B2B Marketing: How it is Special

Currently in school we've been learning about marketing strategies. The business that my team is profiling this quarter is a produce distributor, OGC. Since OGC is in the business of selling to other business I've wondered if there is any significant difference in marketing to businesses versus directly to consumers. I found a white paper called “Why is Business to Business Marketing Special?” by M. Harrison, P. Hague, and N. Hauge of B2B International. I found it informative on some of the differences between marketing to consumers versus Businesses. I've summarized the 10 differences the white paper identified here.

1) B2B Markets Have a More Complex Decision Making Unit
The decision making unit in a business to business (B2B) model can be made up of one person acting on behalf of an organization, but it can also be made up of several individuals on a committee or is a decision that will need to be vetted through several layers of an organization that usually involves several different experts i.e. finance specialist, operations specialist. As a result of this complex decision making process a business to business marketer needs to demonstrate a high level of expertise to adaquetly address the multifaceted business decision making unit. B2B marketers also need to be diligent and patient as decisions often take longer to vet. Not every decision a business makes must be vetted through multiple levels of a company. The Risk-Value Purchasing Decision Matrix below represents relative risk and value decisions a business must make. Marketers in the high value & high risk quadrant must often be the most knowledgeable and diligent.

low-risk, low value: Decisions in this quadrant are made often by one person, possibly more junior in the organization. Relatively little thought goes into the decision as there is low risk if the decision is wrong.
low risk, high value: Often this quadrant is raw materials and involve a mixture of technical and purchasing personnel. A low price without impacting quality is important.
low-value, high risk: This quadrant includes items such as office insurance. Purchase decisions are usually made by specialists and purchases. Purchasers in this quadrant are required to have the expertise, such as a lawyer, to assess risk in each unique transaction. Price is not the driving factor in this quadrant.
high-value, high risk: Plant equipment or other high priced infrastructure would fall in this quadrant. Company leadership would be involved in this type of decision making including possibility a CFO, R&D director, Production Director, Purchasing Director, Head of Legal, CEO, etc.

2) B2B Buyers are More ‘Rational'
Business to Business buyers are more rational and less whimsical about purchasing decisions. Business purchasing units are less susceptible to whims and indulgences and more critical about price, quality, and return on investment. While emotions are still relevant for a business to business buyer a B2B marketer is best served focusing on trust and security.

3)B2B Products are Often More Complex
Business to Business products are often customized and need to be integrated into the business systems. As a result B2B marketers need to be fully informed about their product or services. B2B sales, while not always, rely heavily on the technical sale. B2B sales staff should strive to be extremely experienced and knowledgeable.

4) Limited Number of Buying Units in B2B Markets
It is not unusual for even the largest B2B companies to have 100 or fewer customers. This concentration of key accounts means that B2B marketing is very relationship based. Today many business purchasers are looking to create partnerships with their suppliers. B2B are well served to align themselves with businesses that share similar values.

5) B2B Markets Have Fewer Behavioral and Need-Based Segments
While the consumer products to have 10-12 market segments, it is not uncommon for the average business to business market study to produce only three or four. Typical segments include: (1) Price-focused segment - These are often business with low margins and service/product of low importance. “Extras” are not often important. (2) Quality and brand-focused segment - These business purchases are made on best product available information. Often these businesses have high margins and are usually medium-sized or large. They regard product/service of high strategic importance. (3) Service-focused segment - Businesses in this segments require product quality and range. These businesses are often in time critical industries, small to large with high volumes. (4) Partnership-focused segment - Business in this segment seek trust and reliability and regard the supplier as a strategic partner. They are often large, operate on relatively high margins, product/service is of strategically important.

6) B2B Personal Relationships are More Important to B2B
Personal relationships are very important in the B2B markets. It is not uncommon for B2B suppliers to have loyal customers. As a result B2B will spend a large amount of their marketing budgets on developing these personal relationships and retaining knowledgeable technical staff. The B2B sales person is focused on a limited number of quality-driven relationships often focused on face to face contact.

7) B2B Buyers are Longer-Term Buyers
Business are often making expensive and long-term purchases including capital expenditures and technology upgrades. These purchases are both of high value but often require routine follow-up. B2B marketers are also motivated to ensure lasting relationships as there are fewer business accounts about. Again, relationship building with a technically focused sales team is the focus of a B2B marketing.

8) B2B Markets Drive Innovation Less Than Consumer Markets
Business to business companies are much more responsive to trends rather than seeking to predict (unlike the consumer markets). This is because their customers are more clearly defined and trends easily identified. B2B customers have accessible data from upstream that allows them to carefully assess their options before making decisions. This does not imply there is no innovation rather it is driven by upstream data and complete market intelligence.

9) Consumer Market Rely Far More on Packaging
Simply put, packaging is functional and for the consumer. B2B companies resources are better spent on developing relationships and expertise.

10) Sub-Brands are Less Effective in B2B Markets
It is thought that B2B branding has increased over the years. A while a strong brand is important, sub brands and multiple brands can be confusing and even insulting to business purchasers. Values transmitted. B2B marketers branding should ensure its business values and recognize that less is more, and it is better to have a coherent brand that all can relate to rather than sub-brands.

The "Why is Business to Business Marketing Special?" reports highlights the importance of relationships in business to business marketing. Much of the other reading we are doing this quarter about operations and supply chains also highlights the importance of the relationships. When we relate this back to OGC we discover that OGC continues to foster long term relationships with customers. OGC is not a flashy consumer brand but rather has a dedicated sales staff that provides customers with one on one customer service, reliable information and a trustworthy product.

OGC has recently started a ‘brand' of produce called Ladybug that is exclusively grown in Oregon, Washington, and Idaho. The Ladybug brand is often joint marketeted with OGC's retail clients. Currently the joing branding includes in store displays that highlight the farmers. This presents a unique opportunity for OGC to add value to its products. While this type of joint marketing does not neatly fit into the 10 highlights of a B2B company above, produce (and food in general) has a unique opportunity for this type of innovative partnership. It is a marketing strategy that highlights the whole supply chain creating transparency, trust, and reliability not only for the business purchasing the produce, but for the consumer who will eventually eat the produce.  






M. Harrison, P Hague, & N. Hague. 2013. Why is Business to Business Marketing Special? retrieved from: http://www.b2binternational.com/publications/white-papers/b2b-marketing/