Business model of any company is defined as either B2B (business-to-business) or B2C (business-to-consumer) based on its marketing approach. If a company is doing business with another company for selling its products and services or for exchange of information then we say it is following B2B model. Examples include, CA firm offering audit services to companies, advertising agencies helping other businesses with graphic design needs etc. On contrary, if the final customer is consumer rather than business like in restaurants, retail stores and e-commerce websites, then it can be termed as B2C. These two business models are entirely different to work with and require varied outlook, discipline and skills. A person having B2C mind-set may feel it very difficult to adjust and work in a professionally driven B2B environment.
For better understand, let us discuss the basic difference between B2B and B2C business concepts.
The business process in B2B is streamlined to customize the end product or service according to the need because the customer is valued much due to higher cost of sales. To make things easier, sometimes businesses also integrate their system processes to the client business so that they can handle the requirements with more efficiency. Generally, businesses in B2B focus on maximizing the relationship using various marketing activities to convert the prospects into customers. It is quite opposite in case of B2C where business have to deal with large number of people with different outlooks. The business transaction in B2C is product driven and companies focus more on merchandising activities to convert the shoppers into buyers. Here, there is a little chance of retaining customers for long as the sales are short and less valued.
The purchase process in B2B typically is complex & multilevel, and may even take months to make decisions on a particular product or service. Since the purchase is meant for company’s use involving large capital, sometimes members from different group take part in making decisions on the need and budget. There is also a possibility that a person who has the authority to select the product may not hold the power of responsibility in making the final purchase decision. The decisions on the products & services in B2B is based on the business expertise and credibility of the company. B2C sales are direct, short and sometimes involve the emotional way of approach to convince the customer unless it is an online purchase.
Size of the company and target market
B2B companies are generally small in size and mostly deal with companies belonging to same vertical markets to do the business. Dealing with B2B environment requires high level of maturity as every person involved in the business process has refined professional outlook. It typically deals with far fewer but much larger buyers than the B2C market does. Due to this reason, B2B companies employ less manpower to work on the projects, but focus on hiring professionals having unique specialization with good problem solving and decision making skills. B2C companies are generally large as they have to deal with large targeted markets. Since the buying process is shorter, they don’t emphasize more on professional or technical skills but employ people who work aggressively and consistently to close the sales cycles as quickly as possible.
Corporate and non-corporate B2B businesses
Not all B2B business segments and markets have professional and corporate environments. Within B2B, there are two subsets of the marketplaces, one exclusively focusing on professional corporate environment while the other is non-corporate. Just as there is difference between B2B and B2C, B2B corporate and non-corporate are also very different in their frameworks. For instance, a business between a CA firm and a limited company is professional corporate whereas the business supplying furniture to a shop is not considered as professional and corporate B2B even though the transaction is between two businesses.
Why is knowing B2B & B2C professional and non-professional concepts important
Knowing the difference between B2B & B2C professional and non-professional concepts are very helpful for choosing a right company to work and avoid workplace misunderstandings and aggravations. A person serving B2C market feel very difficult and awkward to fit into a professional corporate environment. It is important for everyone working in an organization to be clear on – what kind of organization they are working in and what type of community they are serving. Unless people understand the environment in which they are working, it becomes hard for them to get adjusted to the workplace demands.