Small number of Buying Units in B2B markets 

Pareto Principle or 80:20 principle rules almost all business-to-business markets. To put it more precisely, small number of customers rule the sales ledger. Even some of the largest business-to-business companies may just have 100 or few customers that may make huge a difference to sales.

The major difference between a consumer market and a B2B market is of scale. In consumer markets, there is a limit to a single persons purchase. No doubt, there will be heavy users of all consumer products, but in the consumer market there won’t much difference between heavy users or light users when compared to the scale of difference in business-to-business markets. The amount spend by the largest and the smallest buyer in a business-to-business world is likely to be much, much more as opposed to the amount spend by the largest and smallest buyers in the consumer markets.

The Role of a Business to Business Marketer

Since small number of customers rules the lives of businesses, database management has become a crucial component of business-to-business marketing. Customer relationship management systems help in updating databases. It includes personal details of members of the DMU along with each and every transactional and contract record.

Moreover, business-to-business marketer should be skilled at key account management. Key account management calls for prompt delivery of services and products in the given time period, buyers also look forward to services such as rapid problem resolution and technical advice. Further, key business-to-business accounts, today, are looking beyond the delivery of effective products and services at good prices, now they are aiming at partnerships. Today, they are looking for suppliers, who can bring value-additions to the table. Say, for instance, stock goods on their behalf, offer technical consultancy, calculate product efficiency and even provide long-term on-site support.

And since there are selected few buying units in business-to-business markets, it presents both an opportunity and an expectation to the B2B marketer. The marketer at his end should ensure that biggest buyers are provided with best value-added services. Remember, if you don’t satisfy his requirements, someone else will be willing to.

Fewer behavioural and needs-based segments comprise B2B Markets

A study of over 2000 business-to-business studies reveals that B2B markets have smaller number of needs-based segment than consumer markets, whereas an FMCG market boasts of not less than 10 or 12 segments. The average business-to-business market by and large has 3 or 4 segments.

Probably, a smaller target audience makes it convenient to have smaller number of segments in business-to-business markets. In consumer market, there are thousands of potential customers, so it is considered practical and economical to divide the market into 10 to 12 segments, though several segments may get separated by small variations or need.

The primary reason for smaller number of segments dominating the B2B markets is that business audience’s behavior and needs are comparatively lesser than that of a consumer audience. Whims, insecurities and indulgences are far less likely to affect the decisions of a B2B buyer, since the purchase is for place and not for oneself or for a personal family member. And since, numerous colleagues are involved in the decision making process, it will help sort out out the unwarranted behaviour.

Need-based segments in a b2b market often comprises the following

Price-focused segment – Often small companies fall in this segment. Companies work for low profits and consider the product/service of low strategic importance.

Quality and brand focused segment- This segment seeks the best possible product and don’t mind paying for it. Medium-sized and large companies seeking high margins fall under this segment, and consider product/service of high-strategic importance.

Service-focused segment- Both product quality and range is important for the buyer and even after sale services and delivery rank prominently in their must-have list. Both big and small industries fall under this category and are specially into bulk purchasing.

Partnership-focuses segment – Here the buyer regards the supplier as the strategic partner. Such companies work on comparatively high margins and consider the product/service of strategic importance.

The Role of a Business to Business marketer

Since business-to-business market is confined to a few segments, makes the role of a b2b marketer much easier. Nonetheless, the marketer has to put in some efforts to find which customers fit in which segment, and moreover he has to come up with innovative strategies to attract each of these segments Major challenges encountered by a b2b marketer while ascertaining behavioral or need based segmentation are as follows.

To arrive at a consensus on what segments to serve, and to familiarize oneself with the special features of this segment, this usually calls for investment in quantitative market research.

Once the segmentation has been achieved, there is a need to identify other segments like country and the industry sector. Behavioural and need-based segments usually bypasses ‘firmographic segments’ like country and industry sector.

Orienting sales team, marketing teams, customer relationship and various other departments, so as to get them acquainted with the segments. This calls for huge effort and investment, horizontally and vertically within the organization.

Given the limited size of b2b target audience, B2B marketers, more often than not split the target audience geography wise, with all the key accounts receiving the much-desired attention.

Personal Relationships are crucial in B2B markets

Business-to-Business Markets rides on personal relationships. Small number of customers that buys by and large from the same supplier is easy to talk to. Sales and technical representatives show excitement in meeting such buyers. People refer each other by their first-names. Personal relationships and confidence level reaches newer heights. Now days, it is a commonplace for a business-to-business supplier to have customers who have been loyal and committed for years.

The significance of personal relationships is particularly predominant in emerging markets like China and Russia, where the concept of branding is still at its budding stages. Here the customer completely trusts the salesperson in terms of the quality of the products.

The Role of a Business-to-Business marketer

Stress on developing relationships, helps cultivate faithful buyers, thereby making it easier for a b2b marketer to focus more on the sales and technical side, rather than devoting too much of time on promotional activities. Advertising budgets for B2B marketers are usually fixed in thousands of pounds and not in millions. Unlike a consumer salesperson, a B2B marketer focuses more on cultivating a limited number of relationships than be quantity driven as in the case of consumer markets. Here, stress is more on face-to-face contact, and the salesperson is expected to have in-depth technical knowledge of whatever he or she is selling. Trade shows; therefore have come up in a big way in B2B markets. They are considered to be number one promotional tool of US business-to-business companies.($ 17.3 billion per annum are spent on trade shows)