with the purchasing agents, plant manager as well as with other executives. Therefore the performance of consumer products tends to determine the demand for industrial goods which derives from the demand made by the consumers. The above illustration made on the marketing strategies adopted by Smucker highlights the features that tend to differentiates business strategy from that of consumer goods strategy. In business marketing, more emphasis is put on the personal selling rather than advertising made in television or newspaper in order to reach the potential buyer. However a small portion is likely to be invested in promotional through direct mails or trade journals. The industrial salesperson needs to understand the aspect of the requirements of the organization and find out solutions as to how to meet the requirements and also understand as to who influence the buying decision power (Hutt & Speh, 2012, p. 17). Whereas in case of consumer goods, promotional tools plays a vital role in influencing the buying decision making power of the consumers and is regarded as one of the most vital and important marketing mix. A marketer spends a majority of its budget towards promotional techniques unlike the industrial marketers (Shimp, 2008, p. 397). The product of business marketer includes service component as the consumers tends to evaluate the quality of both physical and also the attached services. Attention centers towards the total packaging which tends to benefits the consumer. Price is an important aspect in industrial buying. Business marketers believe that direct distribution of products to customers will strengthen the relationship between a buyer and the seller. The example of Smucker explains the difference in marketing strategies from consumer goods to industrial or business marketing mainly on the basis of emphasis given to respective marketing mix elements. The example also highlights the difference in buyer in both the categories. In organizations, individuals influences the decision making process. However the business marketer who gets involved with the purchase decisions process has a greater chance to success (Hutt & Speh, 2012, p. 17). Therefore base on the above discussion on business to business marketing and business to consumer marketing, it can be concluded that both forms of marketing differs in many aspect as shown in table 1. However the marketers serving in consumer goods are able to adapt or expand itself into business marketing and vice versa. An example provided in the above paragraph was that of J. M. Smucker which has operated successfully in both consumer as well as industrial marketing. However the marketing implication tends to be very different from each other. The marketing mix adopted for consumer marketing is different from that of industrial marketing and thus it can be said that there lies a huge difference between consumer marketing and business marketing. Reference Baker, M. J. & Hart, S., 2007. The Marketing Book. Great Britain: Routledge Barschel, H., 2007. B2B Versus B2c Marketing- Major Differences Along the Supply Chain of Fast Moving Consumer Goods (Fmcg). Germany: GRIN Verlag. 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