1.

B2B companies are supportive enterprises that offer the things other businesses need to
operate and grow. These include businesses like payroll processors or industrial suppliers. This is
in contrast to business-to-consumer (B2C) models, which sell directly to individual customers,
and consumer-to-business (C2B) models, in which an end user creates products or services for a
business. B2B companies have an entirely different target audience: They offer the raw
materials, finished parts, services or consultation that other businesses need to operate, grow and
profit.
For example, the cloud-based document storage company Dropbox serves businesses as well as
individuals. General Electric makes plenty of consumer goods, but it also provides parts to other
enterprises. 

2. Differences between B2B and B2C are:

B2B Marketing 

In B2B marketing, you want to focus on the logic of the product and its features. There is little to
no personal emotion involved in the purchasing decision, so you want to focus on understanding
your buyers and how they operate within the confines of their organizations' procedures. What's
their role? What's important to them?

This type of marketing is about people using the product more than it is about the product itself.
Be more in-depth with your marketing materials. Your most effective messages will focus on
how your product or service saves time, money, and resources. What kind of return on
investment can buyers expect with their purchase?

As an example, imagine that your company sells productivity software. If you are marketing it to
businesses, the key thing you need to be able to show your prospective clients is that using the
software will save them money in the form of time. Because those using the software will be able
to streamline their work through the use of your software, employees will be able to get more
done in the same amount of time. Because this likely would be a significant purchase for most
companies requiring multiple software licenses and adequate training, expect the sales process to
involve detailed demonstrations and trial periods.

B2C Marketing 

When you are marketing to a consumer, you want to focus on the benefits of the product. Their
decision is more emotional. Consumers also are different in that they demand a variety of
distribution channels for convenience. Consumers are less likely to be interested in a lengthy
marketing message and want you to get right to the point.
Consumers don't want to work to understand your benefits. Instead, they will want you to point
out the benefits to them clearly. With consumers, your message must be simple and easy to
understand. Consumers also have a much shorter purchasing process than businesses. They can
purchase within a few minutes to within a few days.

Your most effective marketing strategies will focus on the results and the benefits that your
product or service will bring to them. Customers will want to hear more about how a product or
service helps them and what benefits it brings to them personally. Focus on the problem or pain
point that you solve.

Consider again the example of the productivity software. What consumers will want to know is
how the software is going to make their lives easier. If it includes a calendar feature, how is
inputting information easier, and how does it sync with family members' phones and laptops,
etc.? Your customers in this example aren't looking for a return on their investment. They're
simply looking for software that will make their lives easier without being too complex.

3. Similarities between B2B and B2C are:

 Marketing and sales alignment

They both require alignment with marketing if their marketing strategies are not aligned with
sales strategies, potential customers may get confused. As a result, marketing and sales
departments should work closely. The former helps generate leads, the latter transfers the leads
into clients, both of which work heading to the revenue.

 Excellent customer service

Staffs who do marketing have to recognize the difference between customers with rigid demand
and elastic demand, in order to satisfy them according to their needs and desires. Once a sale is
made, the support team and helpful service which customers can enjoy will do good to save
churn rates.

 Marketers must build and nurture their brand

It is important for both the B2B and the B2C marketers to build a strong brand which can
encourage the consumer to buy. For consumers, even they may pay more, they prefer to buy
brands which have high status like Benz, Lexus, Rolex or Nike as brands play a big role in the
purchasing behavior.

4. Derived demand is an economic term describing the demand for a good/service resulting from
the demand for an intermediate or related good/service. It is a demand for some physical or
intangible thing where a market exists for both related goods and services in question. The
derived demand can have a significant impact on the derived good's market price. Derived
demand is solely related to the demand placed on a good or service for its ability to acquire or
produce another good or service. Additionally, derived demand can be spurred by what is
required to complete the production of a particular good, including the capital, land, labor, and
raw materials required. In these instances, the demand for raw material is directly tied to the
demand for products that require the raw material to be produced.

The demand that is derived from the demand for another good can be an excellent investing
strategy when used to anticipate the desire for goods outside of the specific good desired. If
activity in one sector increases, any sector responsible for the first sector’s success may also see
gains.

The principles behind derived demand work in both directions. If the demand for a good
decreases, the demand for the goods required to produce the item will also decrease.

5. Fluctuating demand is another characteristic of B2B markets: a small change in demand by

consumers can have a big effect throughout the chain of businesses that supply all the goods and
services that produce it. Often, a bullwhip type of effect occurs. If you have ever held a whip,
you know that a slight shake of the handle will result in a big snap of the whip at its tip.
Essentially, consumers are the handle and businesses along the chain compose the whip—hence
the need to keep tabs on end consumers. They are a powerful purchasing force.

For example, Cisco makes routers, which are specialized computers that enable computer
networks to work. If Google uses five hundred routers and replaces 10 percent of them each year,
that means Google usually buys fifty routers in a given year.

6. The nature of industrial demand the influence of final consumer is well recognized. One way

which industrial marketers attempt to increase sales is by stimulating increases in demand of

ultimate consumers.
 By directing advertising to ultimate consumers, industrialists can often increase consumer

demand for final products, which in turn, increases their industrial sales. Industrial advertising to

ultimate consumers is also a method of increasing goodwill and achieving a favorable position

with an industrialists immediate customers.

7. Price sensitivity is the degree to which the price of a product affects consumers' purchasing
behaviors. Summed up, it's how demand changes with the change in the cost of products.

In economics, price sensitivity is commonly measured using the price elasticity of demand, or

the measure of the change in demand based on its price change. For example, some consumers
are not willing to pay a few extra cents per gallon for gasoline, especially if a lower-priced
station is nearby.

When they study and analyze price sensitivity, companies and product manufacturers can make
sound decisions about products and services.

Price sensitivity can basically be defined as being the extent to which demand changes when the
cost of a product or service changes.

The price sensitivity of a product varies with the level of importance consumers place on price
relative to other purchasing criteria. Some people may value quality over price, making them less
susceptible to price sensitivity.

8. The various B2B customer are:

i. Distributors and Retailers

ii. Dealers

iii. IT companies

iv. Manufacturing companies

v. Any company which needs financial or consultancy services

vi. Companies which need software services

9. Raw Materials– These are products obtained through mining, harvesting, fishing, etc. They stand
at the very beginning of the production inputs and are unprocessed. They are key ingredients in the
production of higher-order products.
Processed Materials– These are products created through the processing of basic raw materials.
Thus, in contrast to raw materials, they have already been worked on and are processed in some way.
Sometimes, the processing refines original raw materials while in other cases the process combines
different raw materials to create something new. For example, several crops including corn and
sugar cane can be processed to create ethanol.
Installations – Installations refer to facilities such as buildings and offices. Without them, running
the business and producing goods would not be possible.
Equipment– These are products used to help with production activities. An example would be a
conveyor belt used on an assembly line.
MRO (Maintenance, Repair and Operating) Products– These are products used to assist with the
operation of the organization but are not directly used in producing goods or services. Office
supplies, cleaning supplies and copiers as well as parts for a truck fleet and natural gas to heat a
factory fall into this category.

10. The most widely accepted classification of business products divides the types of B2B
products into entering goods and services, foundation goods and services, and facilitating goods
and services. Let’s take a closer look at each of them:

Entering goods and services  – These are products and services that become part of other
products. We are referring to raw materials, component parts and materials. Examples of this
type of B2B product include steering wheels for an automobile, lumber or metallic ores, formed
parts or electronic products like integrated circuits. From the accounting perspective, entering
goods and services are usually expensed rather than capitalized.
Foundation goods and services – These are products that are used to make other products. This
includes installations and accessory equipment. The former are items like offices and buildings
and the latter are machine tools. In contrast to entering goods and services, foundation goods do
not become part of the end product. While the majority of them are capital items, some
foundation goods can also be expensed.
Facilitating goods and services  – These are products and services that help an organization
achieve its objectives. In other words, they assist and support. Facilitating goods also do not
enter the product or even the production process. Generally speaking, facilitating goods and
services are expensed rather than capitalized. Examples include market research services,
cleaning supplies and copiers. Facilitating goods can be divided into supplies and business
services.

11. Commercial customer is buying goods, they tend to buy in bulk. This means that they usually
get the product they need at a discounted price. A non-industrial business consumer of energy.
One of three standard classifications of customers for commercial energy, along with
residential and industrial customers.
Commercial customers are usually service sector businesses, although some
manufacturers with low energy demands may also qualify.

 9
12. Institutional customers is a term used in the financial services industry to differentiate retail
customers and corporate customers from other financial institutions such as banks, insurance
companies and investment management companies.
In several jurisdictions financial institutions may be able to enter transactions under a more lax
regulatory environment than the other customer categories.

13. Government is the biggest customer in B2B market. It purchases everything from paper and
fax machines to tanks and weapons, buildings, toilets for NASA (the National Aeronautics and
Space Administration), highway construction services, and medical and security services. State
and local governments buy enormous amounts of products, too. They contract with companies
that provide citizens with all kinds of services from transportation to garbage collection. (So do
foreign governments, provinces, and localities, of course.) Business-to-government (B2G)
markets, or when companies sell to local, state, and federal governments, represent a major
selling opportunity, even for smaller sellers. In fact, many government entities specify that their
agencies must award a certain amount of business to small businesses, minority- and women-
owned businesses, and businesses owned by disabled veterans.

There is no one central department or place in which all these products are bought and sold.
Companies that want to sell to the government like U.S. government should first register with the
Central Contractor Registry. The GSA helps more than two hundred federal agencies buy a wide
variety of products purchased routinely. The products can include office supplies, information
technology services, repair services, vehicles, and many other products purchased by agencies on
a regular basis. Consequently, it is a good starting point. However, the GSA won’t negotiate a
contract for the NASA toilet or a fighter jet. It sticks to routine types of purchases.

14. The business buying process is split into eight stages. The new task buying contains all of
these steps whereas the straight or modified rebuy may skip some of them. These stages are as
follows.

 Problem Recognition
 Description of General Need
 Specification of Product
 Search of Supplier
 Proposal Solicitation
 Selection of Supplier
 Order-Routine Specification
 Performance Review

1. Problem Recognition

In the first stage of business buying process, a certain problem is recognized by someone in the
organization, so that it can be solved through the purchase of any new product or service. The
external or internal stimuli result in the creation of such recognized problem. In case of internal
stimuli, the management of the organization may determine to manufacture a new product or any
production machine become damaged that needs certain new parts. Another internal reason may
be that the supplier is not providing effective goods at a fair price. On the other hand the external
elements may be in the form of any new idea of a product at a trade show or seeing new
advertisements or any favorable offering by a sales person etc.
 2. Description of General Need

This stage starts when a clear need has been identified by the organization. In this step
description about the general need has been prepared which shows general characteristics and the
quantity of the required product. In case of simple items, this process is linear whereas in case of
complex items in the process involves a team of buyer, engineers and other professionals who
work together to agree on the desired product. The significance of reliability, price, durability
and other features are ranked for the desired product or service by the team.

3. Specification of the Product

In this stage, the organization that is involved in the business buying process prepares a detailed
list of the technical specifications of the desired product through value analysis conducted by the
engineering team. In value analysis, careful studies are made to determine the cost reduction
production process for the redesigning or standardization of the desired product or service. The
professional team covers the best features and characteristics required in purchasing the product.
The selling organizations can also use this step to increase their sales.

4. Search of Supplier

In this step of the business buying process, the buying organization searches the suppliers in
order to make a purchase with the best one. For this purpose a list of competitive vendors is
prepared by the buying organization through the use of supplier directories, aid of a computer
(internet), or contacting other organization for obtaining of recommended names. The internet is
increasingly becoming a platform for such searching now-a-days as most of the organizations are
entering into this virtual world. In case of buying of new and expensive product, the more time is
consumed in searching of suitable suppliers that can best meet the specifications of the required
product. The suppliers should keep themselves enrolled on the relative directories to make their
good reputation in the market. Moreover the sales person should also target the supplier
searching organizations in the business market.

5. Proposal Solicitation

In this stage the suppliers are asked to submit their proposals. In some cases, some suppliers send
only their salespersons or simple catalogs. But when the desired product is expensive and
complex than proper formal presentations and detailed written proposals are required from the
qualified suppliers. The marketers of the business organizations should also be skillful in writing
and presentation of business proposals to the buying organizations.

6. Selection of Supplier

At this stage the final supplier is selected from the list of potential suppliers who have submitted
their proposals to the buying organization. The selection team of the buying organization reviews
the proposals of all suppliers and list the offered attributed on the basis of the rank of importance.
Following are some of the main attributes that serve as the basis for the selection of potential
suppliers.
  Quality of product
 Delivery time
 Ethical corporate behavior
 Reasonable price
 Honest communication
 Past performance and reputation
 Repair and maintenance services etc

7. Order-Routine Specification

The order-routine specifications are prepared in this step which contains the order having a final
list of the specifications, the selected supplier, delivery time, quantity required, price and repair
and maintenance services etc.

8. Performance Review

This is the last stage of the business buying process in which the performance of the supplier is
reviewed by the buying organization. For this purpose the buying organization contacts with the
customers or users of the purchased product and ask them to provide their experience of using
that product.

15. A fixed-price contract is a type of contract where the payment amount does not depend on
resources used or time expended. This is opposed to a cost-plus contract, which is intended to
cover the costs with additional profit made. Such a scheme is often used
by military and government contractors to put the risk on the side of the vendor, and control
costs. When such contracts are used for innovative new projects with untested or undeveloped
technologies, such as new military transports or stealth attack planes, it can and often results in a
failure if costs greatly exceed the ability of the contractor to absorb unforeseen cost overruns.

A cost-reimbursement contract is a contract where a contractor is paid for all of its allowed
expenses to a set limit, plus additional payment to allow for a profit. Cost reimbursement
contracts contrast with a fixed-price contract, in which the contractor is paid a negotiated amount
regardless of incurred expenses. Federal agencies can choose among three main contract types to
procure goods and services: fixed-price, time-and-materials, and cost-reimbursement. Each
contract type comes with a different level of cost or performance risk for the government.
Different types of cost-reimbursement contracts can be used based on whether incentives, award
fees, or other arrangements are offered to motivate contractor efforts and discourage contractor
inefficiency and waste.