What is B2B and B2C? Differences between B2B and B2C
Is there any idea of starting a business that springs in your mind? If you have ever thought about opening your own company, you might first decide which products to sell and which customers to target. Then, it will expand to which type of business you should be.
It is possible for anyone to join the business landscape, of course. But before you do, learning about the industry and what’s going on is essential.
An industry includes both B2B and B2C businesses. Two forms of business are growing up parallel to each other. If you haven’t deeply involved in the industry yet, it makes sure that some aspects between B2B and B2C can confuse you. Don’t worry! This article will help you understand both forms of business better.
Table of contents
- What does B2B mean?
- What does B2C mean?
- What are differences between B2B and B2C
- Examples of successful B2B and B2C companies
- In summary
What does B2B mean?
B2B is shorthand for business-to-business. It describes businesses whose customers are also businesses. In other words, it is commercial transactions that take place between two or more business organizations like the supplier and manufacturer, manufacturer and wholesaler, wholesaler, and retailer.
There are several typical examples of B2B businesses, including logistics agencies, advertising agencies, software companies, graphic design services, office furniture manufacturers. Customers, as known as other companies, buy products and services from these B2B sellers to use in further production or serve for internal purposes.
What does B2C mean?
B2C stands for business-to-consumer. In this form of commercial transactions, goods, and services are marketed to individual consumers. B2C businesses sell products directly to the final consumers. The commercial transaction here is shorter than that in the B2B one.
As a consumer, you might get more familiar with the B2C than B2B. The presence of B2C is right on your daily purchase. When you go to an Apple store to buy a smartphone or buying food from a supermarket, it is B2C.
What are differences between B2B and B2C
Similarities of B2B and B2C
B2B and B2C may sometimes confuse you because two forms have similarities. So before we dwell on their differences, let’s talk about their similarities first.
B2B and B2C marketing might be the most easy-to-confuse one for you. Marketers in both B2B and B2C always cultivate communication directly to customers. So marketing strategies in B2B and B2C depend on the target audience. Both types know that entailing consistent and the customer-centric sales process is the key to win the customers, and building customer loyalty is the ultimate overarching goal. Whether you’re a B2B marketer or a B2C marketer, it is essential to identify and define buying personas of your customer (individual human customer for B2C and companies for B2B) for successful marketing.
Notably, at the very beginning, both types need to make sure that they have solutions for each customer who come to the business. Besides, it is crucial to continue the customer journey, even after-sales. This time is ideal for enhancing customer experience and establishing trust for them by providing excellent after-sales services, which contributes a lot to boost sales for your company.
Differences between B2B and B2C
B2B and B2C have a lot of differences. Let’s discuss critical differences together!
Different target audiences
The audiences of B2C are individual consumers who buy products and services for personal purposes. The consumers are everyday people who categorize into various segments. They are end customers and do not use purchased items for any other productions for sales purposes later.
The audience of B2B is more narrow and significant than B2C’s counterparts. Firms in all sizes, including SMEs (small and medium enterprises), or organizations purchase products, not for immediate usage. Instead, they use for business or internal purposes. B2B commonly has higher-value customers than B2C because its products and services are larger and more complex.
One of the most obvious examples distinguishes target audience of these two forms of business - You go to a Mercedes Benz branch to buy a car, then you are B2C customers, Mercedes Benz is a B2C company. You set up a book store and go to the publishers to purchase the books; you are a B2B customer.
Decision making on both sides is also different. The decision-making process in B2C is usually shorter than that in B2B.
In B2B, marketers have to deal with multiple distinct target groups/personas within a single enterprise. B2B business doers must keep in mind that there will be many people involved in the purchasing process, so the process is more complicated than B2C one. Depending on the type of purchases, the final purchasing is influenced by a decision-making group that can include members from technical, business, financial, and operational departments.
For example, the purchasing manager of a car manufacturer might need to consult with the finance, engineering, and sales team before deciding to purchase components from a supplier. The purchase with significant capital may require authorization from the board level.
In B2C, the decision-making process is much simpler. It is a personal purchase and depends mainly on the emotion of the buyers.
Differences in marketing strategies
Though marketing in B2B and B2C might be similar in the methods of advertising, publicity, and promotions, and marketing channels, there are differences in marketing tactics and the way of information brought to customers.
In B2C, it is sufficient to advertise in general media like television, radio, or online magazine. However, for B2B, it may not help as business customers use their unique avenues that marketing needs to follow. For example, if you are selling supplements, advertising your products on radio, local TV channels, or a daily newspaper is helpful because your target audience is individuals who have demands for supplements. In contrast, if you are a Human Resource agency, your customers are other businesses that will be not likely to watch TV or listen to the radio to find their contractors.
Besides, B2B customers are more rational, planned, and logic than B2C customers. When purchasing a product, B2B customers always think carefully about a specific return on investment (ROI). Therefore, it is crucial to deliver to them rational messages, provide them with sound information and ultimately practical B2B solutions. Emotional factors usually influence B2C customers’ purchasing decisions. So the message to them should be more emotional, and the content should be fun to enjoy. For example, you’re walking around the street, and suddenly a salesman comes to you with a box of chocolate. You refuse to buy at first, but after he sings a song that you like, you buy that chocolate box with a smile on your face.
You should notice the differences of content marketing in B2B and B2C to do it right.
B2C transactions are commonly faster than in B2B as B2C sells directly to customers. In B2C, sellers want the transaction to go as fast as possible. It means that their products are quicker to be sold. In B2B, a transaction is longer. As I mentioned, multiple people influence the making-decision process in B2B, and the final purchase has to go through a lot of stages. So it is sometimes challenging and time-consuming for B2B businesses to sell their goods. From the time of raising brand awareness, leading nurturing, and driving engagement to turn leads into customers, it may take several months.
Relationships with customers
In most cases, B2B has a deeper relationship with clients than in B2C. The B2B market is smaller than B2C; the scale of potential customers in B2B is also narrower than in B2C. That’s the reason why it is more competitive in B2B space to generate leads. B2B businesses need to develop a strong relationship with their clients. Once the company builds trust with clients and brings to them benefits, they will have customer loyalty.
In B2C, you tend to have shorter relationships with customers, and customers are also less loyal than in B2B. As a typical example, in B2C, a lot of one-time purchase has been made. Today, customers may clothe from a brand, and tomorrow they can buy from the other brand and might never make any purchase on that brand.
Return on investment
Unlike in B2C, B2B buyers do not buy goods to satisfy their demand or to have fun. They buy technology, software, and services to optimize their operation and manufacturing. It reduces cost, improves customer experience, and ultimately increases revenue.
Therefore, it makes sense to say that a B2B transaction is an investment in future profitability and productivity.
Examples of successful B2B and B2C companies
Look at some awesome B2B models!
Microsoft, one of the largest companies in the world, is also one of the most successful B2B models. The company ranked 20th Global B2B brands in the BrandZ top 100 most valuable brands 2017 report. Founded in 1975, up to now, the company has contributed significantly to world technology advancement.
Microsoft provides excellent technology solutions such as Microsoft Azure, Microsoft Dynamics 365, Data platform, or Microsoft Advertising for businesses all over the world.
MailChimp is the world’s largest marketing automation platform. It is an incredible assistant for millions of business customers - from small ecommerce shops to big online retailers - to reach audiences, engage with customers, and build their brand.
When it comes to MailChimp, email is more useful rather than an out-of-date traditional marketing method. MailChimp makes it better for each email sent to customers from the business and its marketing campaigns via email.
MailChimp’s campaign builder makes it easier for you to create an email marketing campaign that best fits your business messages and purposes. Whether you want to sell a product, inform something new, or tell a story, MailChimp has handy solutions to help you handle all.
Salesforce is one of the most successful B2B examples which provides customer relationship management solutions for other business. Customer relationship management (CRM) is a software that stores customer contact information like names, phone numbers, and addresses. It also tracks customers’ activities, like website visits and emails.
If you need a centralized place to organize all your business’s sale process, SalesForce is an ideal solution. The software actively checks and manage customer information as well as simplifies repetitive tasks. It also provides you with insights and recommendations. Therefore you can focus on leads.
Here are some successful B2C models
When it comes to successfull B2C companies, the first that springs to my mind is Amazon - the largest retailer in the United States. The company has built a powerful brand with the whole business model of providing various kinds of products to its customers around the world.
Amazon starts selling books at the beginning, then expands the business to all sorts of different verticals, including electronics, fashion, and house goods. There are more than 353 million products sold on Amazon’s marketplace. The data report Q2 2018 about the competitive state of eCommerce marketplaces by JumpShot indicates that Amazon has 89.9% of market share for electronics. Amazon platform now owns over 310 million active users across the globe. And according to CNBC, people start searching for products on Amazon over Google, which stimulates the company’s growth in the future.
Airbnb is a successful example of B2C businesses in the travel. The company provides you with essential things for an unforgettable trip - places, accommodations, experiences, and more. In eleven years of business, Airbnb’s site lists more than six million rooms, flats, and houses in over 81,000 cities around the world.
Airbnb has an extensive affiliate network of those who want to become a supplier for other customers. If you own a homestay or lead experience, try to be a hostess on Airbnb.
Facebook - the most popular social media platform today, is also a successful B2C model. It creates a place where people can share every moment of their daily life, make friends, access information, and interact with worldwide people without strict limitations.
If you want to promote a B2C product or service, Facebook is an ideal marketplace. You can find your audience here easily as they can be someone in 2.4 billion Facebook users. Facebook is also a B2B company. Many businesses execute product marketing campaigns on this platform and get impressive achievements. Also, Facebook reaps the benefits and profits from advertising offers for both individuals and organizations.
Nowadays, with the striking development of eCommerce, many companies have been modifying to adopt both B2B and B2C. A typical example is Google, serving both individual customers and other businesses.
I hope that this article delivers useful information about B2B and B2C to you so that you see apparent differences between them. No matter what type of business you tend to form your own company, keep in mind key factors that help start and run a business successfully.