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Business-to-Business (B2B): What It Is, How It’s Used

What is Business-to-Business (B2B)?

Business-to-business (B2B), also known as B-to-B, is a transactional relationship between businesses, such as one involving a manufacturer and wholesaler or a wholesaler and a retailer. B2B pertains to commerce conducted between companies, as opposed to transactions between a company and an individual consumer. Business-to-business differs from business-to-consumer (B2C) and business-to-government (B2G) transactions.

Understanding Business-to-Business

Business-to-business transactions are commonplace in a common supply chain, as companies acquire components and products, including raw materials, for use in manufacturing processes. The finished products can then be marketed to individual consumers through business-to-consumer transactions.

In communication, B2B refers to methods through which employees from different companies can connect, such as through social media. This type of communication between the employees of two or more companies is termed B2B communication.

What is B2B E-Commerce?

In late 2018, Forrester reported that the B2B e-commerce market had surpassed $1.134 trillion, exceeding the $954 billion projection made in a 2017 forecast for that year. This constitutes approximately 12% of the total $9 trillion in US B2B sales for the year. Forrester anticipates this percentage to increase to 17% by 2023. The internet offers a strong environment for businesses to discover information about products and services, laying the foundation for future B2B transactions.

Company websites enable interested parties to learn about a business’s products and services and initiate contact. Online product and supply exchange platforms enable businesses to search for and procure products and services through e-procurement interfaces. Specialised online directories, providing information about specific industries, companies, and their offerings, also facilitate B2B transactions.

B2B Transactions

Successful business-to-business transactions need careful planning. These transactions depend on a company’s account management personnel to establish relationships with business clients. Business-to-business relationships also require nurturing, often through professional interactions preceding sales, to ensure successful transactions.

Traditional marketing practices play a key role in fostering connections with business clients. Trade publications contribute to this effort by providing businesses with opportunities to advertise in both print and online formats. Furthermore, a company’s participation in conferences and trade shows enhances awareness of the products and services it offers to other businesses.

What is Business-to-Business Advertising?

Business-to-business advertising refers to marketing efforts directed towards other businesses rather than individual consumers. It occurs between companies usually positioned in the middle of the supply chain for products or services that do not directly reach the average consumer. B2B advertising may encompass the promotion of items like daily office supplies, specific components used in another company’s product, or services such as human resources consulting or logistics primarily tailored for businesses.

How B2B Advertising Works

While business-to-consumer (B2C) advertising is geared towards reaching the decision-maker within a household, B2B advertising is aimed at engaging with the employees of a business responsible for making capital decisions or the individuals overseeing purchases. While consumers can swiftly decide on the appeal of a product, businesses often navigate a slower and more intricate decision-making process due to the high cost of products, requiring approval from multiple levels of management.

For instance, when Apple announced its transition to using Intel processors in its MacBook computers, it constituted a B2B transaction, as Apple procured the processors from Intel rather than from end consumers like you or me. Since Intel does not target end consumers, any advertising it undertakes is considered B2B advertising, directed at other computer or electronics companies to encourage the purchase of its specialised technology.

Other targets of B2B advertising involve institutions such as schools and hospitals, government and government agencies, as well as companies utilising different products and materials in their operations, such as manufacturers.

Venues

Given the significant differences between B2B and B2C advertising, companies must carefully consider their media choices, as finding suitable venues may be more challenging. For instance, will local newspapers reach enough decision-makers, or might a trade publication yield better returns? Is digital or mobile advertising more effective than print? Is the investment in expensive radio or television advertising justified?

Understanding the customer is important in guiding advertising spending decisions. As an illustration, The Washington Post reports that nearly two-thirds of U.S. small business owners are older white men, potentially explaining the prevalence of services for small businesses in national sports media outlets like satellite radio.

Messaging

B2B advertisers must thoroughly understand their target market and audience in order to create an impactful message. This understanding can be obtained through research and surveys, whether purchased or self-conducted. It is necessary to test the message to ensure its resonance with the target market. Armed with this information, advertisers can develop a strategic plan with a primary objective, such as increasing business leads, conversions, or overall traffic.

A compelling message should effectively convey the company’s values, showcase the best features of its products, and articulate the company’s value proposition. This includes demonstrating how the business and its products or services can assist customers in saving time and/or money.

The Digital Space

An advertiser needs to effectively convey their message and value proposition online through the company’s owned digital marketing channels, including their website and social media platforms. It’s important for customers to easily discover a B2B company online, accessible through a website showcasing the company’s brand story.

Additionally, an advertiser must implement a strong content strategy to cater to both existing and potential customers with expertise and solutions. This strategy should incorporate diverse content types such as articles, videos, testimonials, all strategically aligned with a search engine optimisation (SEO) approach to address customer queries. Furthermore, advertisers should actively maximise their websites and social media presence to foster meaningful engagement with customers.

Examples of Business-to-Business

Business-to-business (B2B) transactions and large corporate accounts are commonplace for firms in the manufacturing sector.

For instance, Samsung serves as one of Apple’s major suppliers in the production of iPhones. Apple also maintains B2B relationships with companies such as Intel, Panasonic, and semiconductor producer Micron Technology.

B2B transactions form the backbone of the automobile industry, where various vehicle components are independently manufactured. Auto manufacturers then acquire these parts to assemble automobiles. Examples of such components include tires, batteries, electronics, hoses, and door locks, which are often produced by different companies and directly sold to automobile manufacturers.

Service providers also participate in B2B transactions. Companies specialising in property management, housekeeping, and industrial cleanup, for example, often exclusively offer these services to other businesses rather than individual consumers.

DISCLAIMER: This article is for informational purposes only.  BARTERCARD is not affiliated with any of the mentioned companies.

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