Business to business fundamentals and practices

Business to Business

Major Trends in the Business-to-Business Marketing Environment

The practice of business to business has developed together with commerce. The importance of B2B marketing has evolved in time, given the requirements of smaller or larger companies that needed to purchase products or services from other companies in order to resell them or to use them in producing other products. Although B2B shares common traits with other marketing types, like consumer marketing and business to government marketing, B2B is significantly different from these practices.

The B2B marketing environment is in continuous development. Globalization is one of the factors that influenced the growth of B2B marketing. Companies are able to expand their business on international level, which determines the development of the B2B marketing environment.

However, B2B marketing has significantly developed over the past few decades, transforming itself into an area with different characteristics and approaches from the discipline of marketing. Given the fact that B2B represents meeting the needs and demands of other companies, which have require different types of products in comparison with individual customers, this marketing type requires different strategies and objectives that must be fulfilled by players in the field.

Business-to-Business Marketing Characteristics

There are several differences between B2B markets and consumer markets. The most important characteristics of B2B markets are represented by: B2B markets have a more complex decision making unit, B2B buyers behave more rationally, B2B products are usually more complex, there is a limited number of units that can be bought in B2B markets, B2B markets have a smaller number of segments based on behaviors and needs, personal relationships are more important in B2B markets, B2B markets are characterized by longer-term buyers, B2B markets do not encourage innovation as much as consumer markets do, B2B markets do not focus on packaging, sub-brands are less effective in B2B markets (Harrison et al., 2010).

Given the fact that B2B deals with products of higher importance for the buyer, like acquiring a production plant, or purchasing large amounts of raw materials, and also given the higher risks associated with such products, it is natural for the decision making unit to be more complex in the B2B market. These units assess the potential purchase by taking into consideration the value and the risk associated with the product in case. From the marketer's point-of-view, the company must make proof of a high level of expertise regarding the production process, the technical aspects associated with the product, and correct understanding of the buyer.

Although not all specialists in the field agree, it is considered that B2B buyers are more rational than individual consumers. This is because B2B buyers are more informed, they benefit from an increased level of information, and they participate in the decision making process regarding the purchase made for the company, not for themselves. However, this characteristic does not apply to all B2B customers. Certain customers in this market also make their purchase decision based on trust and security.

As mentioned above, products in the B2B market are more complex than those in consumer markets, which significantly influences transactions in the B2B environment. Buyers in such markets in interested in the technical aspects of the product they intend to purchase, rather than in other characteristics, in comparison with consumer markets. In order to assess technical information, companies use qualified experts. This means that the sales people in the B2B environment must also be able to provide sufficient technical expertise.

Business-to-Business Market Trends

The B2B market is subjected to the changes that emerge in the global environment. Buyers and marketers in the B2B market are affected by the trends imposed by changes that take place on international level or on local level, affecting companies that do business in certain countries. Globalization, the economic crisis, and the emerging markets are some of the most important factors that are responsible for determining the trends that affect the B2B market. These trends refer to companies' organizational structure, their management, or their marketing strategy.

For example, certain specialists in the field consider that an increased number of companies will assign marketing and sales to the same manager (Koch, 2010). This is because the two departments must follow similar goals and objectives. The resources required by these activities must also be shared, which means that companies might benefit from reduced costs.

Social media

Regarding the buying process, it is expected that it will integrate social media. This trend has been reported by surveys that have observed that the use of social media in it and business buyers has significantly increase. The trend is more visible in the case of large corporations rather than in smaller companies. These surveys have also reported the fact that an increased number of companies in the B2B market intend to increase their investments in partnerships. This trend is determined by the fact that these companies are unable to further reduce their budgets, and must, therefore, consider such partnerships in order to expand their business.

The Marketing Benchmark Report released by MarketingSherpa identifies a series of trends that must be taken into consideration (MarketingSherpa, 2011). Therefore, 78% of marketers said that their main priority is represented by generating high quality leads. In the case of 44% of marketers the main priority is represented by generating a high volume of leads.

Information technology

Another trend that is likely to influence business of B2B companies is represented by the changes in the sales cycle that are expected to take place. The benefits of information technology allow buyers to take charge of the purchasing process, by reaching the product information they require from the Internet, rather than from sales people (Thimmesch, 2010). As a consequence, the important of trade shows increases, which is useful for both the buyer and the seller.

Regarding technology, it seems that the increased use of mobile provide significant growth potential for B2B companies. The important technological developments that allow people to use mobile phones and other types of devices as computers, provide an opportunity that B2B companies intend to exploit. However, this means that the marketing budget of companies that intend to use such techniques must significantly increase, given the high cost of technology.

Marketing automation

Marketing automation is a process that is likely to influence the development of the B2B market. Such software and platform are intended to help marketers maintain their position that it has been affected by the increase of Internet usage by buyers. These are also useful in facilitating marketers' access to potential buyers that are more difficult top access in traditional manners.

International expansion is a trend that is expected to influence numerous B2B companies. The strategy that most companies are likely to rely on in order to achieve this objective is represented by increase the volume of exports. This can be observed in international trade shows, where an increased number of foreign manufacturers exhibit their products.

Although the B2B market in the UK has similar characteristics with the market in the U.S., the market in the UK is not as developed. But surveys in the field reveal that the UK B2B market is improving its situation. Most of the agencies and companies in the UK B2B market consider that their business is likely to develop in the following period of time. This is also based on the fact that they intend to increase the budgets allocated for marketing objectives.

Return on investments

There is disagreement between agencies and client-side marketers in the UK regarding the return on marketing investments (IDM, 2010). In other words, most client-side marketers admitted to not measuring return on marketing investments. But most agencies in this market considered that clients measured this indicator.

In order to be able to measure marketers' return on investments, specialists recommend that B2B companies invest in measurable marketing programs, clearly define the objectives they intend to reach, and define the metrics they intend to use for this activity. This is because by clearly measuring the return on investments, B2B companies are able to measure their success and to assess whether the strategy developed and implemented by these companies is suitable in the business environment. Specialists also consider that this activity is likely to help these companies gain a higher number of customers.

Specialists in the field consider that it is difficult for companies in the UK B2B market to adapt to the trends imposed by the international B2B market and required by the changing needs of customers. However, most companies acknowledge the importance of these trends and intend to make efforts in order to follow them. For example, although most companies in this sector did not develop and implement a social media strategy, they are aware of its importance and of the fact that it would be useful to include such a strategy within their general strategic direction.

However, not all companies consider that social media is that effective. The chart bellow presents managers' opinion regarding the effectiveness of several tactics. Social media is considered to be less effective than other marketing strategies.

Specialists in the field have also identified other trends that they consider will affect the B2B market (Focus, 2010). Such trends refer to the fact that marketing is likely to be considered responsible for revenue objectives, B2B markets are likely to become more similar with consumer markets, the B2B sector will be characterized by a social media crisis, more attention granted to return on investments, the increased of automation, increased importance of Internet supported buying cycles, information overload, focus on lead quality, focus on branding and awareness, and others.