Business marketing
Business marketing is a marketing practice of individuals or organizations (including commercial businesses, governments, and institutions). It allows them to sell products or services to other companies or organizations that resell them, use them in their products or services, or use them to support their works. It is a way to promote business and improve profit too.
Marketing can be broken down into many sections such as business-to-business marketing, business-to-consumer marketing, as well as business-to-developer marketing. However, business marketing is typically associated with business-to-business marketing.[1]
Business and consumer markets (B2C)[edit]
Business markets have derived demand – a demand in them exists because of demand in the consumer market. An example would be a government wishing to purchase equipment for a nuclear power plant. Another example would be when items are in popular demand. The underlying consumer demand that has triggered this is that people are consuming more electricity (by using more household devices such as washing machines and computers). Business markets do not exist in isolation.
A single consumer market demand can give rise to hundreds of business market demands. The demand for cars creates demands for castings, forgings, plastic components, steel, and tires. In turn, this creates demands for casting sand, forging machines, mining materials, polymers, and rubber. Each of these growing demands has triggered more demands.
As the spending power of citizens increases, countries generally see an upward wave in their economies. Cities or countries with growing consumption are generally growing business markets.
Despite the differences between business and consumer marketing from a surface perspective being seemingly obvious, there are more subtle distinctions between the two with substantial ramifications. Dwyer and Tanner note that business marketing generally entails shorter and more direct channels of distribution.
While consumer marketing is aimed at large groups through mass media and retailers, the negotiation process between the buyer and seller is more personal in business marketing. According to Hutt and Speh (2004), most business marketers commit only a small part of their promotional budgets to advertising, and that is usually through direct mail efforts and trade journals. While advertising is limited, it often helps the business marketer set up successful sales calls.
Both business to business (B2B) and business-to-consumer (B2C) marketing is done with the ultimate intention of making a profit to the seller (business-to-business marketing). In B2C, B2B and B2G marketing situations, the marketer must always:
These are the fundamental principles of the 4 Ps of marketing (the marketing mix) first documented by E. Jerome McCarthy in 1960.[9]
While "other businesses" might seem like the simple answer, Dwyer and Tanner say business customers fall into four broad categories: companies that consume products or services, government agencies, institutions and resellers.
The first category includes original equipment manufacturers, such as large auto-makers who buy gauges to put in their cars and also small firms owned by 1–2 individuals who purchase products to run their business. The second category, government agencies, is the biggest. In fact, the U.S. government is the biggest single purchaser of products and services in the country, spending more than $300 billion annually. But this category also includes state and local governments. The third category, institutions, includes schools, hospitals and nursing homes, churches and charities. Finally, resellers consist of wholesalers, brokers and industrial distributors.
Hutt and Speh (2001) note that "business marketers serve the largest market of all; the dollar volume of transactions in the industrial or business market significantly exceeds that of the ultimate consumer market." For example, they note that companies such as GE, DuPont and IBM spend more than $60 million a day on purchases to support their operations.
Dwyer and Tanner (2006) say the purchases made by companies, government agencies and institutions "account for more than half of the economic activity in industrialized countries such as the United States, Canada and France."
A 2003 study sponsored by the Business Marketing Association estimated that business-to-business marketers in the United States spend about $85 billion a year to promote their goods and services. The BMA study breaks that spending out as follows (figures are in billions of dollars) :
Despite the stream of leads and undeniable impact of marketing in B2B organizations, a 2021 report by Statista states that majority of businesses only allocate 5% of their budget towards promotions.[14] By contrast, B2C companies typically spend 5% to 12% of their total revenue towards marketing.[15]
Impact of the Internet[edit]
According to Anderson and Narus (2004), two new types of resellers have emerged as by-products of the Internet: infomediaries and metamediaries. Infomediaries, such as Google and Yahoo, are search engine companies that also function as brokers, or middlemen, in the business marketing world. They charge companies fees to find information on the Web as well as for banner and pop-up ads and search engine optimization services. Metamediaries are companies with robust Internet sites that furnish customers with multiproduct, multivendor and multiservice marketspace in return for commissions on sales.