*Positioning
The fundamental difference between business-to-business and consumer marketing
For many CEOs or boards of directors of industrial or service organizations, marketing is a ‘far from their bed show’. The decision-maker in an organization often rises from sales and sees it as the department where money is earned. “Marketing costs money and doesn’t yield anything net.” The executive, brave enough to take the plunge, quickly loses track in a maze of theories and success stories. All are based on successful use of channels and resources to reach consumers; one simply replaces consumer with buyer/client. Although the resources and channels are used in both fields, there is a fundamental difference between business-to-business and consumer marketing.
In a large part of the business-to-business markets, a limited number of participants are active; thus, every participant – buyer or supplier – knows virtually all other competing organizations in the market. Supplier or buyer relationships are entered into for longer periods, and there are strong interpersonal relationships between organizations. The modus operandi for these organizations is to retain current customers and quietly try to bring in new relationships. This is reflected in the marketing strategy, as efforts must be made to attract new prospects, but the most important thing is that it must not drive current customers into the arms of competitors. This is why industrial and service organizations are seen as conservative and cautious; there is too much to lose.
Herein lies the fundamental difference with consumer marketing, where an action or campaign is entirely focused on the target audience and market position. Success is achieved if a certain percentage of the target audience develops a preference for your product. If you can attract 10% of a new target audience by alienating 90%, that is often an excellent result. In consumer marketing, the goal is to motivate a small part of the target audience for the product, even if it means compromising the position with the rest of the market. Conversely, in business-to-business marketing, organizations aim to acquire new customers with the condition that they alienate as few parties as possible.
This leads to the fundamental difference: business marketing mainly aims to prevent parties from dropping out, while consumer marketing is solely concerned with finding people who want to join.
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Two examples that illustrate this difference:
| Trade fair (B2B) – Practically the entire market can be found at a trade fair. Every organization is there mainly to receive current customers and make a ‘show of presence’. Here, a limited number of valuable relationships are formed, which may lead to negotiations in a few months. | Consumer fair (B2C) – Every consumer brand is represented with a stand, and a company sometimes has up to 5 different stands. Stands are populated with hired salespeople with no loyalty to the brand, and they are instructed to put as many samples as possible into the hands of visitors. Additionally, visitors are bombarded with ‘offers’. |
The marketing bibles of Kotler and Verhage, from which business studies courses are taught, dedicate only a few paragraphs to business-to-business marketing, while business-to-business turnover is a multiple of business-to-consumer. The positioning of B2B and B2C companies couldn’t be more different!
In recent years, there has been a clear movement towards a more relational approach in consumer marketing, but the fundamental difference remains. Organizations in a strictly business market would do well not to determine marketing efforts based on successes in consumer marketing, but perhaps smaller successes in a business environment. They must, in line with their own strategy, look for actions that fit their own customers, employees, and organization. Maintaining and possibly building relationships should be central to this.