B2C and B2B are two big worlds in the global market. Very often, entrepreneurs fail because they do not understand that rules of b2b and b2c are completely different. Meaning, there are two opposite approaches of launching and running these different kinds of business. In this article, we will explain to you how exactly they differ, what are the benefits of b2c and b2b and illustrate the explanation with some examples of b2b and b2c companies.
What does b2c mean?
The term b2c stands for “business to consumer”. Meaning, this is a type of marketing activity when an establishment (company, shop, website, etc.) delivers its goods/services to end-users – ordinary people who buy certain products or order services for their personal needs. Usually, no third party takes part in b2c trading.
What does b to b mean?
B2b abbreviation stands for “business to business”. This concept means sales of goods and services for the needs of companies. The bottom line – people do not buy anything for themselves, but a company buys big volumes of certain product with an aim to trade it later.
Here are a couple of examples for clarity.
Examples of b2b and b2c businesses
For example, I have a business. It is a translation agency. We are engaged in the translation of various documents and certificates into foreign languages. Do you think this is b2b or b2c? It is impossible to answer for sure because everything depends on the situation.
Let’s say a person needs a translation of a birth certificate to go abroad and get residence permission there. He or she would probably use some services like EduBirdie Services or any local translation agency. This definitely would be a business-to-customer experience, as the only sides involved are a company and a single consumer.
And if a representative of a company who has bought a new Italian machine tools appeals to us, and now they need a translation of all enclosed with machine documents – that is already b2b. The representative of the company will not use the translation of the instructions himself. Translation is ordered so that their business can work further.
Thus, here comes the conclusion #1: the same company can perform b2b and b2c activities simultaneously. The only question is who will pay for the work – the person himself or his company.
What are the pros and cons of b2b and b2c companies?
There are several fundamental differences between “businesses” and “consumers”. Based on these differences, you need to build your marketing.
Difference # 1 – Businesses are bought mostly when it is an urgent need for the product or service, and there is no way out except spending money on it. While ordinary consumers buy when there is a slight desire to get a product or service.
Difference # 2 – There are more consumers than businesses.
Difference # 3 – Businesses possess much more money than consumers.
In the b2b companies, it is better to sell something big and expensive enough, making only a few sales per month (or even a year). And in business-to-consumer companies, it is better to deal with inexpensive mass sales.
At the same time, your product for the b2b market should be a vital necessity. Something special they will not be able to work without. Then they will come to you to buy your goods. But for individuals, your product may not have any particular practical value.
The main thing in working with “live” customers is to make them want what you offer. That is, even if they did not know anything about you five minutes ago, or about your product – you can quickly warm them up to the state of readiness for purchase.
True, the purchase amount will be small. But this is how business-to-consumer works.
Furthermore, the main way to promote b2c goods and services is the usual advertising. And the main way to promote b2b is personal meetings and long negotiations.
Of course, there are exceptions to any rule. And there are successful b2b companies, which sell inexpensively and massively. There are also b2c, selling expensive, but little goods, like yachts, planes.
Sales b2b vs. sales b2c
Consumer sales are usually more straightforward, transactional and managed marketing. B2c sales tend to have a shorter cycle Because of lower price targets and fewer people involved in the process of preparing the solution. For many products, especially with prices below $ 100, this is more marketing than sales. Often, they do not even involve a seller. Such goods and services, if they can benefit from the use of online social networks, are more from social merchandising, targeted advertising and viral marketing tactics.
As the price and complexity of the goods increase, b2c begins to resemble b2b more and more. Especially when such intangible factors as guarantees, support, authenticity, and quality of service affect the sale process, a critical difference will be based on trust and relationships. In organizations, b2b sales are often multi-threaded processes, including communication with many decision-makers at different levels of the organization. All these factors lead to an extension of the sales cycle. Sections of this chapter on the organization of cooperation in sales teams and promotion in client organizations are devoted entirely to b2b-sales. Finally, b2b transactions are often “individualized,” that is, they include negotiations that begin on the basis of insufficiently accurate information about the value of the goods and services offered and the needs of the client.
Thus, here comes the conclusion that B2b is “business for business”. These are companies that sell goods and services to other companies. B2c is “business for the consumer” when goods and services are already sold to specific individuals for personal use.
The same company can work both b2b and b2c. It all depends on who exactly and why they place an order with them. Individuals buy the most expensive thing they can afford. Meanwhile, businesses buy the cheapest from what will perform the task.
In the market of b2b, it’s better to sell something big enough and expensive, making only a few transactions a month or a year. And for promotion, it is better to use personal meetings and negotiations.
In the market of b2c, it is better to sell something inexpensive and in great need. And for promotion, you need to use regular mass advertising.
Emma Rundle is a famous American writer, blogger, and businessman. She is an author of diverse workshops and training dedicated to marketing, SEO and online sells. Emma has been a leading coach at his own Online Promotion Project for 3 years.