B2B has become a common expression used by those who are eager to market their products or services. It is shorthand for ‘business to business‘ and refers to transactions between businesses rather than between a business and a customer — this is called B2C. Some companies put a lot of their focus on B2B marketing and there are some very good reasons why they might want to do this.
The Importance of B2B
It is easy to understand the importance of B2B when we do the math. If a business sells a product to an individual customer they are only going to make small sales; after all few customers are going to want to buy more than a few items for personal use. Dealing with another business though can mean dealing with orders that are huge. So given the choice between marketing to an individual person or marketing to another business, it is easy to understand why the later would be more attractive — it is just a lot more profitable to do so.
Some companies will focus purely on B2B transactions while others will also work to promote B2C as well. Where both types of marketing do occur it is usual to offer a special price for B2B transactions; a bulk discount. The fact that a business will need to pay less than a customer is an attraction and it will encourage them to by more of a product. If a business was expected to pay the standard B2C price they would likely be a bit unsatisfied with the situation and take their business elsewhere.
Another way that B2B is encourages is by offering special products that are only available to companies. So if a shoe retailer wants to market to a big company they might arrange for a special shoe line that is only available to this other business — and is thus tailored towards their needs. This type of exclusive line is a popular incentive for B2B transactions and most of the big manufacturers will offer this option.
The Future of B2B Transactions
The growing importance of internet technology has greatly increased the volume of B2B transactions occurring around the world. This growth is likely to continue into the future. There are now many financial products that only another business could afford to buy and these can be marketed directly to other businesses online; for example investment packages. The amount of money that can be involved in these B2B transactions is quite astounding — sometimes over a billion pound. If you look around online you are likely to find B2B transactions occurring everywhere. A small scale example would be web hosting reselling; the larger hosts sell their server space to smaller businesses who then sell it onto their customers.
B2B transactions are always going to be an attractive option for businesses because of the potential to make so much money. It is far easier to market to a few big buyers then to have deal with thousands of individual customers who will all need to be attracted and convinced to buy.