Differences Between Business and Consumer Markets

For marketers, the selling environment of business markets present uniquely different circumstances when compared to selling to consumers.  At the beginning of this tutorial, we saw two ways in which consumer and business markets differ:

  1. Business markets are more likely to be price driven than brand driven, and
  2. Demand in business markets tends to be more volatile than consumer markets.

However, the two markets are dissimilar in other ways requiring marketers to take a different approach when selling to business customers than they do when selling to consumers.  These differences include:

How Decisions Are Made

In the consumer market, a large percentage of purchase decisions are made by a single person. As we discussed in the Consumer Buying Behavior tutorial, there are situations in which multiple people may be involved in a consumer purchase decision, such as a child influencing a parent to choose a certain brand of cereal or a husband and wife deciding together to buy a house, but most of the time purchases are individual decisions. The business market is significantly different. While single person purchasing is not unusual, especially within a small company, a significant percentage of business buying, especially within larger organizations, requires the input of many (see Buying Center Roles).

Experienced Purchasers

Businesses often employ purchasing agents or professional buyers whose job is to negotiate the best deals for their company. Unlike consumers, who often lack information when making purchase decisions, professional buyers are generally as knowledgeable about the product and the industry as the marketer who is selling to them.

Decision-Making Time

Depending on the product, business purchase decisions can drag on for an extensive period. Unlike consumer markets, where impulse purchasing is rampant, the number of people involved in business purchase decisions results in decisions taking weeks, months or even years.

Size of Purchases

For products that are regularly used and frequently purchased, businesses will often buy a larger volume at one time compared to consumer purchases. Because of this, business purchasers often demand price breaks (e.g., discounts) for higher order levels.

Number of Buyers

While there are several million organizations worldwide operating in the overall business market, within a particular market the number of businesses may be relatively small. For instance, within some industries, buyers are highly concentrated in a few geographic clusters (e.g., pharmaceutical and biotech clusters) and may number less than a few hundred. Consequently, compared to consumer products, where millions of customers make up a market, marketing efforts for the business market may be confined to a smaller targeted group.

Types of Promotion

Companies that primarily target consumers often use mass advertising methods to reach an often widely dispersed market. For business-to-business marketers, the size of individual orders, along with a smaller number of buyers, makes person-to-person contact by sales representatives a more effective means of promotion.