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The Characteristics of Business-to-Business (B2B) Markets

19 January, 2016 - 17:13


  1. Identify the ways in which business-to-business (B2B) markets differ from business-to-consumer (B2C) markets.
  2. Explain why business buying is acutely affected by the behavior of consumers.

Business-to-business (B2B) markets differ from business-to-consumer (B2C) markets in many ways. For one, the number of products sold in business markets dwarfs the number sold in consumer markets. Suppose you buy a five-hundred-dollar computer from Dell. The sale amounts to a single transaction for you. But think of all the transactions Dell had to go through to sell you that one computer. Dell had to purchase many parts from many computer component makers. It also had to purchase equipment and facilities to assemble the computers, hire and pay employees, pay money to create and maintain its Web site and advertise, and buy insurance and accounting and financial services to keep its operations running smoothly. Many transactions had to happen before yours could.

Business products can also be very complex. Some need to be custom built or retrofitted for buyers. The products include everything from high-dollar construction equipment to commercial real estate and buildings, military equipment, and billion-dollar cruise liners used in the tourism industry. There are few or no individual consumers in the market for many of these products. Moreover, a single customer can account for a huge amount of business. Some businesses, like those that supply the U.S. auto industry around Detroit, have just a handful of customers—General Motors, Chrysler, and/or Ford. Consequently, you can imagine why these suppliers become very worried when the automakers fall on hard times.

Not only can business products be complex, but so can figuring out the buying dynamics of organizations. Many people within an organization can be part of the buying process and have a say in ultimately what gets purchased, how much of it, and from whom. This is perhaps the most complicated part of the business. In fact, it’s a bit like a chess match. And because of the quantities each business customer is capable of buying, the stakes are high. For some organizations, losing a big account can be financially devastating and winning one can be a financial bonanza.

How high are the stakes? Table 4.1 Top Five Corporations Worldwide in Terms of Their Revenuesshows a recent ranking of the top five corporations in the world in terms of the sales they generate annually. Believe it or not, these companies earn more in a year than all the businesses of some countries do. Imagine the windfall you could gain as a seller by landing an exclusive account with any one of them.

Table 4.1 Top Five Corporations Worldwide in Terms of Their Revenues


Sales (Billions of Dollars)

Royal Dutch Shell




Walmart Stores


British Petroleum (BP)


Toyota Motor Company


Note: Numbers have been rounded to the nearest billion.


Generally, the more high-dollar and complex the item being sold is, the longer it takes for the sale to be made. The sale of a new commercial jet to an airline company such as U.S. Airways, Delta, or American Airlines can take literally years to be completed. Sales such as these are risky for companies. The buyers are concerned about many factors, such as the safety, reliability, and efficiency of the planes. They also generally want the jets customized in some way. Consequently, a lot of time and effort is needed to close these deals.

Unlike many consumers, most business buyers demand that the products they buy meet strict standards. Take, for example, the Five Guys burger chain, based in Virginia. The company taste-tested eighteen different types of mayonnaise before settling on the one it uses. Would you be willing to taste eighteen different brands of mayonnaise before buying one? Probably not. 1 

Another characteristic of B2B markets is the level of personal selling that goes on. Salespeople personally call on business customers to a far greater extent than they do consumers. Most of us have had door-to-door salespeople call on us occasionally. However, businesses often have multiple salespeople call on them in person daily, and some customers even provide office space for key vendors’ salespeople. Table 4.2 Business-to-Consumer Markets versus Business-to-Business Markets: How They Compareoutlines the main differences between B2C and B2B markets.

Table 4.2 Business-to-Consumer Markets versus Business-to-Business Markets: How They Compare

Consumer Market

Business Market

Many customers, geographically dispersed

Fewer customers, often geographically concentrated, with a small number accounting for most of the company’s sales

Smaller total dollar amounts due to fewer transactions

Larger dollar amounts due to more transactions

Shorter decision cycles

Longer decision cycles

More reliance on mass marketing via advertising, Web sites, and retailing

More reliance on personal selling

Less-rigid product standards

More-rigid product standards