In these series of videos, we turn from international consumer marketing, to business marketing. Much of marketing academic research and consequently much of marketing education, focuses on business to consumer marketing, shorthanded as B2C. B2C marketing, focuses on businesses selling consumer products and services to individuals and families for personal consumption. Let's study and let's discuss this business to business or B2B marketing. B2B marketing focuses on businesses selling commercial products and services to other businesses, governments and NGOs for organizational use. Examples of B2B products include equipment, machines, raw materials, and sub-components. Also included in B2B marketing are commercial services, such as consulting, daily cloud services, maintenance contracts, accounting, and so forth. While there is a good deal of overlap between B2B and B2C market strategies, there are also distinct differences for B2B marketing, which are the topic of these series of videos. Global trade can be divided into five categories of goods, capital goods, industrial supplies, consumer goods, car parts and engines, and food. This chart shows that capital goods and industrial supplies comprise about 53 percent of imports into the United States in a recent year as a representative sample of global trade. It's clear here the category where almost all sales are is B2B, business to business. But thinking about it, the other three categories: consumer goods, autos, and food, for the most part, are also B2B. Most consumer goods are not sold directly to consumers, but are sold to distributors and retailers, who in turn sell them to end of use consumers. Most of these sales are best classified as B2B. Similar arguments can be made for important autos, auto parts and food. Recipient buyers of these imports are almost always wholesalers and distributors and not consumers. Extrapolating to global trade, we can safely assert that almost all international cross-border trade is B2B and not B2C. Therefore, understanding international B2B marketing is critical for international managers. Here are some important differences between B2C and B2B marketing. With B2C marketing, there are minimal personal relationships between buyers and sellers, purchase decisions are often made spontaneously and emotionally, and purchase decisions are based on brand reputation and personal choice. Conversely, with B2B marketing, there are important longstanding relationships between buyers and sellers, purchase decisions are systematic, logical, and by the book, and also early vendor involvement in decision-making is key in order not to miss out on good selling opportunities. This table shows other significant differences between B2C and B2B. For example, the scale and scope of B2C is broad and large, while it's small and niche with B2B. Buyers are individuals with B2C and they are are organizations with B2B. The buying process is simple single-step B2C, and longer, many steps with B2B. The sales funnel is shorter and impulsive for B2C and longer and calculated for B2B. Sales drivers for B2C are advertising and brand, while for B2B is benefit and value. Mindset of B2C, customers have emotions and desire, the mindset of B2B, buyers is rational and proof-based. Finally, examples of B2C are groceries, clothing, autos, and furniture, and examples of B2B are software, machines, vehicles, and materials. B2B sales also tend to be much more complex than B2C sales. In a typical B2C sale, a consumer might do some preliminary research online or with print publications, then goes to a retail store, selects the product, pays for the product, and then goes home with a product. A typical retail sales transaction takes minutes or maybe an hour or two. In contrast, B2B sales are much more complex and time consuming. Typically, a buyer is informed or identifies a need. The buyer creates a specification document, then publishes an RFP or an RFQ to interested vendors requesting a proposal or quote. Vendors receive the RFP or RFQ, analyze required specifications and it's terms, and a proposal is created which is then submitted to the buyer. The buyer along with other involved colleagues, evaluates alternative proposals, negotiates terms with vendors, and then selects a winning proposal. At this point, the selected buyer and vendor typically sign a contract. This process can take weeks, months, and sometimes even years. Relationships also tend to be much more complex with B2B sales. In a B2C transaction, a consumer may talk with a salesperson, usually stranger, for just a few minutes and in many cases the consumer has no interaction with anyone except the cashier. In contrast, in a B2B transaction, there are many persons in departments involved. On the buyer side, these can include the purchasing department, functional personnel, financial personnel, engineering, and IT staff, and sometimes legal staff. On the vendor side, there may be involvement by business development staff, sales personnel, marketing personnel, product designers, and service departments. On both the buyer and vendor sides, there may be complex political and personal relationships within their respective teams. If these were not complex enough, there are larger projects where there are often many directory relationships between team members of both parties. B2B sales almost invariably are much more complex than B2C sales. B2B complexity is greatly amplified when buying and selling teams that are international, due to the usual language differences, political and cultural sensitivities, distances in times of difficulties. Sometimes it's a wonder that anything gets done at all. One last challenge of B2B sales is that somewhere downstream there is always an end use customer lurking. Every supply chain ends with an end use customer, individual, company, government or NGO. Every vendor in a supply chain has an immediate customer. Every vendor in a supply chain ultimately has a final end use customer. Upstream vendors must keep this in mind, that they have an end use customer, when they do their work. For an example, aircraft manufacturers sell to airlines as their immediate customers, but the flying public is their ultimate end use customer. Airline manufacturers must keep this in mind that comfort and safety of flying individuals as well as satisfying their airline customers. To further illustrate the point, I once had a woman in an executive MBA class who worked as an engineer for an airline seat manufacturer. The company had major aircraft companies as its customers. Listening to stories from the student, the seat manufacturer had to worry about many stakeholders, including aircraft manufacturers who bought the seats, airlines who bought the aircraft and worried about cost, airline and airline interior designers who are worried about aesthetics and comfort, business analysts who are worried about trying to squeeze more passengers onto a plane, fuel efficiency experts who are worried about weight, and government oversight agencies who are worried about safety, finally, flight attendants who are worried about getting customers on and off the aircraft quickly, and the flying public, of course, want space and comfort. This illustrates how B2B transactions can become complicated, indeed. Summarizing, most international trade is business to business, not business to consumer. International B2B marketing often differs greatly from B2C marketing. It can be much more complex, it is often built on long-term relationships, and B2B buying decisions are usually made by careful analysis, not emotion. Finally, B2B efforts most often require coordinated teams, not individual sales personnel working independently. For these reasons, international managers must be careful to distinguish between B2C and B2B strategies when making important marketing decisions.
