Comparing Business-to-Business & Business-to-Customer Approaches

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  • 0:00 Comparing Business Approaches
  • 0:56 Business-to-Business Approach
  • 2:24 Business-to-Customer Approach
  • 3:54 Applying the Right Approach
  • 4:42 Lesson Summary
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Lesson Transcript
Instructor: LeRon Haire
In this lesson, we will define the terms 'business-to-business' and 'business-to-customer.' The lesson will also discuss some of the different approaches that are used for each, and then you can test your knowledge with a quiz.

Comparing Business Approaches

The two terms we're discussing in this lesson refer to different business methods. The business-to-business approach involves business conducted between two companies; one company attempting to sell a product or service to another company. Imagine that you own an orange grove and currently sell your oranges to a grocery store for resale to the public. This is a prime example of a business-to-business transaction.

On the other hand, the business-to-customer approach, also called consumer marketing, involves a company selling products or services directly to customers. An example of a business-to-customer approach is when an electronics store attempts to sell its products directly to consumers.

Such vastly different business methods rely on their own set of good business practices and techniques. In the following sections, we'll explore these factors in greater detail.

Business-to-Business Approach

One of the most important factors involved in businesses successfully catering to other businesses is a strong knowledge of the product or service. To market to another company, one must be able to explain precisely how that product or service will help the target company's bottom line, increasing profits. That may involve knowing the cost per unit (how much it costs to manufacture the product), just how the product or service will help the company run more efficiently, and ultimately how it will help increase profits.

The business-to-business approach process can be lengthy due to the information and research a purchasing company makes to determine if it's a wise purchase. The business-to-business approach also has a tendency to be less emotional when it comes to the purchasing decision, since the person in charge of making the decision is doing so on behalf of a larger company rather than him or herself.

Let's look at an example. Say that you are working for the Blue Company and you are trying to sell a hammer to the Red Company. In order to make a successful pitch, you would tell the Red Company how the hammer would save time when used in place of the metal rod generally used to ensure that nails are firmly placed into shipping boxes. The company would be able to finish nailing the boxes at a faster rate, which means the company could ship their products to customers sooner, a perk that may attract more customers. This increased efficiency and faster shipping time will mean greater profits for the Red Company.

Business-to-Customer Approach

As we discussed, the business-to-customer approach is centered on selling products or services directly to customers. The major difference here lies in the fact that customers have different purchase wants and needs as opposed to businesses. While businesses must know how a product or service will lead to profits, customers don't share that sentiment. Customers are more concerned with the functional and emotional benefits that the product offers.

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