Business entities undergo different interactions with each other as well as with end users of their products. These interactions typically include purchase of merchandise or raw materials inventory from vendors, sale of goods and services to customers, exchange of economic resources and transfer of data and information. Among all these, the engagement with customers is of special importance because it causes inflow of revenues and ultimately profits for the entity. Moreover, it defines business model the entity has adapted.
Depending on the need of a particular study, the business models can be grouped in many different ways. The article “B2B vs B2C” explains and highlights the main points of difference between two types of such business models i.e., business-to-business (B2B) and business-to-consumers (B2C).
Definitions and meanings
B2B or business-to-business:
The business transactions, marketing activities or any other core engagements like transfer of resources, data and information that result in dealings between two businesses or one business to another fall under the classification of B2B or business-to-business. In a B2B model, a business only manufactures products or provides services for the use of another business. In other words, we can say that a business offers its goods, services or solutions to another business.
In B2B business type, the goods and services are offered to individuals or a small groups of persons responsible for making purchase decisions for the organization. The selling business needs to tailor its marketing efforts to influence the decision of those responsible individuals or groups acting on behalf of the buying business. The marketing messages should be understandable, free of jargon and directed towards explaining the core features and characteristics of the product in question. The decision makers should be able to understand how the investment in offered product can solve their problem better than any other similar product available in the market.
Some common examples of B2B or business-to-business transactions are given below:
- Manufacturer of consumer packaged goods like Procter & Gamble, Unilever and Kraft Heinz that sell their products to wholesalers and retailers in large quantities.
- Chemical manufacturing companies like Reagents and E&C Chemicals that supply many of their products such as acids, bases, salts, dyes and solutions to leather processing, textile, and food processing companies.
- IT companies like Plaxonic, Relevant and Skelia that provide custom made software and other IT services to countless manufacturing and merchandising businesses belonging to various industries.
- Marketing companies like Accenture, PWC and Epsilon that help businesses and brands in improving their over all marketing efforts by a successful creation and implementation of marketing strategies.
- Hardware vendors like HP, Dell, IBM, FUJITSU, Inspur Technologies that sell servers, desktops and laptops to webhosting companies as well as businesses in various other industries.
- Furniture manufacturing companies that sell tables and chairs to be used in restaurants and offices etc.
B2C or business-to-consumer:
The business transactions or marketing strategies in which a business focuses on the end consumer are known as B2C or business-to-consumer. Such transactions evade the third party interactions and develop a direct relationship between the business and the end user.
In a B2C business type, customers buy goods for their personal use, not for use in a business or organization. The marketing efforts in a B2C model are, therefore, directed towards needs, desires, feelings, emotions and the possible issues with similar or competing products that an average customer can face.
A few examples of B2C or business-to-consumers transactions are given below:
- Supermarkets like Wegman, Trader Joes, H-E-B that sell large quantities of consumer goods directly to end users.
- Restaurants like McDonald’s, Starbucks and Subway that sell various fast food items to end users.
- Online retailers like Amazon, Ali Express and Walmart that sell household goods.
- Pharmacies, medical clinics and health care stores that sell medicines and health care services to their customers and clients.
- Music streaming services like Apple Music, Spotify and Tidal that provide millions of music and songs in high quality audio to their customers for a monthly or yearly subscription.
- Real estate agencies like Realogy, Keller Williams Reality and Compass that sell homes to families.
Difference between B2B and B2C
The key points of differences between B2B and B2C are listed below:
1. Basic meanings:
The basic idea behind a B2B is that a business will only transfer its products, services and/or information to another business. These businesses are mostly suppliers, manufacturers and wholesalers or businesses that deal with large tailor-made products. On the other hand, in a B2C transaction the primary focus of a business is the end consumer to sell it’s products, where there may or may not be any B2B transactions present in their supply chain.
2. Type of products and customers:
A B2B business normally deals in specialist orders and their products are normally tailored as per their customer’s requirements. B2B businesses also deal in standardized products, but these are normally sold in batches. B2B customers normally enjoy economies of scales but they need to get through stringent supply chain management procedures in order to avoid over or under supply. The type, quality and quantity of products can also vary according to their customer’s demands. However , under a B2C model, business largely sells standardized products to end consumer. Their products can be sold in small orders with no or small discounts. Their consumer has to deal with a representative of the business and they can choose the products or services that meets their needs the most.
3. Type of market:
The main marketing efforts of a B2B business are aimed at larger businesses. They normally tend to avoid public marketing strategies such as television commercial ads and are directly selected through a bidding process. Another aspect of a B2B is that their products and customers are usually limited and they trade in a specified field with already acquired prerequisites. For a B2C business their marketing is highly targeted at their niche market. Such businesses often follow the marketing P’s policy and engage their customers with an attractive branding and media hype.
If we take an example of a car manufacturer J.P.Motors PLC., the business transaction that J.P. Motors PLC. enters with the suppliers of its body paints, raw material etc. will normally be considered as B2B transactions, whereas it’s sale of car units to the end consumer will be considered as B2C transactions. Other examples of B2B businesses can be airplane manufacturers, ship manufacturers etc. Other examples of B2C businesses are retailers, online app stores like Amazon, online travel agencies, food restaurants etc.
B2B vs B2C – tabular comparison
A comparison of B2B and B2C in tabular form is presented below:
|Business transactions and/or dissemination of information and data amongst two businesses.
|Business transactions between a business and an end consumer.
|Types of products and customers
|The products are largely tailored or batch made and meets the instructions of the customer, whom are other businesses.
|The products are mostly standardized and may also include commodities. The customers are normally the final consumers.
|Type of markets
|There market is normally limited to commercial entities.
|There market is the niche customer based on the type and nature of the business and it’s products/services
|Retailers, wholesalers, commercial traders, governments etc.
|The end consumer for example a person buying a car, or a customer buying a particular membership etc. are examples.
Conclusion – B2B vs B2C
In most of the businesses today, to undertake a B2C transaction, there are possibly various B2B transactions going on simultaneously. The particular reason for this interdependence is that most of these businesses are interrelated to other businesses for their raw material. Additionally, businesses tend to outsource those functions in which they don’t possess expertise and can be efficiently outsourced. So, in order to meet the best practices in their particular businesses, it must be noted that whether the customer of a business is another business or the end consumer, they must pay heed to their systems and processes in such a way that best serves the needs of their customers.