B2B and B2C Marketing - Assignment Example

We are living in a knowledge economy where the businesses are getting more and more competitive. Such a high level of competitiveness demands a highly buyer-oriented marketing. It is therefore, marketing, in modern world, is considered as the lifeblood to all the organizations, regardless of the fact that who are their buyers, consumers or businesses. Despite such a significant position of marketing across the board, the characteristics, features and nature of strategies employed differ widely for individual customers as well as the corporate customers, as their buying determinants also vary. The buying pattern can be divided into two parts, based on the customers: B2C: B2C refers to the purchases by the marketing focused on the individual consumers who by the product as the finished good and not for the intent of reprocessing or resale. B2B: On the other hand, B2B refers to marketing focused on the corporate clients who buy the goods to add value to it and re-sale. We can differentiate the marketing of an individual consumer and that of a corporate consumer on following grounds: Demand Business do not purchase to satisfy their own needs, rather they demand what is required to fulfil the demands of their (business consumers') customers. Thus, business buyer demand is derived demand. It means that there is an impact of all the determinants of individual demand on the derived demand of the business consumers. Moreover, it also means that it may be possible in consumer market to mould the demand but it is rarely possible to mould the demand of business consumers. The demand in the business market is more inelastic than consumer market. It means that demand of the consumer market is not affected by short run market price fluctuations. Market Size and Structure Business market contains fewer but larger customers but in individual consumer market, the number of buyers is large but average quantity they purchase is small. Moreover, the business market is geographically more concentrated as compared to individual customers. Promotional Techniques The promotional techniques used in marketing for business are different from that for individual customers. For B2B marketing, usual techniques are direct sales, trade discounts, personal networking etc. However, for B2C marketing, the promotional techniques are advertising and other above the line (ATL) marketing techniques. Buyer Expertise and Rationality Since the buying decision is very crucial and any error in that decision may cause a great loss, the buyers of the B2B are more rational, whereas, many consumer buying decision are derived by emotional appeals. AN EXAMPLE OF AN AUSTRALIAN INDUSTRY The example we have chosen to demonstrate the difference between B2B and B2C is the automotive industry. The automotive industry may serve both the purposes, B2B and B2C. If an automotive industry is manufacturing cars to be sold to the individual consumers, it is B2C market operation, and however, if ACE Car Rental, a car rental service provider, purchases a car from the same vendor (Toyota Motor Corporation Australia). In that case, it would be B2B market. Now let us analyse the various characteristics of B2B market in the scenario of automotive industry. CHARACTERISTICS OF B2B DEMAND: Derived Demand: The requirements of an individual purchasing Camry from Toyota Motor Corporation Australia would be different from that of a car rental agency. It is due to the fact that when a person demands a car, he demands whatever he wants, he demands the features which provide comfort to him. However, when the ACE Car Rental will demand a Camry from TMCA, he would demand whatever can give comfort to his customers. For example, the major customers of ACE Car Rental are those returning home from or going to an airport, it will demand the car with maximum luggage capacity or probably a luggage carrier on its roof. Thus, the demand of ACE car rental is derived from that of its customers. Moreover, when ACE Car Rental will buy the car, the performance will be at greater priority than an individual buyer, because the use of the car would be heavier than that of an individual customer. Demand Elasticity: The demand of ACE car rental will be more inelastic than that of individual customers. It means that organizations do not change their buying decision for few dollars. In this case, it means that if the cost of one car increase by 100 dollar, across the industry, ACE Car rental will not defer its purchase decision. Demand Stimulants: Demand Stimulants refers to the factors that influence the buying decisions effectively. If a person is buying Camry from TMCA, it may base its decision on its colour or some other emotional appeal, after seeing an Ad etc. However, when ACE car rental buys the Camry, its buying decision is based on factors like mileage, and other performance indicators. Thus we can say that there may be the case of emotional appeal in the B2C market, but such concept usually does not work in the B2B market. Demand Fluctuation: The demand fluctuation in B2B market is lesser than that in B2C market. For example, in Automotive Industry, there may be the case that for a particular season, the use of rental cars slows down, however, if that decline in demand is temporary, Ace Car Rental won't reduce its demand, since the vision of B2B market is long term. DEMAND DETERMINANTS: Assessing value: As discussed earlier, the demand of Camry in B2C market will be dependant on the perception of that car (a subjective measure). But the demand of Camry by Ace Car Rental will be dependent on the assessment of the value of the car, its useful life and other such objective measures. Cost/Benefit analysis: When an individual buys a car, he hardly does any cost benefit analysis. It is so because, the though the cost is objective but the benefits he will drive out of the car would be to some extent the subjective measure. In case of ACE car rentals, the cost benefit analysis is essential because, that car would be used to generate the revenue, thus cost benefit analysis is not only possible but essential too. End use: The end use of the car will also determine the demand. For example, as mentioned earlier, if the car is supposed to be used to pick and drop passengers from airport, the major demand would be greater storage space etc. CONCLUSION: To sum up, the demand in B2B market varies widely from that in B2C market. Moreover, the B2B market demand is more inelastic, lesser affected by short term price fluctuations and based on rational decision making. REFERENCES Hutt, Michael, and Thomas Speh. Business Marketing Management. Cincinnati: South-Western College Pub, 2006. Read More